L.A. consumers have turned bearish on the economy as a new local consumer sentiment index from Claremont McKenna College dropped 7 percent during the second quarter.

The Los Angeles Consumer Sentiment Index fell to 96.5 in the second quarter from 103.7 in the first quarter, which in turn was down from 106.1 in the fourth quarter of last year. This marks the first time in two years that the index has slid below its 100-point baseline.

The index, published by the Lowe Institute of Political Economy at Claremont McKenna, officially launched late last year and is drawn from a sample of 500 people who are asked about their current financial situation, perceived future prospects and future spending plans.

The three consecutive quarterly drops are a worrying sign, said Marc Weidenmier, professor of economics and finance at Chapman University and the former director of the Lowe Institute.

“Despite a strong local economy and low unemployment, Los Angeles consumers are concerned about their business climate,” Weidenmier said. “This is a sustained decline which we should consider as a strong signal for Los Angeles businesses and government leaders to be mindful that our economy may have peaked and to be prepared for some weakness.”

The largest component decline in the index was the outlook on the national economy, which dropped 13 percent from the first quarter. The index’s outlook on the Los Angeles County economy was down 9 percent.

Weidenmier said political differences between overwhelmingly Democrat-leaning L.A. County residents and the administration of President Donald Trump, as well as with the Republican-led Congress, may be contributing to the increasingly dour outlook on the national economy.

The second quarter 2017 index marks a new alliance between the Lowe Institute and Chapman University on consumer sentiment measures.

The second-quarter index results will be released in a live-stream presentation at www.laconsumersentiment.com on Aug. 3 at 11:00 a.m.

Public policy and energy reporter Howard Fine can be reached at hfine@labusinessjournal.com. Follow him on Twitter @howardafine.

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