UF survey: Florida consumer confidence steady amid conflicting indicators
GAINESVILLE, Fla. — Consumer confidence among Floridians remains unchanged in February, with concerns about long-term economic conditions balanced by optimism about personal finances in the short term, University of Florida economists report.
The preliminary index remained at 97 this month, although there were some changes in the levels of the five components that make up the index, said Chris McCarty, director of the survey research center at UF’s Bureau of Economic and Business Research.
Perceptions of personal finances rose three points to 88 in February, while views of whether it is a good time to buy rose seven points to 116. These gains were balanced by an eight-point decline in perceptions of long-term economic conditions and a two-point drop in perceptions of long-term personal finances. Expected national economic conditions over the next year stayed the same.
“Consumers in Florida appear to feel that things are good for them now but are less optimistic about the future,” McCarty said. “On a national level, the job situation seems to be stabilizing, and Florida should be among those states that benefit most from that. “
There appears to be some permanent job losses from the spate of layoffs that preceded and followed the recession of 2001 and many of those, particularly in manufacturing, will not be back, he said.
“Florida’s reliance on tourism, agriculture, and increasingly on high-tech sectors such as medical supplies and pharmaceuticals puts it in a better position than other state economies to compete in a global economy,” McCarty said.
“Americans in general must recognize that there has been a tremendous change in employment over the past decade,” he said. “Many people are accustomed to thinking of U.S. prosperity being a function of American ingenuity. With open borders and open trade, we cannot assume that American ingenuity will keep us on top, particularly when the education systems in other countries are quickly surpassing ours.”
There are still weaknesses in the economy that threaten the recovery, however, such as record-high consumer debt levels, which are taking place without lowering spending, he said.
One potential problem is the skyrocketing number of mortgages that rely on adjustable rates or involving interest payments only with nothing paid on the principal, he said.
Such loans make sense when housing prices are rising and interest rates are not likely to get much higher, McCarty said. But when interest rates are at a 40-year-low, as they are now, any change in rates is likely to result in increased monthly mortgage payments.
“Some economists fear that many consumers that can barely afford mortgage payments under these conditions will not be able to do so once interest rates start to rise,” he said. “When that happens, the effects could be far-reaching and will most certainly affect consumer confidence and consumer spending.”
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 February was conducted from 533 responses. The error rate is plus or minus 4 percent.
Consumer confidence is designed to help predict buying patterns by measuring the mood of consumers 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.
- Cathy Keen, firstname.lastname@example.org, (352) 392-0186
- Chris McCarty