O.C. Confidence in Economy Hits Highest in ‘90s
Orange County consumers are regaining their faith in the economy and now boast the highest confidence levels of the 1990s, according to a UC Irvine report released Thursday.
The latest Orange County Annual Survey pegged the local Consumer Confidence Index at 89, a level just below the national average and a whopping 16 points higher than last year. The local index is now at its highest in four years.
“This is one important indication that Orange County has come out of recession,” said Esmael Adibi, an economist at Chapman University in Orange.
The 1994 survey, conducted by Prof. Mark Baldassare at the UC Irvine School of Social Ecology, found a sharp increase in the number of adults who said that they are better off now than a year ago. Consumers also generally believe the nation has a prosperous year ahead and that now is a good time to buy big-ticket items such as cars and refrigerators.
Those results are significant, Adibi and other analysts said, because they suggest that consumers will start making big purchases that they had put off during the recession. And that buying spree, in turn, will create jobs in manufacturing and retail.
“Consumer spending looks like it’s ready to take off,” said UCI research associate Cheryl Katz, who conducted the survey with Baldassare. “We will see more spending across the board, more home buying, perhaps.” Also, she said, people will be “generally more at ease with their finances.”
Some retailers say they are already seeing signs of freer spending. Auto dealers, for example, report that their business has picked up, with some having sold out their entire inventories.
“I don’t have a single ’94 Jeep on the lot,” said Gary Gray, owner of Orange Coast Jeep Eagle in Coast Mesa. “Last year at this time, I had 150 ’93 Jeeps that I couldn’t sell.”
The consumer confidence report also bodes well for the holidays, retailers’ busiest season and thus a crucial part of their fiscal year. Yet it does not mean that the local economy, hampered by continued layoffs in the aerospace industry, has shaken off all of its lingering ills.
Orange County consumers “are not as confident in the local scene as the national scene,” pollster Katz said. The local confidence rating of 89 compared to a national rating of 92, a reverse of the late 1980s, when Orange County consistently scored higher than the rest of the nation.
The latest poll found that median annual household income was unchanged from last year at $47,000. That is a sharp contrast with the 1980s, when the median income rose 25% during the decade, compared to 6% nationally, said Baldassare, UCI’s chairman of urban and regional planning in its School of Social Ecology.
“That’s why our consumer confidence ratings were so high during that period,” he said Thursday. “Until we start to see income grow again, we’ll probably lag behind or stay on par with the national average.”
Still, the report showed that 40% of the Orange County residents surveyed said they are better off now than they were a year earlier. That compared to just 30% in the 1993 poll.
The pollsters, who interviewed 1,000 adults between Aug. 19 and 29, say the results have an error margin of plus or minus 3%.
Recent economic indicators also encourage optimism. In August, for instance, the county’s jobless rate fell a full percentage point to 5.9% compared to July. And TRW Redi Property Data recently reported that sales of new and existing homes were up 26.2% for the first eight months of 1994, compared to the same period last year.
“We all know hard economic numbers have been moving up for a few months now, and non-agricultural employment has been going up,” said Cal State Fullerton economist Anil Puri. “But a big factor in any recovery has to be consumer spending.”
During the recession, spending fell faster than personal income, meaning that people had dollars but were afraid to use them on consumer purchases. Now, Puri said, they are poised for a buying spree.
The survey found that the optimism is spread across all age groups and through every sector of the county. It found that 49% of Orange County consumers believe good times are ahead for the country over the next 12 months, compared to 29% in last year’s survey.
They also believe the good times will be long-lasting, with 43% saying that the economy will remain healthy over five years. Last year, only 31% were so optimistic.
Times correspondent Hope Hamashige contributed to this report.
Optimism Returns to O.C. Consumers
Orange County residents are more upbeat about the economy than they have been in five years. The Confidence Index is calculated by computing scores from a national and local survey and adjusting from the base year, 1966, when the national index was 100. Here’s how the United States and Orange County compare:
Big-Ticket Buys
The outlook for consumer spending has also improved, with the percentage saying this is a good time to make a major purchase highest since 1989.
About the big things that people buy for their homes, such as furniture, a refrigerator, a stove, television and things like that--generally speaking, do you think now is a good time or a bad time for people to buy major household items?
1994:
Good time: 60%
Bad time: 25%
Don’t know: 15%
Percentage saying “good time”:
1994: 60%
More Confident, but Cautious
County consumers are decidedly more confident about their financial situation than they were a year ago. And while they remain basically optimistic about the future, their view of the next 12 months is unchanged.
Would you say you (and your family) are financially better off or worse off than you were a year ago?
1994:
Better off: 40%
Worse off: 29%
Same: 31%
Percentage saying “better off”:
1994: 40%
Looking ahead, do you think that a year from now you (and your family) will be better off, worse off or just about the same as now?
1994:
Better off: 42%
Worse off: 10%
Same: 42%
Don’t know: 6%
Percentage saying “better off”:
1994: 42%
Source: Orange County Annual Survey, UCI
Outlook for Business Is Upbeat
Optimism regarding the national economy has turned upward in Orange County. About half say business conditions will be good during the next year. Although residents are split on the longer term outlook, the current four in 10 who think good times will last is a significant increase from 1993.
Turning to business conditions in the country as a whole, do you think that during the next 12 months we will have good times financially or bad times?
1994:
Good times: 49%
Bad times: 36%
Don’t know: 13%
Percentage saying “good times”:
1994: 49%
Looking ahead, in the country as a whole will we have continued good times during the next five years, or will we have periods of widespread unemployment or depression?
1994:
Good times: 43%
Bad times: 45%
Don’t know: 12%
Percentage saying “good times”:
1994: 43%
Source: Orange County Annual Survey, UCI
