Local consumer sentiment about current and future business conditions in Los Angeles County and the nation surged during the first quarter from record low levels last year as the pace of vaccinations picked up and restrictions on local businesses began to ease, according to a survey released this month to the Business Journal.

For the first quarter, the sentiment index tracked by the Lowe Institute of Political Economy at Claremont McKenna College showed the biggest upward leap in Angelenos’ consumer confidence in the survey’s five-year history.

The overall index of current and future business and economic conditions rose 20 points to 87.9 — its highest level since the fourth quarter of 2019 — while the index of current business conditions in Los Angeles County shot up 33 points to 57.4.

Furthermore, every component of the index — from the respondents’ personal financial situations to employment expectations — rose substantially during the quarter.

“It’s unalloyed good news,” said survey author Cameron Shelton, who is also director of the Lowe Institute of Political Economy and associate professor of political economy at Claremont McKenna College.

The quarterly survey of 500 L.A. County residents was taken in the second half of March, just as vaccine eligibility was poised to expand and restrictions on local business operations were being eased. This overall environment as it relates to the pandemic was a complete reversal from December, when the last quarterly survey was taken.

“Now, the trend lines are all moving in the direction of more optimism,” Shelton said.
According to Shelton, the only cautionary note in the survey findings was in the differing degrees of optimism. Respondents under 45 years of age and/or in lower income brackets were significantly less optimistic than older and wealthier Angelenos, he said.

The sentiment of respondents under 45 was up 16 points to 79.7 while the sentiment of respondents over 45 rose 28 points to 94.6.

Shelton noted that in the middle of the survey period, state and local authorities announced vaccine eligibility would soon expand to include all Angelenos over 50.
“For those Angelenos over 50 in mid-March, vaccination was moving to the here and now while vaccinations for younger folks were still a ways off,” he said.

It was only last week that vaccine eligibility expanded to include all Angelenos over 16.

Similarly, on the income optimism gap, the survey showed the confidence level of respondents with incomes over $100,000 rose 36% while the confidence level of respondents with incomes under $50,000 rose 26%.

Shelton said that because most higher-income respondents had not lost their jobs during the pandemic, their optimism came back first. Many lower-income respondents, on the other hand, did lose their jobs or saw their hours sharply reduced, so they weren’t as optimistic.

“I would expect that in the next quarter or two, as the leisure/hospitality sector reopens and many lower-income Angelenos are called back to their jobs, they will play catch-up in terms of optimism,” Shelton said.

He added that the March sentiment survey showed another optimism gap, which he expected. That gap was based on the political preference of the respondent.

 Democrats were substantially more optimistic, with their confidence level rising an average of 40% to an index reading of 92. The confidence level among Republican respondents rose 15% to 72.

“This is a complete reversal from the era of President Trump, when Republicans were much more optimistic than Democrats,” Shelton said.

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