L.A. County residents have reversed their long run of countering national trends on consumer confidence, registering an upward outlook on the local economy, especially their future jobs.

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, which had recorded drops in consumer confidence for seven consecutive quarterly readings even as the local economy has boomed over the same period.

The second quarter snapped the negative streak, as the index for the local economy rose 7 percentage points, reaching 96.3 compared with 89.4 in the first quarter.

The index was down on a year-to-year basis – it stood at 100.3 for the second quarter of last year.

“This quarter witnessed a remarkably broad-based rise in consumer sentiment, which seems best explained by the continued strength of the labor market,” said Cameron Shelton, director of the Lowe Institute associate professor of political economy at Claremont McKenna.

The indices for consumer sentiment on the local and national economies are the first of their kind for Los Angeles. They are produced through an alliance between the Lowe Institute and Chapman University in Orange.

The index has been made public on a quarterly basis for the past year but was tracked privately for two years before its debut for the purposes of establishing a benchmark. The high-water mark for the index so far is 126.3, reached in the third quarter of 2016.

The second quarter reading was from a sampling in June of roughly 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 June survey came against a backdrop of a local economy many consider to be at or near full employment, with a near-record 4.5 million payroll jobs in Los Angeles County and an unemployment rate of 4.5 percent, near its lowest point in at least 40 years.

The underlying picture didn’t seem to matter much for local residents until the latest survey, according to Shelton.

A key finding behind the change in outlook in the second quarter survey, he said, was the index reading for those who felt they had a good chance at finding a job in the next year – up 16 percent to 115.8, the largest percentage gain registered for any of the responses to the seven questions in the survey.

L.A. County’s labor force grew by 5,000 people between May and June to total of 5,146,000, according to figures released July 20 from the state Employment Development Department.

The growth of the labor force means more people were working or actively looking for work, a turn that typically accompanies confidence about the chances of finding a job.

The increase in the local labor force has not been as consistent over the last six months as it has been at the national level, but the sharpest rise in sentiment in the L.A. survey was among workers with part-time jobs.

More part-time workers felt they could improve their job prospects in the coming year, Shelton said.

“People are more confident in their ability to find a job in this tight (labor) market and the jobs are more appealing as well,” he said.

This increased confidence is showing up among job candidates at the Los Angeles office of Menlo Park staffing firm Robert Half International, according to Jon Swift, metro market manager for Robert Half Technology.

“Job candidates we see are in general just feeling better about their overall prospects and career prospects,” Swift said. “They are more likely not to take the first job offer and are more likely to turn down interviews with certain companies if they feel those companies don’t have a positive reputation.”

What’s more, Swift said, even candidates with spotty job histories or education attainment are now more confident.

“It’s now a better time than ever to be an imperfect candidate,” he said. “Employers are now taking chances in hiring these imperfect candidates, those with maybe only two-thirds of the skill-sets necessary for the job in question, as opposed to 90 percent of the necessary skill sets they were looking for a couple years ago.”

That trend was borne out in the survey. Those residents with only a high school education registered the largest increase in sentiment (16 percent), with smaller gains for those with at least some college or post-graduate education.

Shelton cited another factor that could be boosting confidence among some residents: the continual hikes in the minimum wage at the local and state levels. He noted that the biggest spike in sentiment was amongst households in the $35,000 to $50,000 income bracket, which is the typical bracket for households holding down two minimum wage jobs.

But Shelton cautioned against reading too much into the minimum wage impact, saying the wage hikes also could result in some workers losing their jobs or seeing their hours cut.

Drop in negativity?

Also contributing to the rise in local consumer sentiment was the decline in some factors that had hindered confidence in previous quarters, Shelton said. The turmoil in the stock market that dominated the first quarter subsided during the second quarter, and the local inflation rate appeared to peak in May with gasoline prices starting to come back down by late June.

“These factors, combined with somewhat of a lull in adverse statements and policy changes coming from the Trump administration, meant that the underlying strength of the local economy was finally allowed to shine through,” Shelton said.

But, he noted, shortly after the survey period, talk of trade tariffs rose.

The tariff talk, Shelton said, has a dual effect on local perceptions, sparking concerns about the potential for higher prices for consumer goods as well as worries of a slowdown in traffic at the ports of Long Beach and Los Angeles, both major economic engines for the region.