Bubble watch: California consumer confidence hits 8-month low

“Bubble Watch” digs into tendencies which will point out financial and/or housing market troubles forward.

Buzz: California shopper confidence fell to an eight-month low in Could as recession discuss turned a part of the mainstream financial dialog.

Source: The Convention Board polls consumers month-to-month, creating varied shopper confidence indexes, together with one for California.

The Development

The general statewide index was 109.8 in Could — down from a revised 118.6 a month earlier and down from 118.2 a yr in the past. Could noticed a 7% one-month drop and a 7% drop over 12 months. Word that California’s confidence averaged 113 within the 5 years earlier than the pandemic.

So 2022 has began with 4 confidence dips in 5 months, pushing this optimism yardstick to its lowest since September 2021. Rising mortgage charges have put a chill on the state’s red-hot housing market this yr. And different rising costs pushed inflation to a four-decades excessive, one other added concern.

Now let’s take a look at two measures contained in the statewide index, and what they are saying concerning the mindset of California customers …

Present situations: Declining, with this index at 138.9 for the month — down from 151.9 a month earlier and above 124.4 a yr earlier. This measure averaged 141 in 2015-19.

Consumers’ outlook: Skittish, with this index at 90.4 for the month — down from 96.4 the earlier month and down from 114.1 a yr earlier. This measure averaged 94 in 2015-19.

Elsewhere

The Convention Board tracks the nation and 7 different states — Texas, New York, Florida, Illinois, Pennsylvania, Ohio and Michigan. How did California evaluate?

General confidence: Three will increase among the many seven states in a month; only one up over the yr. Nationwide? Down for the month; decrease over 12 months.

Present situations: Two will increase in a month; three up over the yr. Nationwide? Down for the month; larger over 12 months.

Outlook: Two will increase in a month; one up over the yr. Nationwide? Down for the month; decrease over 12 months.

Arch-rivals? Texas’ total confidence fell 8% within the month and decreased 16% within the yr. Florida? 1% one-month acquire however a ten% 12-month dip.

Massive image

What’s driving swings in optimism? The Convention Board additionally asks customers nationwide concerning the job market and plans to make main purchases within the subsequent six months …

Extra jobs? 18.5% up from 18.4% a month earlier and down from 27.7% a yr earlier.

Purchase a house? 5.9% down from 6.8% the earlier month and up from 5.3% 12 months in the past.

Purchase a car? 10.2% down from 11.2% a month earlier and up from 10% a yr earlier.

Main equipment buy? 45% down from 50% the earlier month and up from 44% 12 months in the past.

Then there’s the most recent unnerving pattern — inflation. People polled anticipate the price of residing to be 7.4% larger in a yr, down from 7.5% a month earlier and up from 6.5% a yr earlier.

And the inventory market? 43% see it decrease in 12 months, in contrast with 36% the earlier month and up from 31% 12 months in the past.

How bubbly?

On a scale of zero bubbles (no bubble right here) to 5 bubbles (five-alarm warning) … FOUR BUBBLES!

Let’s keep in mind it’s laborious for the California financial system to maneuver ahead with antsy consumers. And there are severe worries — from political challenges, right here and aboard, to record-high gasoline costs to companies brief on staffing and supplies.

However comparatively talking, be aware Could’s drop in optimism: 7% decrease within the Golden State over 12 months vs. down 11% throughout the U.S.

Jonathan Lansner is the enterprise columnist for the Southern California Information Group. He will be reached at jlansner@scng.com

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