California consumer sentiment slides

The California Composite Index of Consumer Confidence declined approximately 10 points to 78.6 in the fourth quarter of 2011 compared with the third quarter’s revised reading of 88.2, according to the A. Gary Anderson Center for Economic Research at Chapman University.  An index level below 100 reflects a higher percentage of pessimistic consumers versus those who are optimistic. In contrast, the survey of consumer confidence at the national level conducted by the University of Michigan showed a reading of 64.1 in the month of November increasing from the August reading of 55.7. 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. All three components of the composite index declined over the last three months.
Continued high unemployment rate in California, currently at 11.7 percent, and volatile stock market may be the main factors explaining why the consumer assessment of the current economic conditions has deteriorated so sharply. This index declined to a reading of 60.8 in November of 2011 from 67.1 in August of 2011. The index measuring future economic conditions also decreased to a reading of 95.8 in November from a reading of 106.8 in August 2011. Moreover, the index measuring consumers’ planned spending on big-ticket items decreased significantly from the August reading of 93.4. The reading of 79.8 suggests consumers’ spending in the early part of 2012 may decline sharply from the current strong pace reported by the retailers. (C.A.R. Newsline)