“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.
Buzz: California’s consumer confidence is on the rise, with a statewide index up in four straight months.
Source: The Conference Board polling of shoppers monthly to create various consumer confidence indexes, including one for California.
The Trend
Shoppers seem to be largely ignoring short-run challenges to the start of 2022, from a persistent pandemic to choppy financial markets.
The overall statewide index was 122.1 in January — up from a revised 120.9 a month earlier and up from 88 a year ago. That’s a 1% one-month gain and a 39% gain over 12 months. California confidence averaged 113 in the five years before the pandemic.
Now let’s look at two measures inside the statewide index …
California consumers’ view of current conditions: Improved, with the index at 155.5 for the month — the highest since February 2020. It’s also up from 141.1 a month earlier and above 75.6 a year earlier. This measure averaged 141 in 2015-19.
Shoppers’ outlook for the future: Skittish, with the index at 99.8 for the month — down from 107.5 the previous month and up from 96.3 a year earlier. This measure averaged 94 in 2015-19.
The Dissection
The Conference Board also tracks the nation and seven other states — Texas, New York, Florida, Illinois, Pennsylvania, Ohio, and Michigan. How did California compare?
Overall confidence: two increases among the seven states in a month; seven up over the year. National? down for the month; higher over 12 months.
Current conditions: three increases in a month; seven up over the year. National? up for the month; higher over 12 months.
Outlook: three increases in a month; two up over the year. National? down for the month; higher over 12 months.
Arch-rivals? Texas’ overall confidence rose 5% in the month; increased 21% in the year. Florida? 7% one-month drop; 37% 12-month advance.
Another view
The Conference Board also asks consumers nationwide about the job market and plans to make major purchases in the next six months …
More jobs? 22.7% down from 24.2% in a month; down from 28.8% 12 months ago.
Buy a home? 7.8% up from 6.9% in a month; up from 6.7% 12 months ago.
Buy a vehicle? 11.5% up from 11.1% in a month; up from 10.8% 12 months ago.
Major appliance purchase? 48.9% up from 47.8% in a month; up from 48.8% 12 months ago.
And then there’s the latest unnerving trend, inflation. People polled expect the cost of living to be 6.8% higher in a year, down from 6.9% the month before and up from 6.1% a year earlier.
How bubbly?
On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … TWO BUBBLES!
A year ago, the state and the nation were suffering through medical uncertainty (a hard hit from the Delta variant) and political unrest (the presidential race results and the attack on the U.S. Capitol).
So it’s easy to see increased optimism over 12 months. And let’s remember, it’s hard for the California economy to move forward without confident consumers.
But January’s slip in the statewide view of the future is a tad worrisome.
Jonathan Lansner is business columnist for the Southern California News Group. He can be reached at jlansner@scng.com “
