By Beth Fouhy
ASSOCIATED PRESS
July 15, 2004

SAN FRANCISCO – Californians' consumer confidence continued to slide in the second quarter of 2004 amid ongoing concerns about the war in Iraq and the overall health of the economy, a new survey found.
The California Consumer Confidence Survey's Index of Consumer Sentiment was 91.1 at the end of June, down two points from March and down six points from January.

The survey, modeled on the national Consumer Sentiment Survey conducted monthly by the University of Michigan, measured consumers' assessment of current economic conditions and their expectations for the future. Nationally, the index was 95.6 during the same period.

The survey, released Thursday by the Survey and Policy Research Institute at San Jose State University, was based on interviews with 992 California adults conducted June 28 through July 2. It had a sampling error of plus or minus three percentage points.

"Two-thirds of the American economy is driven by consumers, and overall, California consumers are not wildly optimistic that the economy is recovering," said Phil Trounstine, director of the Survey and Policy Research Institute and one-time communications director for former Democratic Gov. Gray Davis.

The survey revealed sharp regional differences in consumer outlook throughout the state. In Silicon Valley, which has struggled to emerge from the collapse of the dot-com economy, consumer optimism has been steadily increasing. Nearly 55 percent of those polled said business conditions are improving in the region, compared to about 26 percent a year ago.

Meanwhile, consumer confidence in southern California has dropped steadily over the last six months. The consumer sentiment index in southern California was 89.9, down from 99.9 in January.

Californians' shaky consumer confidence has taken a toll on President Bush's popularity in the state. His overall job approval rating was 36 percent, down from 49 percent in January.

Bush's sinking job approval ratings mirrored growing concern over his handling of Iraq. Only 22 percent of respondents said they approved of Bush's handling of Iraq, while 63 percent disapproved.

Trounstine said Californians' disapproval of the war has had an impact on consumer confidence and their view on the economy.

"Concerns about Iraq suggest a dampening of long-term expectations," Trounstine said.

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