O.C. Consumers Expecting Prosperity, Survey Shows

With visions of a rosy economic future looming, more Orange County consumers than at any time this decade say they are upbeat about their finances and are preparing to make major purchases, according to a new survey.

For the first time since 1991, local consumers’ economic confidence, which sagged during a prolonged economic slump and the county government’s bankruptcy, is higher than the surging national average, the annual consumer survey by UC Irvine has found.

The survey of 1,000 adults puts local consumer confidence levels almost 30 points higher than at the nadir in 1993.

National consumer indexes published recently by the University of Michigan and the Conference Board, a business research organization in New York, showed economic confidence at its highest level in seven years.

Mark Baldassare, director of the UCI survey, said that while median household income in the county grew only slightly--rising $1,000 from 1995 to a post-recession high of $48,000--65% of those surveyed say they feel this still is a good time to purchase major items like home furnishings and appliances.

Those big-ticket goods often are bought on credit, so attitudes like that feed economists’ worries that consumer debt in the U.S.--at an all time high of more than $1.1 trillion--could be getting out of control.

But Baldassare said respondents to the UCI survey are not worried. Indeed, they say they are spending based on their expectations that good times lie ahead and that their incomes will start growing at a faster pace as a result, according to Baldassare.

“People worry when they feel their jobs are in doubt or a recession is near, and they just aren’t feeling that way right now,” he said.

Consumer confidence in Orange County, which runs hotter than the national average when things are good and colder when they are not, was two to four points below the norm from 1992 to 1995.

Baldassare said things started improving in 1994 but were stymied last year by the county’s bankruptcy. “That put a damper on people’s confidence,” with the index gaining only a single point, to a reading of 90, after rocketing up 16 points the year before, he said.

Readings above 100 on the scale indicate a healthy economic outlook while readings below that show increasing consumer wariness and generally reflect economic slumps.

This year, UCI’s index for Orange County jumped to 101, compared to a level of 95 on the University of Michigan scale. The Orange County index was at its peak in 1986 when the economy was booming. The local index hit 109 at the time, while the national index was at 92.

Overall, survey respondents felt as good about their own financial status as they did about the overall economy: 46% said they are better off now than a year ago--compared to just 38% last year--and 50% said they believe they will be better off next year than they are now.

“We fell harder than the rest of the country but we’re coming back stronger,” said Nate Franke, head of retail services for the Costa Mesa office of accounting and business consulting firm Deloitte & Touche.

The Federal Reserve Board’s decision this week not to raise the interest rate that major banks pay for money they borrow from the government should help keep consumer confidence levels high and give retail sales a critical post-summer boost, Franke said.

County residents also indicated they are optimistic about the future.

UCI’s survey asked respondents about business conditions over the next 12 months and about the general economic outlook for the next five years. Half the respondents--the highest level since the survey began in 1986--said they believe the country will continue enjoying a good economy through the end of the decade, and 61% said they think business conditions will remain good during the next year. A year ago, only 48% thought the economy would be good for the ensuing 12 months, and just 45% had a positive outlook for the five-year period.

The findings “are not surprising,” said economist Esmael Adibi, director of Chapman University’s economic research center. “Consumer confidence is going up nationally, and the economy in Orange County has improved quite a lot in the last two years.”

Employers in the county added about 20,000 new jobs to their payrolls last year and the present unemployment rate of 4.2% is down substantially from 6% readings in the early 1990s.

“People are finding jobs, home prices are stabilizing, even going up a little bit, we think, the county’s bankruptcy is behind us and the outlook is improving significantly,” Adibi said.

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Happier Days

Orange County consumer confidence has surpassed the nationwide level for the first time in five years. Consumer Confidence Index, locally and nationwide:

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Orange County United States 1987 104 94 1988 106 95 1989 105 96 1990 85 76 1991 84 82 1992 75 77 1993 73 75 1994 89 92 1995 90 94 1996 101 95

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Sources: Orange County Annual Survey, UC Irvine, University of Michigan

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Income Growth

Orange County’s median household income increased for the first time since 1993, and the percentage of households earning $50,000 or more annually also topped last year’s figure. But both figures fall below 10-year highs reached in 1990 and 1991:

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Median Earn $50,000 income or more 1987 $42,000 36% 1988 $44,000 40% 1989 $45,000 41% 1990 $49,000 49% 1991 $49,000 49% 1992 $45,000 42% 1993 $47,000 46% 1994 $47,000 46% 1995 $47,000 46% 1996 $48,000 47%

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Source: Orange County Annual Survey, UC Irvine

Compiled by JANICE L. JONES / Los Angeles Times