December 05, 2002
UCLA Anderson Forecast/Financial Times Economic Survey Reveals that Employment Concerns are Paramount, but Spending Continues on Homes, Cars
War with Iraq, Falling Stock Market and Domestic Terrorism Cited as Posing Risk to the National Economy
Los Angeles — UCLA Anderson Forecast, in cooperation with the Financial Times, recently conducted an Internet-based economic survey whose results unveiled some surprisingly paradoxical attitudes among the 3,447 Americans who responded. One interesting revelation is that while 25 percent of those surveyed reported “some” or a “substantial” possibility that they could be laid off, these same individuals continue to spend as if they were secure in their employment.
In fact, 48 percent of those who reported employment fears made a major purchase in the past 12 months, while 39 percent are planning to make another major purchase next year. The numbers are eight percent higher, respectively, for those with job security: 56 percent made a major purchase last year and 47 percent intend to make another next year.
“The results of the survey were a bit surprising to us,” said Dr. Ed Leamer, director of UCLA Anderson Forecast and professor of global economics and management at UCLA Anderson. “We frankly didn’t expect so many respondents to have serious job concerns. It will be very interesting to see how the results evolve over time, as we look forward to conducting an annual economic survey.”
Other survey highlights are as follows (all percentages are attributed to the 3,447 respondents):
Greatest Risk to the National Economy
27 percent think a potential war with Iraq poses the greatest risk.
20 percent think a falling stock market is the key threat.
18 percent cite domestic terrorism.
40 percent expect home prices to rise by less than 10 percent.
25 percent expect home prices to stay largely unchanged.
17 percent expect home prices to rise by more than 10 percent.
23 percent intend to buy or sell a home next year. Of these respondents:
38 percent are renters buying for the first time.
21 percent are buying a more expensive home.
Major Consumer Durable Goods (new car, substantial amount of appliances or furniture)
53 percent made a major purchase in the past year.
45 percent plan to make a major purchase next year.
45 percent believe that the high cost of housing in California is the state’s number one weakness in competing with other states and countries for jobs and business. (The number jumps to 67 percent for Bay Area respondents.)
15 percent believe workers’ compensation and anti-business legislation as a key concern.
12 percent cited regulatory gridlock and ineffective government bureaucracy as a problem.
The cost of electricity, traffic congestion on roads and at airports, public education and health care costs each garnered in single digit percentages.
Dr. Leamer notes that it was somewhat interesting to learn that the biggest source of job worries is not weakness on business spending in the technology area (a depressed sector of the economy that was a leading cause of the recent national recession), but rather spending in such areas as advertising, consulting and other business services. Another interesting finding was that only three percent of respondents site globalization as an employment concern (specifically the fear that one’s job would move overseas to save costs).
UCLA Anderson Forecast/Financial Times survey reached out to 14,665 individuals, generating a 23.5 percent response rate (3,447 respondents). The sample is not random and heavily over-represents business professionals and Southern Californians. Out of the 3,447 responses, 2,393 were from Southern California, 285 from the San Francisco Bay Area, 19 from Sacramento, Calif., 197 from the rest of California, and 553 from states other than California.
For the complete details of the survey and analysis from Dr. Leamer, please go to UCLA Anderson's home page at www.anderson.ucla.edu.
About UCLA Anderson Forecast
UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation, and was unique in predicting both the seriousness of the early-1990s downturn in California, and the strength of the state’s rebound since 1993. Most recently, the Forecast is credited as the first major U.S. group to declare the recession of 2001.
About Financial Times
The FT is firmly established as one of the world's leading business information brands, internationally recognised for its authoritative, accurate, and incisive news, comment and analysis. Whether in print or online, the Financial Times is essential reading for the global business community. Printed in 19 sites across the world, the Financial Times newspaper currently has a circulation of 485,000 copies worldwide.
FT.com is the world's leading global business Web site and the online partner of the Financial Times. It attracts 2.7 million unique monthly users and generates 55 million monthly page views, delivering a premium audience to advertisers.