O.C. Consumers Not Buying Yet : Economy: Most still pinching pennies, but many expect to be back in the shops by fall.
Jittery about the recession, Deborah McConnell, a 32-year-old grocery store manager in Huntington Beach, and her husband, Patrick, have cut back on their expenses, big and small.
“We’re not going out, and we watch cable television and rent videos,” McConnell said. “We were thinking about having a child and buying a home, but now we’re postponing that.”
Even with the Persian Gulf fighting over, McConnell said she isn’t likely to go on a spending binge in the next six months. She plans to loosen the purse strings gradually, once she starts seeing her customers do the same.
Like McConnell, Orange County consumers have been on a serious spending diet during the past six months, according to a Times Orange County Poll conducted March 21-24 by Mark Baldassare & Associates in Irvine. The telephone survey interviewed 600 Orange County adults and has a 4% margin of error.
The results show people have postponed big-ticket purchases such as television sets, automobiles and homes and have cut back on daily expenses such as eating out at restaurants.
Consumer confidence in Orange County has also taken a dive. Only 33% of Orange County residents believe they are better off than they were a year ago, compared to 49% in September, 1990, and 62% in March, 1988. Nationally, consumer confidence made a record jump between February and March, but it remains well below national figures for last fall and summer.
The results suggest that some county residents, known for their expensive shopping tastes, are becoming cautious shoppers like others in the recession-hit nation.
Donald Lecher, 36, a sales representative for a hardware wholesaler in Anaheim, said he is a music fanatic and has purchased more than 200 compact discs in the past two years.
“Now I’ve curtailed that,” he said.
“You get used to living a certain way, and it’s not easy to cut back,” he said.
Lecher said several people at his firm have been laid off, and he has canceled plans to buy a car this year.
Four in 10 Orange County residents said they postponed buying big-ticket items--so-called durable goods such as furniture or television sets--during the past six months. Forty percent also postponed a vacation or trip away from home and 37% canceled plans to buy a new car, the survey found.
Low-income households cut purchases the most, but the cost-cutting attitude seems to have penetrated even the ranks of Orange County’s affluent communities. Thirty-one percent of households making more than $75,000 a year responded that they had postponed big-ticket purchases.
Ruth Janesick, a 75-year-old Laguna Hills retiree, said she has noticed lately that local horse stables now seem to have plenty of empty stalls. Her daughter, who owns an Arabian horse, once had to be put on a waiting list to get a stall in Orange County, Janesick said.
“I think that means we are in a serious recession,” she said.
About 28% said they had postponed plans to buy a house in the past six months because of the economic climate, including 14% of homeowners and more than half of renters.
Residents are also cutting back on everyday spending. Forty-eight percent have been eating out at less expensive restaurants, while 45% say they have been shopping more at discount stores.
For some discount retailers, the poll results reflect an upsurge in business they have seen among customers who have been “trading down” to more inexpensive restaurants and stores since the recession began last summer.
“We noticed an increase in traffic count (last summer), and it’s continued all the way to now,” said Paul Hitzelberger, executive vice president of Del Taco Inc. in Irvine, a chain of inexpensive fast-food restaurants. He said the number of customers visiting Del Taco restaurants is up 20% to 40% over the same time last year while business at moderately priced, sit-down restaurant chains is soft.
HomeClub, a discount chain of home centers based in Fullerton, also reports that the recession appears to have brought in more customers. The company’s fourth-quarter earnings rose 63%, which chain President James F. Halpin attributes in large part to people staying home and fixing up or adding on to their houses, rather than moving to more expensive new digs.
Forty-four percent in the Times Orange County Poll said they are renting videos more often instead of going out. “I have a feeling in general that this spring, video rentals have picked up--not just in Orange County but nationwide,” said Frank Moldstad, editor of Video Store Magazine, a trade magazine based in Santa Ana.
Forty-one percent said they have been taking trips closer to home. The trend has left some travel agents hurting for business.
“We’ll be lucky if we break even this year,” said Jack Cosand, president of La Habra Travel. He said the ruckus in the travel industry--war, fear of terrorism, airline bankruptcies, recession and the like--has taken its toll.
“The people who have money are still going on their regular vacations,” he said, adding that the people who make up the other half of the business--wage earners who spend less money and less time on vacations--are cutting back.
Some people who want to travel in groups to exotic parts of the world cannot go. When terrorism fears were at their height earlier this year, tour companies cut back or curtailed trips to places such as Egypt and Israel.
In a way, Cosand said, the consumer cutbacks on travel are ironic. They come at a time when hotel and airline price cutting has given travelers some of the biggest bargains in years.
Pat Duffy, 60, a teacher in Anaheim, said she took a trip to New Mexico instead of Europe this Easter because she was concerned about terrorism related to the war in the Middle East.
“I don’t think the dollar goes as far anymore,” Duffy said. “I’m not buying clothes or anything else.”
As a result of spending less, one in four residents say they have reduced their credit card debts in the last six months, Baldassare found.
Such habits have taken a toll on some retailers in Orange County, and some say the signs are evident.
Janesick says her favorite pastime during her daily “mall-walking” routine is to count the number of stores and restaurants that have shut down in local shopping malls.
“It’s really sad,” she said. “Some of my favorite stores like Buffums aren’t there anymore. They have real cute facades covering up what used to be there, but they’re still gone.”
Looking forward, a lot of people may make up for lost time by this fall. About 70% said they planned to take a vacation away from home in the next six months.
Forty percent said they planned to buy a big-ticket item such as furniture or a television set, 21% said they planned to buy a new car, and 15% said they are likely to buy a house, the poll found.
Stephen Hamre, 36, a Huntington Beach television engineer, said he and his wife and two children haven’t cut back on spending during the recession and are going forward with plans to remodel their home.
“Most people view a recession as an emotional situation rather than an economic one,” Hamre said. “I don’t know enough about what goes on to say if we’re in one, but we haven’t seen the effects personally.”
As a sign that they believe the recession will be mild, half of Orange County residents expect to be better off a year from now, said pollster Baldassare. And 53% believe the recession will be over before 1992.
Orange County Residents Scale Back Spending Many of those surveyed have found it necessary to make money-saving changes in their lifestyles.
“In the past six months, have youu been cutting back on your household expenses in any of following ways because of the economic recession?”
Eating out at less expensive restaurants: Total Yes: 48% Under $35K: 56% $35K-49K: 49% $50K-75K: 49% Over $75K: 40% 18-34: 59% 35-54: 45% 55 and older: 35% Renting videos more instead of going out: Total Yes: 44% Under $35K: 50% $35K-$49K: 43% $50K-$75K: 52% Over $75K: 33% 18-34: 57% 35-54: 45% 55 and older: 20% Shopping more at discount stores: Total Yes: 45% Under $35K: 55% $35K-$49K: 49% $50K-$75K: 42% Over $75K: 35% 18-34: 53% 35-44: 44% 55 and older: 32% Taking trips or vacations closer to home: Total Yes: 41% Under $35K: 46% $35K-$49K: 38% $50K-$75K: 43% Over $75K: 39% 18-34: 46% 35-54: 46% 55 and older: 23%
Consumers Put Off Vacations, Big-Ticket Purchases “In the past six months, have you postponed any of these expenses because of the economic recession? In the next six months, how likely are you to do any of the following?” Postponed in the past six months Buy big-ticket items (e.g. TVs): 40% A trip or vacation away from home: 40% Buy a new car: 37% Plan to buy in the next six months Buy big-ticket items (e.g. TVs): 40% A trip or vacation away from home: 70% Buy a new car: 21%
How the Poll Was Conducted
The Times Orange County Poll was conducted by Mark Baldassare and Associates. The telephone survey of 600 Orange County adult residents was conducted March 21-24. The sample was statistically weighted to reflect the actual population distribution of Orange County residents. The margin of error for the total sample is plus or minus four percentage points at the 95% confidence level. That means it is 95% certain the results are within percentage points of what they would be if every adult resident were interviewed. All respondents were guaranteed anonymity, however, some of those polled agreed to be reinterviewed for these stories.
