Californians See ‘Robust’ Economy
Despite mounting problems in the world economy and a jittery U.S. stock market, Californians are extremely upbeat about both the state economy and their own personal finances, a new Los Angeles Times poll has found.
A full 67% of those polled say the California economy is “robust,” and 73% believe their finances are secure. Overall, 61% of residents think the state is going in the right direction, up from 48% just four months ago.
All three opinions are record highs since The Times began asking about those topics in 1991.
“The perception is that the state is doing really well and people overwhelmingly say they feel secure in their personal finances,” said Times Poll Director Susan Pinkus.
The survey of 1,651 Californians was conducted from Sept. 12 through Sept. 17. It has a sampling error of plus or minus 3 percentage points.
Californians’ optimism reflects low unemployment rates, booming home sales and a stream of generally positive news on the state and regional economies. For example, even though they slightly scaled back an earlier growth estimate, UCLA researchers this week still predicted continued solid economic growth in California despite a notable slowdown expected for the national and global economies.
“Everywhere you look, you see want ads for people,” said Odell Sapp, a retired Lockheed engineer and a poll respondent. “There doesn’t look like there’s going to be a recession or anything big that’s going to cause problems for the economy.”
Nevertheless, Californians are becoming aware of the potentially damaging effects of the financial crises gripping Asia and Russia.
Forty-six percent of respondents say the recent dip in the U.S. stock market--and trouble in overseas markets--make them feel “nervous” about the prospects for U.S. economic stability. One-half of the people said they were not nervous and 4% weren’t sure.
As for the effect on their own finances, 56% think that what has happened in the stock market lately--as share prices have tumbled in recent months amid the worst sell-off since 1990--will have no impact on their finances over the next 12 months.
But 26% believe the market’s action will have a “bad effect,” while only 9% think it will have a “good effect.”
Of people who own stock--47% of those surveyed--34% said the market’s slump will have a bad effect on their personal finances in the next 12 months.
After peaking in mid-July, the Dow Jones industrial average suffered a pullback that sliced its value by almost 20%. The market has recovered a bit in the past three weeks, but the blue-chip Dow still is off more than 15% from its peak. Many individual stocks have fallen much more dramatically.
Almost three-quarters of the people said the market’s recent fluctuations won’t cause them to alter their spending habits.
However, one-quarter of respondents said the market turbulence would cause them to postpone, cancel or reduce their purchases of various big-ticket items.
The percentage of respondents who said they would alter their spending was virtually the same for those who own stocks and those who do not.
When those who plan to adjust spending were asked how they would do so, 14% listed cutting back on vacations, while reducing expenditures on cars, gifts and dining out was cited by 10% each. Cutting back on home expenses was listed by 9% of respondents. (Respondents could cite more than one category.)
But as earlier polls have shown, Californians appear to feel confident about the stock market’s long-term prospects. In fact, a high percentage of people who own stock view the recent market decline as a good opportunity to buy more shares.
Of people who already invest in the stock market, 31% said they are likely to boost their rate of investing over the next six months, compared with only 6% who said they are likely to reduce their rate of investing. Just 4% said they expect to be selling stock in the next six months.
A full 48% said they wouldn’t change their investment habits.
“With it going this low, if the Dow were to drop another 100 or 200 points, it would be an excellent time to buy selectively,” said Kenneth Shephard, a 54-year-old Stockton resident.
The 61% of respondents who think the California economy is going in the right direction eclipses the previous high of 52% reached in April. As the state economy has steadily improved in the past several years, so has sentiment on the direction of the state. Only 28% of Californians feel the state is “seriously off on the wrong track.”
As for people’s feeling about the state’s economy in particular, the 67% who say the economy is robust represents a jump from the previous peak of 55% in early October of last year.
The 73% of people who feel secure in their personal finances is an increase from the previous high of 68% last October. Only 26% describe their finances as “shaky.”
Not surprisingly, people in upper-income brackets feel more secure financially. A full 87% of people whose annual household income is greater than $60,000 felt that way, versus 50% of those taking home less than $20,000.
In the past seven years, the lowest percentage of people who said they felt secure was 55% in September 1993.
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Impact on Consumers
Do you expect to postpone, cancel or reduce spending on any of the following purchases because of the recent stock market activity?
Here’s where those saying “yes” are cutting back:
Vacation: 14%
Car: 10%
Dining out/entertainment: 10%
Holiday gifts: 10%
House: 9%
Major appliances: 9%
Something else: 1%
Multiple replies accepted
Times poll results are also available at https://www.latimes.com/timespoll
Source: L.A. Times Poll
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How the Poll Was Conducted
The Times Poll contacted 1,651 Californians by telephone Sept. 12-17. Telephone numbers were chosen from a list of all exchanges in the state. Random-digit dialing techniques were used so that listed and non-listed numbers could be contacted. The entire sample was weighted slightly to conform with census figures for sex, race, age, education, region and registration. The margin of sampling error for the entire sample is plus or minus 3 percentage points. For certain subgroups the error margin may be somewhat higher. Poll results can also be affected by factors such as question wording and the order in which questions are presented. Interviews were conducted in English and Spanish.
