Do consumers understand the Fed’s warnings? – Orange County Registry
Bubble Watch examines trends that may indicate impending problems in the economy and/or real estate markets.
Buzz: Californian consumers seem a little more nervous than other Americans. But are buyers not worried enough?
Source: My trusty spreadsheet analyzed the Conference Board’s monthly survey of buyers for September. The polls produce various consumer confidence indexes, including one for California.
All three state optimism measures fell for the month ended summer. But there are still many reasons to worry.
The Federal Reserve is working to cool the economy and sky-high inflation. It is reasonable to assume that these measures could trigger a recession.
In addition, there is a poor stock market and a weakening housing market. In addition, interest rates have risen. And add in plenty of geopolitical tensions to make for even more unease.
So a decline in California’s overall confidence index was not unexpected. In September it was 108.7 – down from the revised 113.5 a month earlier and a slight down from 108.8 a year ago.
California consumers’ perceptions of current conditions also fell. That gauge of the current financial picture fell to 143.7 from 152.8 the month before – but it was up from 132.2 a year earlier.
And California buyers had a muted outlook. That measure of expectations fell to 85.3 from 87.4 the previous month and from 93.2 a year ago.
Surprisingly, at least from August through September, there was more optimistic sentiment in Conference Board polls in the nation and seven other states: Texas, New York, Florida, Illinois, Pennsylvania, Ohio and Michigan.
Overall Confidence: Six increases among the seven states in one month; two over the year. Nation: up 4% monthly; 2% less over 12 months.
Current conditions: Five increases in one month; four over the year. Nation: Up 3% for the month; 4% higher over 12 months.
Outlook: Four raises in one month; two over the year. Nation: Up 6% monthly; 7% less over 12 months.
What Drives Fluctuations in Optimism? The Conference Board is also polling consumers nationwide about the job market and their plans for major purchases over the next six months…
More jobs? 17.5% said yes – up from 17.1% the month before and down from 21.3% a year ago.
Buy a house? 5.3% said yes – down from 5.5% in the previous month and unchanged from 12 months ago.
Buy vehicle? 10.6% said yes – up from 9.6% the month before and up from 9.8% a year ago.
Large equipment purchase? 49% said yes – up from 45% the previous month and up from 46% 12 months ago.
Then there’s the big economic concern: inflation. Americans polled expect the cost of living to rise 6% a year from now, compared with 6.1% a month earlier and a 5.6% increase a year ago.
And the stock market? 42% see it lower 12 months from now, compared to 38% the previous month and 32% 12 months ago.
On a scale of zero bubbles (no bubble here) to five bubbles (five alert warning)… THREE BUBBLE!
The Fed wants to freeze the economy so that inflation falls dramatically. Ideally, part of this plan is to get shoppers to limit their spending.
But California consumers didn’t seem overly concerned in the latest survey. The rest of the nation showed even less concern.
Does this split mean even more aggressive moves by the Fed to get its message past Wall Street and onto Main Street?
Jonathan Lansner is a business columnist for the Southern California News Group. He can be reached at firstname.lastname@example.org
https://www.ocregister.com/2022/10/08/bubble-watch-do-consumers-understand-feds-message/ Do consumers understand the Fed’s warnings? – Orange County Registry