California Consumer Sentiment Posts Record Increase of 37%
ORANGE, CA — The Chapman University-Claremont McKenna College California Consumer Sentiment Index posted a record rise of 37.4 percent in the first quarter of 2021. The index is based on a random survey of 2,000 residents in California. The index rose from a value of 65.9 in the fourth quarter of 2020 to 90.6 by the end of March. Professor Marc Weidenmier of the Argyros School of Business and Economics at Chapman University said, “the large jump in California consumer sentiment over the last quarter sends a strong signal that the state economy is in recovery mode. It looks like the medical community and public health officials finally have the upper hand in their battle with the coronavirus. Businesses are opening up and people are going back to work. This trend should continue for the foreseeable future unless we see another wave of the virus.”
All seven questions that make up the baseline index recorded large gains in the first quarter of 2021. Survey respondents reported a 12.6 percent increase in their financial situation over the next year. As for business conditions next year, sentiment rose 48.3 percent. The impact of business conditions on the household in current and next year increased 59.0 percent and 21.0 percent, respectively. Business conditions compared to a year ago rose a whopping 195.0 percent, the largest rise in sentiment for any of the seven questions that make up the baseline index. Sentiment for finding a job over the next year recorded a 30.0 percent gain while sentiment for purchasing a car increased 26.4 percent.
The demographic data also shows large gains in sentiment across different groups. Sentiment for all gender, age, and ethnicity groups increased 25 percent or more over the last quarter. All income groups, ranging from less than 25 thousand to more than 150 thousand dollars, also recorded at least a 25 percent increase in sentiment. Perhaps the most telling indicator is the sentiment responses provided by both Democrat and Republican leaning survey participants. In an era of partisan divide where Democrats and Republicans can agree on very little, both parties seem to agree that consumer sentiment is on the rebound in California. Democrats report a 44.7 percent increase in consumer sentiment compared to a 19.6 percent gain for Republicans.
The Chapman-CMC California Consumer Sentiment Index is a joint venture between the A. Gary Anderson Center for Economic Research at Chapman University and the Lowe Institute of Political Economy at Claremont McKenna College. The Index is constructed from the results of a quarterly survey of a random sample of 2000 people stratified on the basis of age, gender, ethnicity, income, and zip code. The survey asks respondents seven questions concerning their current situation, perceived future prospects, and spending plans.