O.C. Consumer Confidence at New Low : Economy: The local index has plunged to a record 75, down nine points from 1991, results of a survey show.

IRVINE — Orange County’s traditional faith in the economy has nose-dived and consumer confidence has hit a record low as unemployment grows and the region enters a third year of recession.

The startling erosion of consumer confidence mirrors--and perhaps explains--local voters’ equally startling abandonment of the national Republican Party that they have supported for decades.

President George Bush, whose Administration is widely seen as the architect of the current economic decline, is struggling just to stay even with Democratic challenger Bill Clinton in Orange County--which has not supported a Democratic presidential candidate since Franklin D. Roosevelt’s 1936 reelection.

“Residents were extraordinarily optimistic about their finances and the economy four years ago, but now seven out of 10 have no faith and people are in a very nasty mood and that shows up in their political preferences,” said Mark Baldassare, the UC Irvine pollster who has tracked both consumer confidence and political attitudes through the Orange County Annual Survey since 1986.

The overall index of local consumer confidence now stands at 75--two percentage points below the most recent national index level of 77 and a nine-point drop from the previous low of 84 in the 1991 survey.

This year’s index is 31 points lower than when Bush was elected in 1988. It is the first time since the poll began that consumer confidence in Orange County fell below the national average--although the survey’s margin of error of three percentage points means the local and national levels could be about even.

“What we’re seeing is a staggering loss of optimism in a county that’s prided itself on income growth and job growth since the boom time of the 1980s,” Baldassare said.

The survey found that median household income in Orange County has dropped 8.2% to $45,000 from $49,000 last year. And when the 3.5% inflation rate is added in, the real decline is even greater.

In addition, the state Employment Development Department reported earlier this month that Orange County employers have cut 32,800 full- and part-time jobs from their payrolls in the past year.

Little wonder then that consumers’ pessimism about their personal finances and the national economic outlook for the next 12 months led the plunge in confidence; or that negative attitudes prevailed in answers to all five of the confidence questions in the survey.

The survey, which polled 1,012 adult residents by telephone between Aug. 26 and Sept. 2, was conducted by Baldassare, chairman of urban and regional planning studies in UCI’s School of Social Ecology, and by researcher Cheryl Katz.

Local economic optimism usually has been buoyed by confidence that the county’s economic diversity can keep the wolves at bay, Baldassare said.

But that diversity has been significantly weakened by federal budget cutting, particularly in defense and aerospace, and the recession-driven decline in manufacturing, construction and retail employment.

As a result, “even affluent residents appear nervous about the economy,” Baldassare said.

Worries about the status of the national economy likely were an even greater force than local concerns in the growing pessimism shown in the survey, he said.

The number of respondents who said they believe the U.S. economy is heading for “bad times” in the coming 12 months hit a record 58% this year, up from 45% in the 1991 survey and almost four times the 16% who were negative about the overall economy when Bush was running for his first term in 1988.

And 52% said they think bad times, marked by periods of widespread unemployment or even a depression, will extend for the next five years. The only time that response was higher was in 1990, the year the recession began, when 55% said bad times would extend for the ensuing five years.

This year’s survey also found that 35% of the respondents believe they are worse off financially this year than last--compared to 28% in the 1991 poll--and that only 44% believe their financial status will improve next year, down from a 50% positive response to that question in 1991.

And in what has got to be a major blow to retail merchants looking to the coming holiday season to help refill their draining tills, a record 40% of the survey respondents said they believe this is a particularly bad time to purchase major household items, such as furniture, televisions and appliances.

Baldassare said he believes consumers will remain pessimists until real growth in employment and personal income replaces the proposals and plans being offered by political candidates at all levels.

Downward Spiral

Orange County residents have become as pessimistic as the rest of the country about the economy. The consumer confidence index is set at 100 for the base year of 1996. ’92 Orange County: 75 United States: 77 Source: Orange County Annual Survey, UC Irvine

No Confidence

In 1988, the previous presidential election year, 57% of Orange County residents said they were better off financially than they had been in 1987. Now, only 35% say they are better off than a year ago.

Would you say you (and your family) are financially better off or worse off than you were a year ago?

‘88 ’90 ’91 Better off 57% 49% 35% Same 28% 31% 30% Worse off 15% 20% 35%

Now, looking ahead, do you think that a year from now you (and your family) will be better off, worse off, or just about the same as now?

‘88 ’90 ’91 Better off 52% 52% 44% Worse off 6% 7% 9% Same 37% 36% 40% Don’t know 5% 5% 7%

Turning to business conditions in the country as a whole, do you think that during the next 12 months we will have good times financially or bad times?

‘88 ’90 ’91 Good times 65% 40% 28% Bad times 18% 44% 58% Don’t know 19% 16% 14%

Looking ahead, in the country as a whole, will we have continued good times during the next five years, or will we have periods of widespread unemployment or depression?

‘88 ’90 ’91 Good times 43% 30% 34% Bad times 35% 55% 52% Don’t know 22% 15% 14%

About the big things that people buy for their homes, such as furniture, a refrigerator, a stove, television and things such as that-generally speaking, do you think now is a good or bad time for people to buy major household items?

‘88 ’90 ’91 Good time 70% 46% 48% Bad time 14% 31% 40% Don’t know 16% 23% 12%

Optimism by Income Group

Less than $36,000 to More than $36,000/yr. $50,000/yr. $50,000 Better off now than last year 28% 36% 42% Better off next year than now 42% 46% 48% Good time to buy major items 41% 53% 51% U.S. good times next year 32% 25% 31% U.S. good times next five years 32% 33% 38%

Note: Percent giving optimistic answers in each income bracket.

Source: Orange County Annual Survey, UC Irvine