Consumer confidence in the Southland and throughout the state plunged 47% in the last days of March as a consequence of the stay-at-home order — but the Inland Empire has not been hit as hard as other areas, according to results of a survey announced Thursday.
The quarterly California Consumer Sentiment Index captures the real-time decline as events unfolded regarding the global pandemic.
“An index at this level is typically seen in the depths of a bad recession, such as the 2008 financial crisis,” according to Cameron Shelton, an economics professor at Claremont McKenna College. “But it usually takes six to nine months from the onset of the recession for sentiment to deteriorate this far. Having such a rapid drop in just over two weeks is new territory.”
But when compared to other regions of California, the Inland Empire has suffered a comparatively lesser decline in consumer sentiment. The Inland Empire has also, according to the study’s respondents, suffered relatively less in terms of layoffs and reduction in hours compared with usually strong labor markets of Orange County, Los Angeles and San Diego.
“After years of bearing the brunt of most economic downturns, it appears that the Inland Empire’s position as a logistics hub is a benefit during this global pandemic, as delivery of goods is vital,” Shelton noted. “While import/export shipments through the ports of Los Angeles and Long Beach are down at least 15%, and that has affected the part of the industry which handles foreign trade, domestic e-commerce is booming. Amazon, the Inland Empire’s largest employer, is hiring.”
Overall, the California Consumer Sentiment declined an unprecedented 47% on the previous quarter to 51.5, according to the Chapman-CMC Consumer Sentiment Survey, based solely on responses from March 20 to 26.
By comparison, the fourth quarter 2019 California Index stood at 96.9, according to the study.
“In early March, when the field survey began, respondents were concerned but cautiously optimistic,” Shelton said. “As events unfolded, we were able to track on a daily basis a marked drop culminating in a precipitous decline in the last week of our study.”
The California Consumer Sentiment survey provides quarterly data that is one tool for businesses and governments as they monitor economic indicators.
“Rather than looking at the typical quarter-over-quarter results, which would clearly be an overestimate of consumer sentiment, we believe that the true picture of sentiment can best be drawn from the final days of the survey,” said Shelton, director of the Lowe Institute of Political Economy and McMahon Family Associate Professor of political economy at Claremont.
The California Index is based on a survey of 2,000 households from across the state regarding business conditions and their personal financial position. There were just more than 600 respondents from March 20 to 26, which is more than the total respondents for some national surveys, according to the university.