“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.
Buzz: California shoppers’ optimism fell in July for the first time in four months. Could it be fears about rebounding coronavirus risks and the uncertainty over the governor’s upcoming recall election?
Source: Conference Board’s monthly consumer confidence index, derived from a survey of shoppers.
The Conference Board put its consumer confidence index for California at 126.1 for July — down from a revised 129.3 a month earlier but up from 69.6 a year ago.
That’s a 2% one-month drop but an 81% gain over 12 months. Still, this is historically bullish: California confidence averaged 113 in the five years before the pandemic.
Look at two measures inside the index …
1. California consumers’ view of current conditions scored 142.1 — down from 150 a month earlier but above 62.8 a year earlier. These are “typical” conditions as this benchmark averaged 141 in 2015-19.
2. Shoppers’ economic outlook statewide scored 115.4 — less optimistic than 115.5 the previous month but up from 74.1 a year earlier. This remains upbeat vs. the average 94 in 2015-19.
Big states: The Conference Board tracks another seven states, and for the month, overall confidence rose in four of them: New York, Illinois, Ohio and Michigan. Over 12 months, optimism is up in those four and Texas, Florida, and Pennsylvania.
Among these states, current conditions were better in five for the month — New York, Florida, Illinois, Ohio and Michigan. Over 12 months, optimism is up in all seven.
Expectations rose in three states for the month — Illinois, Ohio and Michigan. Over 12 months, optimism is up in all seven.
National: U.S. consumer confidence index was 129.1 in the month vs. 128.9 a month earlier and up from 91.7 a year ago.
U.S. shoppers’ view of current conditions increased in the month and was higher over 12 months. Meanwhile, consumers’ economic hopes nationwide were worse compared with the previous month and more optimistic than a year earlier.
Also, ponder these results on key economic factors.
The national outlook for jobs improved with 27.7% of consumers seeing more jobs six months from now vs. 26.6% a month earlier and 29.6% a year ago. The 2015-19 average was 17.4%.
Inflation prospects remain high — those polled in July saw a 6.6% rate in a half-year compared with 6.7% a month earlier and 6.1% a year ago. Remember, before the pandemic the five-year average inflation outlook was 4.8%.
On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … TWO BUBBLES!
California’s down-now-but-still-up trend is encouraging consumers’ longer-term view to remain upbeat.
Note what the Conference Board found nationally in terms of interest in two major purchases, both big parts of the California economy …
Plans to buy a home within six months? Up: 7% said “yes” this month vs. 6.8% a month earlier and 7.7% a year ago. The 2015-19 average was 6.1%.
Car purchase plans? Up: 13.1% this month vs. 11.5% a month earlier and 12.5% a year ago. The 2015-19 average was 12.6%.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]