Cal confidence index (Chart by Flourish)
“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.
Buzz: California consumers’ optimism dramatically turned upbeat with the largest one-month bump since February 2021, according to one poll.
Source: My trusty spreadsheet analyzed The Conference Board’s monthly polling of shoppers that creates consumer confidence indexes, including one for California.
The Trend
After falling in six of 2022’s first seven months, the overall statewide confidence index was 109.8 in August, up from a revised 89.8 a month earlier.
That’s a 22% one-month gain and the largest jump in 18 months. The surprising summertime strength of the job market seems to be boosting spirits that otherwise could sour due to high inflation rates and a Federal Reserve focused on cooling the overheated economy.
But the financial worries aren’t over. This confidence measure is still down 8% over 12 months and below the average 113 of the five years before the pandemic.
And look at two measures inside the statewide index …
California consumers’ view of current conditions: Improved, with the index at 142.9 for the month, up from 125.6 a month earlier. Still, it’s below 144.5 a year earlier but it’s ahead of the average 141 in 2015-19.
Shoppers’ outlook: Upbeat, with the index at 87.8 for the month, up from 66 the previous month but far off 103.5 a year and an average 94 in 2015-19.
Elsewhere
The Conference Board tracks the nation and seven other states: Texas, New York, Florida, Illinois, Pennsylvania, Ohio, and Michigan. How did California compare?
Overall confidence: Six increases among the seven states in a month; none up over the year. The nation was up 8% for the month; off 10% over 12 months.
Current conditions: Five increases in a month; one up in the year. US: up 4% for the month; off 2% over 12 months.
Outlook: Six increases in a month; none up in the year. US: up 14% for the month; off 19% over 12 months.
Economic arch-rivals? Texas’ overall confidence rose 6% in the month and decreased 13% in the year. Florida saw a 15% one-month gain vs. a 10% 12-month dip.
Big picture
What’s driving swings in optimism? The Conference Board also asks consumers nationwide about the job market and their plans to make major purchases in the next six months …
More jobs? 17.4% said “yes” — up from 15.1% a month earlier but down from 23% a year earlier.
Buy a home? 5.4% said “yes” — up from 4.5% the previous month but down from 6.3% 12 months ago.
Buy a vehicle? 9.6% said “yes” — up from 9.5% a month earlier but down from 11.2% a year earlier.
Major appliance purchase? 46% said “yes” — up from 41% the previous month but down from 51% 12 months ago.
Then there’s the latest unnerving trend, inflation. Americans polled expect the cost of living to be 6.2% higher in a year, down from 6.5% a month earlier but up from 5.7% a year earlier.
And the stock market? 38% see it lower in 12 months, compared with 45% the previous month but up from 32% 12 months ago.
How bubbly?
On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … FOUR BUBBLES!
While it’s nearly impossible for the California economy to thrive without confident consumers, one wonders if August’s optimism — statewide and nationally — may further overheat the economy.
That could nudge the Fed to be even more aggressive in its inflation fight.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com“
Originally published at Jonathan Lansner