L.A. County residents’ confidence in the economy continued to slide in the first quarter, led by a sharp drop among residents 55 and older concerned that the recent stock market volatility could harm their portfolios.
That’s the overview from the quarterly consumer sentiment survey of the L.A. market by the Lowe Institute of Political Economy at Claremont McKenna College. The index for the local economy fell to 89.4 during the first quarter from 92.1 the previous period, and from 106.6 a year ago.
The latest reading of Angelenos’ confidence levels in the national economy fell slightly more on a quarter-to-quarter basis during the first three months of the year, to an index reading of 90 from 94.1. The national drop was slightly less that the local dip on year- to-year basis, falling from 104 in the first quarter of 2017.
A baseline index reading of 100 was set in the second quarter of 2015 for the index, which debuted last year.
The indices for consumer sentiment on the local and national economies are the first of their kind for Los Angeles. It is produced through an alliance between the Lowe Institute and Chapman University in Orange.
The first quarter reading was from a sampling in March of 500 Los Angeles County residents who answered questions about their current economic situation; their outlook for their own finances and spending in coming quarters; and their outlooks on both the local and national economies.
The survey came against a backdrop of a local economy many consider to be at or near full employment, with a jobless rate of 4.5 percent and a near-record 4.46 million payroll positions countywide.
But the stock market’s gyrations that began in late January took their toll on local consumer sentiment, especially among those 55 and older. Among that age group, confidence in the national economy plunged 19 percent, more than four times the overall drop.
“The decline in consumer sentiment among those 55 and over is likely driven by anxiety over the stock market jitters that began in late January,” said Cameron Shelton, director of the Lowe Institute and associate professor of political economy at Claremont McKenna. “Households nearing retirement typically have a nest egg invested in the stock market and are projecting their retirement income based on the performance of that portfolio.”
The Standard & Poor’s 500 Index – one of the broader market indices – began to drop in late January, and eventually fell by around 10 percent before a partial recovery followed by significant swings both ways.
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