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California’s economic outlook hits Biden-era low

Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.

Buzz: California consumers’ concern about their economic future has hit its Biden-era low.

Source: The Conference Board’s monthly polling of shoppers for June creates various consumer confidence indexes, including one for California.

The Trend

With inflation running at four-decade highs and the Federal Reserve all but threatening a recession to cool an overheated cost of living, is a sour economic outlook such a shock?

In California, this expectations index was 84.1 for June — the lowest since Joe Biden became president in January 2021. It’s also down from 90.8 the previous month and down from 115.5 a year earlier. This measure averaged 94 in 2015-19.

California is no outlier. Among the seven other states tracked by this consumer confidence research, June expectations were the lowest of the Biden presidency in Texas, Pennsylvania, Michigan — and nationwide. It was second-worst in Florida, Illinois and Ohio, and No. 4 in New York.

California’s overall statewide index was 109.7 in June, down from a revised 110.5 a month earlier and down from 129.3 a year ago. California confidence averaged 113 in the five years before the pandemic.

Curiously, California consumers’ views of current conditions improved, with this index at 148.1 for the month — up from 140 a month earlier and below 150 a year earlier. This measure averaged 141 in 2015-19.

My guess is that these economic options reflect a hot jobs market with low unemployment, plenty of opportunities and large raises.

Elsewhere

In the other states …

Overall confidence: Three increases among the seven states in a month and none up over the year. Nationally? Down for the month and 12 months.

Current conditions: Five increases in a month and one up over the year. Nationally? Down for the month and 12 months.

Big picture

What’s driving swings in optimism? The Conference Board also asks consumers nationwide about the job market and plans to make major purchases in the next six months …

More jobs? U.S. shoppers think bosses may cool the hiring pace as 16.3% expect more employment — down from 17.5% a month earlier and down from 26.6% a year earlier.

Buy a home? A historic jump in mortgage rates left just 5.6% of those surveyed in a house-hunting mood — unchanged vs. the previous month but down from 6.8% 12 months ago. This also may push builders to slow their construction pace.

Buy a vehicle? Folks still need to get places so 10.4% of us will be car shopping — up from 9.8% a month earlier but down from 11.5% a year earlier.

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