O.C. Optimism Hangs On

Orange County residents remain optimistic about the economy, despite some erosion of the buoyant enthusiasm they displayed a year ago, a new study concluded.

The Consumer Confidence Index declined from last year’s record 110 to a still-strong 105, UC Irvine reported Thursday. Though the Orange County index is five points higher than a comparable national index, researchers said the drop from last year’s heady level reflects growing concern about the Asian financial crisis.

“To some extent there has been a deterioration in confidence, especially in regard to what is expected in the U.S. economy over the next 12 months, compared to the wild enthusiasm of the 1997 report,” said UCI professor Mark Baldassare, who directed the survey with research associate Cheryl Katz.

More than 60% of the 2,002 people surveyed said the Asian crisis will hurt the Orange County economy in the next year. However, Baldassare noted that the index remained at a high level--a score of 100 or better is considered very positive--even though the interviews were conducted in the first half of September amid a series of negative events including a gyrating stock market, the release of the Starr report and more bad news from abroad.

The release of the survey coincided with a trio of bullish government reports, one showing that solid consumer spending nationally fueled stronger growth in the second quarter than previously estimated. Analysts said the data showed that the U.S. economy is weathering the financial meltdown in Asia and Russia quite well. A separate report by the American Bankers Assn. found nearly two-thirds of U.S. households were confident about their personal finances.

The UCI survey revealed some misgivings about the year ahead, as the share of county residents expecting good times for the U.S. economy fell to 59% from 73% in 1997. But the proportion who believe the nation will prosper for the next five years was unchanged, at 56%.

Any trepidation about the economy hasn’t crimped consumers’ spending plans, as 72% in the survey said this is a good time to make major purchases such as furniture or home appliances, about equal with last year. What’s more, slightly more than half said they’re better off financially than they were a year ago, while nearly as many believe they’ll do better next year.

Views varied along ethnic lines, with the indexes for non-Hispanic whites (106) and Latinos (105) much higher than for Asians (98). Nearly a quarter of Asians think the troubled foreign economies will damage Orange County a great deal, compared with 15% of non-Hispanic whites and 11% of Latinos.

“This is the most troubling part of the report,” Baldassare said. “Asian residents may have some insight into Asian markets--more information, more economic ties. They may have greater understanding and knowledge of Asian economies.”

By contrast, Latinos were very upbeat, with 57% saying they expect to be better off next year, a higher level than for both non-Hispanic whites and Asians.

“I think it shows that Latinos are a growing force in the local economy and they are fully involved in the economic boom that’s now going on,” said Katz.

UCI’s Consumer Confidence Index is part of the Orange County Annual Survey, which the university has conducted since 1982. This year the survey for the first time included interviews conducted in Vietnamese in addition to English and Spanish. The findings have a margin of error of 2%.

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Outlook Still Sunny

Orange County residents remain confident about their economic future, though that’s cooled since 1997. The Consumer Confidence Index remains higher in Orange County than it is nationally.:

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Orange County U.S. 1986 109 92 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 1997 110 107 1998 105 100

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Note: The index is calculated using responses to five survey questions on economic outlook, with 100 being the confidence level expressed in 1966 as a base period.

Sources: Orange County Annual Surveys, UC Irvine; University of Michigan