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Hum: California consumer confidence has jumped nearly a third since Joe Biden was elected president, but the future is uncertain.
A source: A roundup of November Consumer Confidence Indices in my Trusted Spreadsheet, based on a survey I did for the Conference Board.
Trend
The 32% rise in California’s Optimism Index in the 12 months since the 2020 election is in line with the nationwide gain as the US Index rose 18% over the same period.
Look, politicians have much less influence on the economy than everyone thinks. And one of the biggest changes over the past year has been the reduction in the health and well-being of the pandemic.
Leadership stops there, however, and wayward shoppers often seek change at the ballot box. So it’s curious to see how the confidence expressed through such an index changed after Biden canceled Donald Trump’s re-election bid.
Let’s take a look at the eight states surveyed by the Conference Board and their political views …
1. Illinois: The overall confidence index rose 49% over the year. Biden won with 58% of the vote.
2. New York: An increase of 46%. Biden with 61%.
3. Pennsylvania: Growth by 33%. Biden with 50.1%.
4. California: Growth by 32%. Biden with 64%.
5. Ohio: Increase by 25%. Trump with 53%.
6. Michigan: An increase of 13%. Biden with 51%.
7. Florida: An increase of 8%. Trump with 51%.
8. Texas: An increase of 6%. Trump with 52%.
Warning
The increase in optimism in the last year shown by this poll may be due in large part to an improved outlook on current conditions. Let’s remember a year ago when the economy – and the well-being of the nation – was hit by the fall coronavirus surge.
Nationwide, the current economy index rose 35% year over year. This is the period when the broadest measure of output – gross domestic product – jumped 6.7% in the 12 months ended June. Government indexes of current conditions are highly dependent on the size of their respective business recovery …
1. Illinois: The index of current conditions rose 77% over the year. The state’s GDP grew by 6.8%.
2. California: An increase of 74%. GDP grew by 8.1%.
3. New York: An increase of 65%. GDP grew by 8.1%.
4. Pennsylvania: Increase by 50%. GDP grew by 5.9%.
5. Michigan: Growth by 41%. GDP grew by 8.3%.
6. Florida: Growth by 32%. GDP grew by 6.7%.
7. Texas: Growth by 22%. GDP grew by 6.4%.
8. Ohio: An increase of 9%. GDP grew by 5.2%.
On a national scale, shoppers are ambivalent about the key metrics of the modern economy.
While the number of respondents who said there were “many” jobs jumped to 58% versus 26% a year ago, the “best” business environment fell to 17% from 18.8% in November 2020.
Bottom line
Economics and politics are definitely a “what have you done for me lately” game.
Biden should be concerned about the concerns highlighted by this study, especially in these eight states, where the October unemployment rate is 4.6% or higher.
Consider the portion of confidence indices that tracks expectations of economic progress. The future looks hazy – again with some political divisions …
1. Ohio: Expectations jumped 53% over the year. Note that this state also had the worst picture of the economy today, with an unemployment rate of 5.1% in October, just 30th among states.
2. New York: Expectations rose 33%. Unemployment? 6.9%, fourth worst.
3. Illinois: An increase of 27%. Unemployment? 6%, draw in 40th place.
4. Pennsylvania: An increase of 19%. Unemployment? 6%, draw in 40th place.
5. California: Increase by 5%. Unemployment? 7.3%, the worst.
6. Michigan: Expectations fell 4%. Unemployment? 6.1%, the rate on the 42nd place is equal.
7. Texas: Decreased by 7%. Unemployment? 5.4%, draw in 34th place.
8. Florida: A decline of 11% to a 15-month low. Unemployment? 4.6%, draw in 27th place.
At the national level, the outlook for expectations rose by only 4%. And when US buyers were asked about what might happen in six months, they had less hope of better business conditions (24.1% versus 26.5% in November 2020) and more jobs (22.1% against 25%).
In addition, when it came to large purchases, dreams of buying a house (4.8% versus 7.5%) and a car (7.8% versus 11.1%) were unfulfilled, but the number of large household appliances increased (45 , 8% versus 44%).
And caution is brewing about what some of the key financial criteria will be in 12 months. By the way, from a political point of view, this is November 2022 – when the midterm elections that will challenge the control of the Democrats over Congress …
Inflation? Buyers now expect the rate to be 7.6% next year, up from a forecast of 5.7% in November 2020.
Are the interest rates higher? 62.5% answered in the affirmative against 45% a year earlier.
Are the promotions higher? 33.2% answered in the affirmative against 34.4% a year earlier.
Jonathan Lansner is a business commentator for the Southern California News Group. You can reach him at [email protected]
