Silicon Valley residents doubt return to economic glory

By Brian Bergstein, The Associated Press
Friday July 12, 2002

SAN JOSE — With corporate scandals popping up regularly and the high-tech industry still in a swoon, fewer than half the Silicon Valley consumers surveyed expect business conditions in the area to be better a year from now, according to a report being released Friday. 

The quarterly Silicon Valley consumer confidence survey by researchers at San Jose State University found much less optimism in the region than previous reports indicated. 

Using the same methods employed by University of Michigan researchers who generate a closely watched index of consumer confidence, the San Jose State team gave Silicon Valley a consumer sentiment rating of 88.1, down from 96.2 in March and 91.7 in December. 

That also is below the nationwide figure of 92.4, according to the Michigan index. 

When asked to describe their optimism about business conditions in the high-tech capital a year from now, 48 percent of Silicon Valley residents said they expect things to be better. About 36 percent said they expect conditions to remain the same and 11 percent said things will get worse. 

When asked about their own financial status, 38 percent said they expect to be doing better a year from now, 47 percent said they will be about the same, and 8 percent said they expect to be worse off. 

“There’s been a lot of positive news, but what appears to be sinking in is the bad news: accounting scandals, layoffs, recession, collapsing stock prices, these sorts of things,” said Phil Trounstine, director of the Survey and Policy Research Institute at San Jose State. 

Despite feeling harder hit than the rest of the country, Silicon Valley appears to be more optimistic about a long-term turnaround. 

The index of consumer expectations, which measures people’s outlook about the economy over the next five years, was 90.5 in Silicon Valley, down from 100.7 in March and 95.7 in December. That is higher than the Michigan expectations index for the nation, 87.9.