“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.
Buzz: California optimism hit a 10-month high in April despite a host of worries from the war in Ukraine and a cooling-yet-inflating economy at home.
Source: The Conference Board polls shoppers monthly, creating various consumer confidence indexes, including one for California.
The Trend
The overall statewide index was 125.9 in April — up from a revised 122.4 a month earlier and up from 118 a year ago.
That’s a 3% one-month gain and a 7% 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 …
Current conditions: California consumers’ view improved, with the index at 161.9 for the month — up from 151.7 a month earlier and above 111.9 a year earlier. This measure averaged 141 in 2015-19.
Outlook: Shoppers are skittish, with the index at 101.9 for the month — down from 102.9 the previous month and down from 122.1 a year earlier. This measure averaged 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: Two increases among the seven states in a month; one up over the year. The nation overall was down for the month and lower over 12 months.
Current conditions: Three increases in a month; five up over the year. National? Down for the month; higher over 12 months.
Outlook: Three increases in a month; none in the year. National? Up for the month but lower over 12 months.
Arch-rivals? Texas’ overall confidence rose 17% in the month and decreased 1% in the year. Florida optimism suffered an 8% one-month drop and a 12% dip over 12 months.
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% down from 17.6% a month earlier and down from 31.7% a year earlier.
“Buy a home? 5.9%, up from 5.8% the previous month but down from 7.1% a year ago.
Buy a vehicle? 11%, up from 9.8% a month earlier but down from 11.1% a year earlier.
Major appliance purchase? 50%, up from 48% the previous month but down from 51% from a year ago.
Then there’s the latest unnerving trend, inflation. Americans polled expect the cost of living to be 7.5% higher in a year, down from 7.9% a month earlier but up from 6.2% a year earlier.
And 34% of respondents think the stock prices will be lower in 12 months, compared with 40% the previous month but up from 29% a year ago.
How bubbly?
On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … TWO BUBBLES!
Let’s remember it’s hard for the California economy to move forward without confident consumers. Remember, optimism was 7% higher in the Golden State over 12 months vs. 9% lower across the U.S.
But the weakening view Californians have of the future is a cautionary trend.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]
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