“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.
Buzz: Confidence of pandemic-weary California consumers hit an eight-year low in August.
Source: The Conference Board’s monthly polling.
The Trend
The California index of shopper optimism was at 58.3 for August — down from a revised 69.6 a month earlier and more than halved from 121.5 a year ago. This is the lowest level of optimism since June 2012.
The Dissection
Let’s remember that in mid-July the state did a U-turn on business reopenings as the coronavirus rebounded and cases spiked.
Two measures within the index show that a deadly pandemic and huge job losses are affecting shoppers’ views on the present and the future.
Californians’ view of current conditions plummeted to a 35.2 score, almost half of July’s 62.8 and far, far below 174.7 a year earlier. This is the lowest reading since November 2012.
There was a slightly less downcast outlook statewide where expectations scored 73.8 vs. 74.1 the previous month and down from 86 a year earlier. This was the worst reading of consumers’ future sentiments since March 2013.
Now the Conference Board also tracks seven other big states. For the month, overall confidence rose in four states but is down in all seven vs. year-ago levels. Current conditions were better in three states for the month and, again, down for the year in all. Expectations rose in five states for the month and improved in two for the year.
Nationally, the U.S. consumer confidence index was 84.8 in the month vs. 91.7 a month earlier and down from 134.2 a year ago. U.S. shoppers’ view of current conditions fell in August and was lower over 12 months. Meanwhile, consumers’ economic hopes nationwide were worse compared with July and less optimistic vs. a year earlier.
Another view
So, what are U.S. shoppers thinking when it comes to two key, big-ticket purchases?
Who’s planning to buy a home within six months? 5.9% this month vs. 7.7% a month earlier and 6% a year ago. Five-year average? 6.2%.
Buy a car? 9.7% this month vs. 12.5% a month earlier and 13% a year ago. Five-year average? 12.5%.
Economist says
Mark Schniepp of California Economic Forecast notes the state’s new pandemic reopening guidelines are “very restrictive” and will be no boost to optimism.
“To the extent counties can qualify, the economies will begin to grow and hiring would increase to meet rising demand for many of the goods and services that have been limited due to the summer’s reversals,” he says. “This would occur slowly, so I would not yet predict a major labor market revival.”
How bubbly?
On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … FOUR BUBBLES!
This is the kind of downcast thinking you’d see in a recession. It may be the virus and its economic damage. It may be political uncertainty.
No part of the economy, including currently healthy housing, can ignore such despair.
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August 30, 2020 at 10:00PM
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Bubble Watch: California consumer confidence plunges to 8-year low - OCRegister
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