UCI

Consumer Confidence

Although perceptions of economic conditions haven’t changed substantially since last year, Orange County consumer confidence is on the rise, apparently driven by optimism about the nation’s economy. The Orange County Consumer Confidence Index has climbed 7 points in the past year. This mirrors the national trend in which the nation’s index rose by 9 points. However, Orange County’s consumer confidence index is higher than the nation’s, standing at 97 compared to the nation’s index of 90. This is the second recovery in the past 10 years. The index today is 24 points higher than in 1993, although it is still well below the exuberance of the late 1990s and the year 2000.

The Consumer Confidence Index for Orange County is calculated using a formula provided by the University of Michigan, which computes scores for each of five questions and then adjusts for the 1966 base period. A score above 100 on the confidence index is considered very good; the average national score over the past 50 years is 85. Findings for the individual items that make up the Orange County index:

The greatest increase is in expectations for the national economy over the next 12 months. Today, 63 percent of county residents anticipate good business conditions, up 16 points from 2002.

As for the five-year U.S. economic outlook, 47 percent anticipate good economic times; 42 percent expect bad times. This is unchanged from 2002.

Fifty-three percent report that their personal finances improved over the past year, up slightly from 50 percent in 2002. Only 26 percent say they are worse off this year, compared to 30 percent last year.

Forty-five percent of county residents expect to be in better financial shape a year from now, similar to the 47 percent last year. Another 45 percent think they will be the same as they are today, and only 6 percent think they will be worse off.

Despite any lingering qualms about the economy, local residents are enthusiastic about shopping. Today, 62 percent say now is a good time to make major purchases, while just 27 percent call it a bad time. These numbers are virtually unchanged from last year.

In general, higher-income residents express greater economic confidence. Whites are more likely than Latinos to consider today a good time to make major purchases (69% to 50%) and to expect the economy to be in good shape five years from now (50% to 42%). Nevertheless, when it comes to personal finances, Latinos are somewhat more likely than whites to say that they will be better off a year from now than today (49% to 43%).

Republicans are especially upbeat about national business conditions over the next 12 months: Seventy-nine percent in the GOP expect good times compared to 49 percent of Democrats. As for the five-year outlook, however, confidence among Republicans drops to 59 percent. Among Democrats, only 32 percent think that the nation will have good economic times over the next five years.

Five-Question Consumer Confidence Index

Source for Orange County from 1993 to 2000 is Orange County Annual Survey at UCI by Mark Baldassare and Cheryl Katz. Source for the United States is the University of Michigan; October 2003 figures were the most current at time of publication.