UF study: Florida consumer confidence marks big gains in December
GAINESVILLE, Fla. — Florida’s consumer confidence rose six points to 90 in December, reflecting optimism about gas prices, the stock market and job growth, and boding well for holiday retailers, University of Florida economists report.
The increase in confidence was broad-based, with growth in all five components of the index. The largest gain was in perceptions of U.S. economic conditions over the next year, which rose 12 points to 84 and is now two points higher than at the same time last year. Perceptions as to whether it is a good time to buy big-ticket items rose eight points to 106. Perceptions of personal finances now compared with a year ago rose six points to 86. Perceptions of U.S. business conditions over the next five years rose five points to 83. Finally, expectations about personal finances a year from now rose four points to 96.
“Continued declines in gasoline prices, an upbeat stock market and high levels of employment all contributed to gains in consumer confidence this month,” said Chris McCarty, director of the survey research center at UF’s Bureau of Economic and Business Research. “Frankly, we had been expecting a moderate rise in confidence at best, given rising interest rates and expectations that energy prices will soon be climbing again. However, these effects have not hit the Florida consumer yet, and given the positive indicators, consumers appear to be feeling pretty good about the economy and their finances. This should be good news for Florida retailers who have been concerned about the holiday shopping season.”
Nationally, retail sales for the holiday season have been slow to gain momentum, McCarty said. November retail sales showed very slow growth, primarily because of falling auto sales and the effect of lower fuel prices on gasoline sales, but recent data from chain stores suggests holiday spending may have been picking up toward the end of the gift-buying rush, he said.
Given the extra Saturday before Christmas, McCarty said, some forecasts suggested that many consumers may have been waiting until the last minute to make holiday purchases. “Retailers will need that kind of boost to make significant gains over last year, given the slow start and the reasonably good sales performance in 2004,” he said.
But while consumer confidence for the next month or two may remain at current levels, McCarty said he expects it to decline as rising energy prices and interest rates affect consumer spending.
“As colder weather up north raises demands on many types of energy, particularly natural gas, energy bills there and in Florida will rise,” he said.
The concern with interest rates is there are already signs of a slow-down in real estate, particularly in Florida markets that have been bid up as a result of speculative buying. “In 2006, we will see a dramatic slowing in home equity loans and refinancing that has been fueling consumer spending for the past several years,” 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 401 responses. The error rate is plus or minus 5 percent.
Consumer confidence is designed to help predict buying patterns by measuring the mood of consumers toward purchasing. Although other economic indicators also predict buying patterns, consumer confidence tends to be available sooner.
The index is benchmarked to 1966, so 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.