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Consumer Confidence Orange County's Consumer Confidence Index has hit a new low, as residents head into the third straight year of recession. And for the first time since the Orange County Annual Survey began in 1982, residents' reported household income has declined. Pessimism about personal finances and the economy is at record levels for each of the five consumer confidence questions. Thirty-five percent of residents describe themselves as "worse off" financially now than they were last year, while 35 percent say they are "better off" and 30 percent are the same. In 1991, 28 percent reported being worse off than the year before. Looking to next year, 44 percent say they will be better off next year than they are now. In 1991, 50 percent expected to be better off in the coming year. Fifty-eight percent expect bad economic times nationwide in the next 12 months, while only 28 percent think conditions will be good. In 1991, 41 percent expected good times. Only 34 percent expect good economic times nationally during the next five years, while 52 percent anticipate bad times. In 1991, 40 percent expected five years of good conditions. Forty-eight percent think that now is a good time to make major purchases, while 40 percent say it is a bad time. Last year, only 35 percent thought it was a bad time to spend money on big-ticket items such as furniture and appliances. Taking all these responses together, the five-question Consumer Confidence Index in Orange County is now at 75. This is a 9-point drop from 1991 and a 30-point fall since before the recession started in 1989. Compared to 1986, the first year the University of Michigan questions were used in Orange County, the overall index has fallen more than 30 percent. Nationwide, the Consumer Confidence Index now stands at 77, according to the University of Michigan. The Orange County index typically has been several points higher than the national index, indicating higher incomes and thus more optimism locally. The Consumer Confidence Index is calculated from a formula provided by the University of Michigan, which computes scores for each question (better - worse + 100) and then adjusts by the 1966 base period. The national index score was 100 in 1966. The survey also finds that the strain of the recession is being felt by all economic groups. While less-affluent residents are more pessimistic than others, there are no income groups in which a majority express optimism about their finances. Residents with household incomes of $36,000 or more are only slightly more likely than lower-income residents to think now is a good time to make major purchases. There are no differences in the one-year or five-year outlooks on the U.S. economy among different income groups. As for age differences, younger adults are more likely than those 35 and older to believe they are better off now than last year. Younger residents are also more likely to think they will be better off next year than now. However, there are no age differences in willingness to make major purchases or in expectations about the U.S. economy. When George Bush was elected in 1988, following eight years of the Reagan presidency, the Consumer Confidence Index stood at 106. Today, it has dropped by 29 percent. While six in 10 in 1988 said their finances had improved over the past year, only 35 percent have such a perception in this year's survey. And the number expecting the country to be heading into good times next year is now half of what it was in 1988. Median household income stands at $45,000 today, lower
than that found in the 1991 survey. The Consumer Price Index indicates
that the inflation rate has been 3.5 percent in the past year, thus,
Orange County consumers have lost ground. The South is still the county's most affluent region, with half the households making more than $50,000 a year. In the Central County, nearly half the households have incomes under $36,000, representing the county's largest concentration of lower-income households. |
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