UF Survey: Stock Market Gains Help Boost Florida Consumer Confidence
GAINESVILLE, Fla. — Consumer confidence among Floridians rose two points this month, fueled primarily by gains in the stock market and an improving job market, University of Florida economists say.
The overall preliminary index rose to 96, with significant gains in three of five components, said survey Director Chris McCarty. Optimism about short-term economic conditions in the United States rose five points to 97, confidence about current personal finances rose four points to 85 and expectations about long-term economic conditions rose three points to 91.
“The increase in consumer confidence provides more evidence that the (economic) recovery may be taking hold,” McCarty said. “Confidence is particularly up among households with an annual income of over $30,000. This is in no doubt due in part to the clear gains in the stock market.”
Another good sign is that jobless claims have been consistently less than 400,000 a week, although not below 350,000, a level indicating a true turnaround in the labor market, he said.
“The consensus among most economists is that the long-awaited employment situation has turned the corner and many of the unemployed are now being hired again,” he said. “Most economists, however, do not expect a complete turnaround until late in 2004.”
Florida will fare better than many states that have permanently lost manufacturing jobs, particularly in apparel and furniture, because of Florida’s service economy. Agriculture and tourism are the mainstays of Florida’s economy, making the state less vulnerable to the loss of domestic jobs that comes when manufacturers shut down U.S. plants to relocate overseas where labor costs are less, McCarty said. In addition, Florida’s history of international economic ties, particularly with Latin America, will ultimately help the state in the increasingly global economy, he said.
Despite the rise in consumer confidence and the improvement in employment, retailers have not experienced the anticipated sales boom this holiday season, McCarty said. Some attribute sluggish sales to snowstorms in the Northeast that may have kept shoppers at home. Wal-Mart and Target stores now are adjusting their forecasts to the bottom of the ranges they gave as estimates at the beginning of the season, he said.
Consumers remain cautious as the job situation has not completely changed for the better, McCarty said. Tax rebate and refinancing money that was available in August and September is now gone, he said.
“Retail sales for this holiday season will still likely reach 5 percent growth over the previous year,” he said. “The main reason for this is that the previous year was very weak, so the comparison makes this year look much better.”
If sales growth falls much below 5 percent, however, many retailers will have difficulty meeting their earnings goals and will be less likely to add jobs quickly next year, he said.
The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for December was conducted from 411 responses. The error rate is plus or minus 5 percent.
Consumer confidence is designed to help predict buying patterns by measuring consumers’ moods toward purchasing. Although other economic indicators also are predictors of buying patterns, consumer confidence tends to be available sooner.
The index is benchmarked to 1966 so that a value of 100 represents the same level of confidence for that year. The value of the index is in comparing changes over time rather than looking at an isolated month.