California’s consumer outlook drops to 11-year low
“Swift swings” takes a quick peek at one economic trend.
The number: The economic outlook from California consumers starts 2024 at an 11-year low.
The source: My trusty spreadsheet looked at quarterly averages of the Conference Board’s consumer confidence measurements for the state. These measures, derived from public surveys, consider shoppers’ views on the future and current trends that add up to an overall index.
Quick analysis
The index for California consumer “expectations” for their household finances ran at 81.7 in the first three months of the year, the lowest quarterly reading since the start of 2013 – just as the Great Recession recovery was gaining steam. The yardstick is “based on consumers’ short-term outlook for income, business, and labor market conditions,” the Conference Board says.
So, 2024 started with an outlook that was off 4% in three months, down 9% in a year, and 13% below the average for the pre-pandemic 2015-19 period. Let’s say psyches are strained.
Tidbits
Curiously, the California consumers’ view of the “present situation” is better. The 136.3 reading for the first quarter was a 5% jump in three months, but that’s still off 5% in a year. Note: It’s off 3% vs. 2015-19.
Combine those two yardsticks, and you see an overall consumer confidence index at 103.6 in the quarter. Yes, it’s up 0.4% in three months, but it’s also off 7% in a year and down 8% vs. 2015-19.
And minus the weak end to 2023, early 2024 has the weakest California confidence since the mid-pandemic start to 2021.
Bottom line
The recent anxieties may be tied to a shaky job market, with statewide unemployment at a two-year high and No. 1 in the nation. Questions about the housing market’s future don’t help. Nor do worries about how the state government can fill the giant hole in its budget.
And remember that squeamish consumers can impact the economy they worry about if they pull back on spending. So this may serve as a warning signal to California merchants, who have been enjoying relatively robust demand for all sorts of goods and services the past two years.
Plus, the Conference Board notes that an expectations index below 80 “often signals a forthcoming recession.” And for March alone, the California expectations index was at 78.5.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com