University of Florida News

GAINESVILLE — An economic calamity would have to rival Hollywood’s “Godzilla” and “Deep Impact” to crush the record-high confidence of Florida’s consumers, University of Florida economists report.

The preliminary consumer index registered 107, the highest level since the survey began in 1984, said survey director Chris McCarty, with UF’s Bureau of Economic and Business Research, which compiles the report. Although the preliminary index for April also was 107, the final figure at the end of the month dipped to 106, he said.

“You have to wonder what it would take to shake the optimism of Florida’s consumers,” McCarty said. “The economic and social turmoil in Asia has not affected the average consumer, at least not yet. Unless Florida is hit by a comet or attacked by a giant lizard, there is nothing on the horizon to make consumers less confident.”

With unemployment at a 30-year low, inflation well in check and mortgage rates near their recent low, money is cheap and plentiful, McCarty said. Low oil prices and aggressive hotel advertising will stimulate travel this summer, creating jobs and boosting tax revenues, he said.

Although Federal Reserve chairman Alan Greenspan continues to warn about Asia’s financial woes and U.S. stock market risks, these are unlikely to affect consumer attitudes unless the board raises interest rates, McCarty said.

“The threats to prosperity — Japan’s banking crisis, East Europe’s gamble on a unified currency, the year 2000 computer glitch, India’s nuclear testing, overbuilding by real estate investment trusts, and latent inflation from a too-tight job market — all seem remote,” said UF economist Dave Denslow. “Only 4 percent of our respondents expect to be worse off financially a year from now.”

Gains occurred in two of the survey’s five components. Those measuring perceptions of U.S. business conditions in both the short and long term were up four points from April and nearly 15 points compared with a year ago. Declining slightly were perceptions of personal finances now and over the next year, as well as whether it is a good time to buy big-ticket items.

Regionally, southeast Florida experienced a three-point gain in consumer confidence, while Central and southwest Florida slipped one point. North Florida remained the same.

Employed Floridians gave cautiously optimistic reports of business conditions. Fifty-three percent — compared with 52 percent in April — said business was better than at the same time a year ago. The share who expected extra employees to be hired at their workplace in the next six months remained at 33 percent, the same as last month.

The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for May was calculated from 879 responses. Numbers for prior months are based on about 1,000 responses. The margin of error for the index is 3 percent.

Consumer confidence is designed to help predict buying patterns by measuring consumers’ mood toward buying. Although other economic indicators also are predictors of buying patterns, consumer confidence tends to be available sooner than those indicators, McCarty said.

Nationally, both the Conference Board and the University of Michigan indexes rose to record-high levels in April. The Florida index is patterned after Michigan’s.

Credits

Writer

Cathy Keen

Source

Dave Denslow