Consumer Confidence Index Tumbles 18 Points

Nervousness about the slow economic recovery, the impending war in Iraq and a rising fear of terrorism have deflated Californians’ confidence during the first quarter of 2003, crimping their desire to spend money, according to a survey released Monday.

Chapman University’s index of California consumer sentiment slid more than 18 points in the first quarter to 72.2, from 90.8 in the fourth quarter of 2002.

The index’s sharp drop put it below the closely watched University of Michigan index of consumer confidence, a national survey that in February stood at 79.9. But it was above the Conference Board’s monthly consumer confidence index, which sagged to 64 in February from 78.8 the previous month.

“Our index is consistent with the Conference Board’s, but even compared with that index our drop was much more than what has happened at the national level,” said Esmael Adibi, director of the Anderson Center for Economic Research.

Compounding Californians’ downbeat view of the economy, Adibi said, was the uncertainty about how the state’s fiscal crisis may be resolved.

The state is facing a $35-billion budget shortfall.

“If you’re working at a municipality, you’re not sure if you’re going to lose your job,” Adibi said.

The survey of 5,000 California households also indicated that consumers are less likely to buy big-ticket items such as cars and major household appliances in the first quarter. A separate index measuring durable-goods spending declined to 71.8, a considerable drop from 104.9 in the fourth quarter of 2002.

Adibi said that once uncertainty about a possible war is resolved, and if the state emerges from its budget morass, Californians’ confidence could improve.