California Consumer Sentiment nearing 6-year high

The California Composite Index of Consumer Sentiment increased to 100.4 in the first quarter of 2013 from the fourth quarter’s revised reading of 94.9, according to Chapman University. Consumer sentiment has been increasing steadily for the past five years. An index level above 100 reflects a higher percentage of optimistic consumers versus those who are pessimistic. Improvement in the job market, higher home prices, and the rebound in the stock market seem to more than offset the negative effects of higher payroll taxes and gasoline prices leading to brighter consumer sentiment.
The California Composite Index is generated based on three indices: Consumers’ outlook on current and future economic conditions, and an index measuring consumers’ spending plan.
The current economic conditions index increased from a revised November reading of 83.9 to 93.4 in February 2013, an increase of nearly 10 points. The index measuring future economic conditions increased by eight points to a reading of 108.9 in February from a revised reading of 100.9 in November.
The index measuring consumers’ planned spending on big-ticket items, a volatile component of the composite index, showed a decrease of more than seven points from the revised November reading of 105. The decrease in this index in February to a reading of 97.6 may be due to a decline in consumers’ discretionary income resulting from higher payroll taxes and gasoline prices.