California Consumers’ Optimism Remains Steady

ORANGE, CA —According to the latest survey of California residents, the California Composite Index of Consumer Sentiment decreased less than a point from the revised first quarter reading of 120.5 to a reading of 119.8 in the second quarter of 2018. An index level above 100 indicates a higher percentage of optimistic consumers versus those who are pessimistic.

This result suggests consumers are content with the overall economic conditions.

The California Composite Index is generated based on three indices: consumers’ outlook on current and future economic conditions, and an index measuring consumers’ spending plan.

The current economic conditions index recorded a reading of 122.4 in May of 2018. This reflects a 6.4 point decrease from the revised reading of 128.8 in February of 2018. The index measuring future economic conditions showed very little movement with a decrease of 0.4 points, from a revised February reading of 112.9 to 112.5 in May.

The index measuring consumers’ planned spending on big-ticket items increased by 9.2 points from a revised reading of 120.1 in February of 2018 to 129.3 in May. This suggests that consumers’ spending over the next six months on big-ticket items will continue to be strong.

Chapman UniversityCalifornia Consumer Sentiment 2 June 5, 2018

BACKGROUND AND METHODOLOGY:

Beginning in the third quarter of 2002, the Anderson Center for Economic Research at Chapman University launched a survey to measure California consumer sentiment. This survey is similar to the monthly national survey of consumer sentiment conducted by the University of Michigan.

A survey comprised of five questions is mailed to a stratified sample of 7,500 residences throughout the state, with a historical response rate of 5 to 10 percent. Two questions relate to the current economic conditions, two questions address future economic conditions (one year outlook) and one question evaluates the consumers’ current plan for purchasing big ticket items.

The results are summarized into four indices. One index measures consumer sentiment about the current economic condition, a second measures consumers’ future economic expectations, the third is a composite index representing overall consumer confidence, and the fourth index measures consumers’ current spending plan on durable goods.

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