Optimism Sweeps O.C. Consumers

TIMES STAFF WRITERS

With Orange County's business engine running in high gear, consumers are more optimistic about the economy than they have been in more than a decade, a survey released Monday found.

The Consumer Confidence Index in Orange County jumped nine points since last year to 110--the highest level since UC Irvine began the annual survey in 1986.

The index also surpassed a nationwide measure of consumer sentiment by three points, the second year in a row that the county response was higher.

Nearly three-quarters of Orange County residents expect the U.S. economy to perform well in the coming year, while only 16% predicted bad times ahead. It was the most positive reading of the national economy in the county poll's history.

"These ratings are incredible," said Mark Baldassare, the UCI professor who conducted the survey. "This is a significant surge in enthusiasm about the economy that shows we are on a very positive track right now in Orange County."

However, the poll also found that county residents are somewhat less optimistic about their personal finances than about the economy as a whole, especially those with lower incomes.

The random-sample poll of 1,002 adults, which was conducted by telephone Sept. 4 to 14, for the first time isolated the responses of Latino residents. It found that, as a group, Latinos are also very upbeat about the business climate, with two-thirds expecting a strong national economy in the next year.

"That bodes well for the entire economy, that one of the fastest-growing groups feels very positive about their own finances and the economy," Baldassare said.

The finding did not surprise Enrique Juarez, an account executive at the Hispanic Chamber of Commerce in Santa Ana. Many local businesses have begun to realize that the Latino community is a "sleeping giant with a lot of money in its pockets," Juarez said.

Maria Chavez Wilcox, president of United Way of Orange County, said the more sanguine outlook of county residents generally has resulted in increasing charitable donations.

"We are finding people to be more open to giving than they have been in the past," Wilcox said. "Giving, and the acceptability of us being in the workplace to ask people to give, is very positive right now."

According to some shoppers at South Coast Plaza on Monday, the strong economy is reason enough to start holiday shopping early.

John Haron spent the afternoon wandering around the mall, picking up a few items for his son's Christmas stocking.

"I just had my annual review and got a raise," said Haron, 28, a computer consultant who works in Irvine. "I have money now and I feel like I can spend it. I'm not so worried about hiding it away in case something goes wrong."

Other people say that a stronger job market helps them feel more secure financially. Two women called in sick on Monday so they could have lunch, go to a movie and buy $25 lipsticks.

"Three years ago, I would have been too scared to play hooky," said one, who declined to say where the pair worked. "Now, I work hard and it seems OK for me to goof off once in a while."

But the survey also pointed to a few possible weak spots in the economy.

The consumer confidence index was significantly higher for those in the upper-income brackets, those with annual household income of $80,000 or more.

The discrepancy was notable, Baldassare said, because it probably underscores the division between those who derive a good portion of their wealth from the stock market and other investments, and wage earners who depend on a weekly paycheck.

Because of the stock market's gains over the last several years, "those who have benefited from it have the feeling of being richer and richer every day, even though it's paper money, and they go out and spend more," said Esmael Adibi, director of Chapman University's Anderson Center for Economic Research.

Also, just over half of those polled said they were financially better off than they were a year ago, and about the same proportion expected to fare better a year from now. Those results are the highest so far this decade, but still below those of the mid to late 1980s.

These findings suggest that despite a vibrant economy and low unemployment, slow growth in personal income is keeping people somewhat more circumspect about their financial prospects.

"The warning flag is that while things look very good, we ought not to get too far ahead of ourselves in terms of consumer spending," Baldassare said.

Despite the concern, Adibi said the chances of a major stock market correction in the near future are probably slim. He also sees little reason to expect a pickup in inflation, or a looming national recession--two other events that would influence consumer psychology.

The survey results also indicate that the county's bankruptcy nearly three years ago no longer has any influence on attitudes about the economy, Baldassare said. "It's out of sight, out of mind."

Baldassare, chairman of urban and regional planning at UCI's School of Social Ecology, conducted the survey with research associate Cheryl Katz. They used the same five questions contained in a national survey done annually by the University of Michigan. The margin of error is plus or minus three percentage points.

The consumer confidence study is the first part of the annual Orange County survey to be released. Complete results of the poll--which examines residents' views on housing, education, charitable giving and quality of life--will be made public in early December.

* INCOMES RISE SLIGHTLY: Most U.S. families scored economic gains last year, but the poorest fell further behind. A3

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Confidence County

Orange County consumer confidence is at its highest ever and has surpassed the nationwide level for the second successive year. How the county and U.S. compare:

1997:

Orange County: 110

United States: 107

Note: Confidence Index is calculated by computing answers from five survey questions regarding both personal and national economic conditions and outlook. Scores are adjusted from the base year, 1966, when the national index was 100.

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

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