Nervous Californians say economic expectations at 4-year low

“Memory Lane” takes a stroll through financial history because the economy has a funny habit of repeating itself.

Buzz: Californians are once again antsy about money as one measurement of economic confidence finishes 2022 with the steepest descent in four years.

Source: My trusty reviewed the slice of the Conference Board’s monthly consumer confidence indexes that tracks the financial expectations of shoppers in eight states and across the U.S. To measure that economic psyche, I looked at 12-month changes between each year’s final three months from a forward-looking yardstick that dates to 2007.

Topline: California expectations for personal finances are down 13% from year-end 2021 as this “too much good stuff” year winds down. This is the biggest drop in consumer prospects since 2018 and is a sharp contrast to the end of 2021, which ended with a 16% gain in expectations.

This sour outlook is not much better nationally, with a 14% drop in the U.S. expectations index – the worst since 2011. Conversely, year-end 2021 saw a 2% gain.

How long ago?

Let’s jog your memory, looking back four years ago when skittishness was elevated …

2018 headlines: The Camp Fire killed 85 Northern Californians, Democrats won the House and turned Orange County’s delegation all “blue.” Seventeen people were killed in a school shooting at Douglas High in Parkland, Fla.

2018 culture: Disney had the top movies (“Black Panther,” “Avengers: Infinity War” and “Incredibles 2”). Noteworthy new “partnerships” included LeBron James joining the Lakers and Prince Harry marrying Meghan Markle. France won soccer’s World Cup.

The back story

What’s behind the “last time it was this bad” tale?

Economically speaking, 2018’s economic script might sound familiar. A huge stimulus (tax cuts) fueled the best U.S. gross domestic product growth in 13 years. California’s bosses grew payrolls by 2% as unemployment hit the then-lowest rate on record. But inflation hit a seven-year high. (That was 2.44%!) Mortgage rates finished 2018 at a seven-year high. (Ahem: 4.8%!)

Align those patterns with 2022 when the economy digested the end of 2020-21’s massive pandemic-era stimulus. GDP stalled but California jobs grew 5% in the ongoing pandemic rebound as statewide unemployment hit new record lows. Yet the economy was too hot: U.S. inflation (9%) and mortgages (7%) hit 40-year highs.

Those extremes help explain the 2022 year-end nervousness.

The result

The good news is that consumers’ year-end 2018 fears proved unjustified.

The following year, the Federal Reserve’s brief battle with inflation ended with a temporary victory, allowing interest rates to decline. Housing’s short-lived stall concluded. GDP chilled slightly. California employment grew by 1.5% and joblessness continued a record-breaking tumble.

History lesson?

Shoppers’ 2018 crystal ball was foggy. Consider 2011, when expectations fell 16%. The following year also was fairly good as the economy continued its post-Great Recession rebound.

However, there was 2008, in the middle of the global financial meltdown. Year-end expectations collapsed by 44%. That huge drop was a correct guess: 2009 was even nastier for household finances.

So the bottom line is that consumers can get a little carried away with their economic fears. But do not totally ignore them!


The seven other states tracked, ranked by the size of their 2022 year-end slips in expectations …

Michigan: 30% drop – worst since the index started.

Florida: 18% drop – worst since 2008.

Ohio: 18% drop – worst since 2020.

Texas: 8% drop – worst since 2020.

Pennsylvania: 8% drop – since 2020.

New York: 5% drop – worst since 2019.

Illinois: 1% drop – worst since 2018.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at

Share the Post:

Related Posts