Do consumers understand the Fed’s warnings? – Mercury News

Bubble Watch looks at trends that may indicate economic and/or housing problems in the future.

buzz: California consumers seem more alienated than other Americans. But aren’t shoppers worried enough?

source: The Trusted Spreadsheet analyzed the Conference Board’s monthly shopper poll for September. The surveys create various indicators of consumer confidence, including one for California.

direction

All three government optimism gauges declined for the month as the summer ended. But there are still many reasons for concern.

The Federal Reserve is calming the economy and high inflation. It is reasonable to suggest that these actions could start the stagnation.

Added to this is a faltering stock market and a weak housing market. In addition, interest rates rose. And throw a lot of geopolitical tensions to create more anxiety.

Therefore, the decline in California’s overall confidence index was not unexpected. It was 108.7 in September – down from a revised 113.5 the previous month and down from 108.8 last year.

California consumers’ view of current conditions also declined. This measure of the current financial picture fell to 143.7 from 152.8 the previous month – but it was up from 132.2 the year before.

California shoppers had a bleak outlook. That measure of expectations fell to 85.3 from 87.4 the previous month and down from 93.2 the year prior.

in another place

Surprisingly, there was a more optimistic view—from August to September, at least—within the Conference Board’s polls for the nation and seven other states: Texas, New York, Florida, Illinois, Pennsylvania, Ohio and Michigan.

public trust: Six increases among the seven states in a month; Two throughout the year. Nation: 4% increase for the month; 2% less in 12 months.

Present or current states: five increases in a month; Four throughout the year. Nation: 3% increase for the month; 4% higher in 12 months.

prospects: four increments in a month; Two throughout the year. Nation: 6% increase for the month; 7% less in 12 months.

The Big Picture

What is driving the fluctuations of optimism? The Conference Board is also asking consumers across the country about the job market and their plans to make major purchases in the next six months…

More jobs? 17.5% said “yes” – up from 17.1% the previous month and down from 21.3% a year earlier.

Buying a home? 5.3% said “yes” – down from 5.5% in the previous month and unchanged from the past 12 months.

Buying a vehicle? 10.6% answered “yes” – up from 9.6% the previous month and up from 9.8% a year earlier.

Buying major appliances? 49% said “yes” – up from 45% the previous month and 46% 12 months ago.

Then there is the big economic worry: inflation. Americans surveyed expect the cost of living to be 6% higher in a year, down from 6.1% the previous month, and 5.6% the year before.

And what about the stock market? 42% see it lower at 12 months, compared to 38% the previous month and 32% 12 months ago.

How’s champagne?

On a scale from zero bubbles (no bubble here) to five bubbles (five warning warnings)… Three bubbles!

The Fed wants to freeze the economy until inflation drops significantly. Ideally, part of this plan is to get shoppers to back away from spending.

But California consumers didn’t seem too concerned in the latest survey. The rest of the nation showed less interest.

Does this disconnect mean more aggressive moves by the Federal Reserve to get its message across Wall Street to Main Street?

Jonathan Lansner is a trade columnist for the Southern California News Group. He can be reached at jlansner@scng.com

Originally published at San Jose News Bulletin