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Economic downturn makes California gloomy

Posted at 10:30 p.m. PDT Thursday, May 31, 2001

BY JENNIFER BJORHUS, Mercury News

In a reversal that has stunned pollsters, most Californians now say they think the state's economy is in bad shape and headed for serious trouble, according to a Field Poll study released Thursday.

The numbers show the public's mood has shifted dramatically since January, when Californians were highly optimistic about the state's overall economy. Mounting layoffs, heftier bills at the gas pump and the state's deepening electricity quagmire have all soured public confidence, say pollsters and economists.

Poll director Mark DiCamillo calls the near head-whipping speed of the change ``incredible.''``You're talking about millions and millions of people changing their minds when you're talking percentage changes on the magnitude of what we're seeing here,'' DiCamillo said.

The Field Institute normally conducts the poll every January, DiCamillo said. But sensing that changes were afoot, the institute conducted another telephone survey in mid-May. That survey of 1,015 California adults also showed Gov. Gray Davis' approval rating had plummeted to 42 percent. ``We had a feeling that there was something going on,'' DiCamillo said. ``Lo and behold it was major.''

Among the study's findings:

A large majority of residents (66 percent) say the state is ``seriously off on the wrong track,'' with just 27 percent saying it is headed in the right direction. In January, 49 percent thought the state was on the wrong track; 43 percent believed it was on the right track. In 2000, 35 percent said ``wrong track'' while 58 percent liked California's direction.

59 percent of residents say the economy is in bad shape, up from 25 percent in January.

Nearly half of California's residents (48 percent) say the state's economy will get worse over the next 12 months, and this perception held across all demographics. In the past 20 years there has been only one time -- 1990 -- when so many people expected the economy to deteriorate.

Residents remain relatively optimistic about their own finances, with 38 percent saying they will be better off in the next 12 months. That's about the same as in January. DiCamillo said the history of the poll indicates that changes in feelings about personal finances lag behind changing perceptions of the overall economy.

To economists and Californians clobbered over the winter by job cutbacks, falling stock markets and rising power bills, the precipitous drop in confidence is not exactly a bombshell.

`I'm not surprised at all,'' said 50-year-old Brian O'Sullivan when told of the poll's negative findings. O'Sullivan runs a struggling windmill farm outside Tehachapi that employs six people. Southern California Edison owes the farm $500,000.

O'Sullivan is one of scores of small power generators in financial hot water because of the money they're owed by the state's utilities. He blames Davis for the gloomy public opinions, saying the governor has put politics before the state's economy.``Your perception of the state of the economy is bound up in your confidence in the way it's being handled,'' O'Sullivan said.

DiCamillo agreed that the unresolved power crisis is likely a ``lead domino'' in tumbling opinions on the state economy. Not everyone agreed that the study's negative findings present an accurate picture of the state of California's economy.

Marilynn Thain, executive director of Consumer Credit Counseling Service's Santa Clara office, said the dismal mood strikes her as an overreaction, a kneejerk response to the sudden downshift from unprecedented good times. Thain says she's seen only a small uptick in activity in her office this year.

``Even though times aren't as good as they were, they're still good. We still have really good employment,'' Thain said. ``I think we're just kind of getting in sync now.''

Dave Greenhalgh agreed. Greenhalgh, 28, said he left a struggling San Francisco start-up last fall and, after searching for a few months, landed a job with Evoke Software as a manager of financial planning and analysis. Personally, he said, things are looking up. Still, the poll's results didn't surprise him, he said, because ``there's a lot of bad news out there right now.''

If the history of the poll is any indication, said DiCamillo, that bad news will start affecting how people view their own financial well-being. Said DiCamillo: ``All I can say is, `Beware.' ''

-- Swissrose (cellier3@mindspring.com), June 01, 2001

Answers

When will the sheep ever learn to lead, rather than follow?

-- Loner (loner@bigfoot.com), June 02, 2001.