Stung by the surprise election of Donald Trump as president, L.A. consumers turned bearish on the economy during the fourth quarter, sending a new consumer sentiment index plunging 12 percent from the previous quarter.
The Lowe Institute of Political Economy at Claremont McKenna College in its report released Tuesday says the consumer sentiment index went from 120.8 in the third quarter of 2016 to 106.3 in the fourth quarter. The index also dropped from the fourth quarter of 2015, when it was 114.2.
The institute started collecting survey data from 500 randomly chosen L.A. County residents in the second quarter of 2015, which was used to create a baseline index value of 100. This was the institute’s first consumer sentiment survey and is the only one focused exclusively on Los Angeles County, the organization said.
The University of Michigan has been tracking monthly national consumer sentiment surveys for 60 years, while Chapman University’s Anderson Center for Economic Research puts out a quarterly statewide survey.
The Lowe Institute’s fourth-quarter survey taken in December pointed to a stark contrast between the L.A. region, which has emerged as a center of opposition to Trump’s presidency, and the rest of the nation, where consumer sentiment surged after the election.
“A factor in Los Angeles may be the ‘Trump effect’ as the majority of Los Angeles County is deeply Democratic with policy views that are opposite those of the new administration,” Marc Weidenmier, director of the Lowe Institute, said in a statement. “The fourth quarter survey was taken in December, after the election when Los Angeles area residents were absorbing the news following the surprising election outcome.”
Besides the purely political difference, Weidenmier said the region’s multicultural diversity and reliance on global trade may also have factored into the drop in sentiment.
This divergence of sentiment points to the need for a separate local consumer sentiment index, according to Robert Lowe, founder of the Lowe Institute and chairman of national real estate company Lowe Enterprises.
“The index serves as a timely source of information crucial to assessing the pulse of the local economy but also as an example of how localized knowledge can be captured and utilized to improve forecasting and decision making,” Lowe said.
The decline in L.A. consumer sentiment was across all ethnic groups – African American, Asian, Hispanic, Caucasian, and “other.” The decline was also consistent across most age groups with the exception of respondents age 65 and older.
The full report can be found at www.laconumersentiment.com.
Public policy and energy reporter Howard Fine can be reached at firstname.lastname@example.org. Follow him on Twitter @howardafine.