UF Economists: Florida Consumer Confidence Rebounds Modestly
GAINESVILLE — Consumer confidence in Florida rebounded in September, despite a steep drop in the stock market, reflecting renewed optimism about the national economy and future finances, University of Florida economists report.
The preliminary index for September rose three points to 105 on the heels of a rough week on Wall Street where the Dow Jones industrial average lost nearly 6 percent of its value, said Chris McCarty, survey director with UF’s Bureau of Economic and Business Research.
“If not for responses collected in the past week, consumer confidence could have been much higher,” McCarty said. “Looking only at respondents who were interviewed past the 20th of September, consumer confidence actually falls one point. Most of those losses are in the component that measures expectations about personal finances a year from now. If the stock market continues its decline, we might expect consumer confidence to fall in October, despite the rise this month.”
Over the past few years, the trend has been for consumer confidence in Florida to fall in the last quarter of the year, with a low in December, followed by a jump in January, McCarty said. With the complication of the Y2K computer glitch, a programming snag that will cause some computers to misread dates after the turn of the century, it is possible that consumer confidence may decline significantly as the holidays approach, he said.
“The Federal Reserve is ready for Y2K,” said UF economist Dave Denslow. “Less than a dozen of the nation’s 1,300 banks are unprepared for Y2K, and the Fed stands ready to pump funds into banks in case depositors withdraw their funds. Factories are likely to build up their inventories of raw materials between now and the end of the year as insurance against production glitches. Other than that, the impact will be hard to notice.”
The component measuring expected national economic conditions over the next year rose three points to 102, and the one measuring expected national economic conditions over the next five years climbed seven points to 95, he said.
Nationally, there are some concerns about a record-high trade deficit and a weakening dollar, McCarty said. Much of the extended economic boom has been due to foreign investment in the United States, given weak markets in Asia, Latin America and Europe, he said.
As financial markets internationally are recovering from their recessions, investors are slowing putting their money elsewhere, leaving the United States with a large demand for foreign goods and less money to fuel that demand, McCarty said. This has raised concerns among some economists who forecast more corrections in the stock market, similar to those from last week, he said.
The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for September was calculated from 481 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.
- Cathy Keen, email@example.com, (352) 392-0186
- Chris McCarty