Consumer Confidence Benefits Clinton In Election, Say UF Economists

August 28, 1996

GAINESVILLE — Consumer confidence in the national economy in August is unfaltering, boosting Clinton’s chances of capturing Florida’s electoral votes in the upcoming presidential election, say University of Florida economists.

The preliminary Florida Consumer Confidence Index held steady in August at 91, the same for July, said economists with UF’s Bureau of Economic and Business Research, which conducts the monthly consumer survey.

“The results will please Democrats hoping Clinton will carry Florida in November,” said UF economist David Denslow. “Four years ago, 37 percent of our respondents said they had become worse off during the preceding 12 months. Now that number is below 25 percent. Four years ago, 56 percent thought the national economy was heading downhill. Today only 28 percent think that.

“The mood of Floridians is best described as assured,” Denslow said. “Not ebullient but confident about their incomes, they report that they will continue to buy appliances, cars and houses.”

A strong economy is a key factor in getting re-elected, said Chris McCarty, survey director at the bureau.

Uncertainty remains, however, about what direction consumer confidence will take this fall, he said.

“Last year confidence started to slide in October amidst reluctance on the part of the Federal Reserve to lower interest rates,” McCarty said. “Confidence bottomed out at 87 in December during what was one of the worst holiday seasons for retailers since the recession of the early 1990s. In many ways the same scenario that led to that drop is in place now.”

The composition of the index, which consists of five components tracking consumers’

attitudes about their finances and national business conditions, was largely unchanged. In fact, the composition of the index is similar to what it was last year at this time, with the exception that consumers are a little less inclined to say this is a good time to buy big-ticket items such as cars and appliances.

Tampa experienced the largest gain in confidence of the three regions for which the survey calculates results individually. It realized a five-point gain from July to register 97. Orlando also registered 97, experiencing a four-point gain.

Confidence fell significantly in Southeast Florida, from 94 in July to 89 in August. Respondents in the Southeast who were pessimistic cited rising inflation as a key reason, followed by job loss.

Floridians who are employed gave upbeat reports about business conditions for August. The share of respondents claiming business was better than at the same time last year rose four points to 52 percent. At the same time, the share who expect extra employees to be hired at their workplace in the next six months increased from 31 percent in July to 34 percent in August.

“The increases in business activity and anticipation of new hires may bode well for the economy as we approach the holiday season,” McCarty said.

The Florida Consumer Attitude Survey is conducted every month by the bureau. Respondents are all 18 or older and live in households telephoned through random digit dialing. The preliminary index for August was calculated from 886 responses. Numbers for prior months are based on about 1,000 responses. The margin of error for the index is almost three points. Regional results are subject to sampling error of almost four points.

The index is patterned after the University of Michigan’s confidence index for the United States. Both indexes use 1966 as the base year. Numbers below 100 indicate that consumers are less confident than they were in 1966, when the index was 100.