Wrapping up 2012 and looking to the New Year, residents of the Golden State are feeling better about their personal finances and the state economy, according to the latest Citi Economic Pulse survey.
According to the survey, which focuses on California consumer sentiment in the current and future economic environment, 66 percent of Californians are optimistic that their personal financial situation will be better off in the coming year. This includes a record high of 21 percent saying they are very optimistic that their finances will improve.
“It is encouraging to see that Californians have positive expectations for both their own financial situation and the state economy,” said Rebecca Macieira-Kaufmann, President of Citibank California. “We have seen historically that as residents feel improvement in the economy, they begin to feel more confident about spending. This, in turn, could mean positive movement for the California economy.”
More than half of respondents (56 percent) expect the state economy to improve in 2013. Of that, 10 percent believe that business conditions in California will be much better in the coming year, the highest point measured since the question was first asked in this survey series in September of 2009.
Savings and Spending
The survey shows that Californians are feeling confident about their personal finances, with nearly half (49 percent) saying they are somewhat to very comfortable with their current level of savings and 40 percent meeting their month-to-month savings goal. Sixty-one percent are somewhat to very comfortable with their current level of debt (i.e. mortgage or loans). In terms of spending, 35 percent said they spent more money in 2012 than in 2011, and 35 percent said their spending was the same year-over-year.
With this positive shift, consumers are more willing to spend, especially around the holidays. According to the survey:
- Fifty-seven percent of Californians say they can at least spend on what they need with the occasional splurge. This includes twelve percent saying they are fortunate enough to spend money for whatever they want.
- Thirty-five percent of respondents are usually willing to spend on an item they know they will need in the future when it is found for a good price.
- Education is a major driver for purchases, as 53 percent of respondents will usually make a purchase if a family member needs something for school.
- Given a choice between something that is higher quality, well-made and likely to last a long time or something that costs less, more than twice as many (67 percent) say they will spend for the higher quality product than the less expensive product (28 percent).
- Forty-nine percent plan to spend about the same on holiday gifts as last year.
The latest survey again found significant differences between Southern and Northern California, particularly in the San Francisco Area, where residents are much more confident than the rest of the state.
Citi Economic Pulse in California
- Seventy-nine percent of San Francisco residents believe their financial situations are the same or better off now than a year ago, compared to 74 percent in Los Angeles.
- Seventy-one percent of San Francisco residents believe their financial situation will be better in 12 months, compared to 66 percent in Los Angeles.
- San Francisco residents are the most positive about potential employment in their area, with 25 percent saying their opportunities are excellent or good, compared to 14 percent of Los Angeles residents who express the same hopefulness.
- Fifty-five percent of San Francisco residents are somewhat to very comfortable with their current level of savings, compared to 49 percent in Los Angeles.
- San Francisco residents are more likely to find the occasional splurge affordable (49 percent) than Los Angeles residents (43 percent).
- Fifty-five percent of San Francisco residents plan to spend about the same on holiday gifts as last year, compared to 46 percent in Los Angeles.
The Citi Economic Pulse in California rose 6 points since the same period last year. Statewide the Pulse sits at negative 10 -- up from negative 16 in November 2011.