Holiday Retailers Experience Soft Sales, Say UF Economists
GAINESVILLE — A mediocre holiday season for retailers, stagnant wages and record-high consumer debt translated into a slightly gloomy outlook for Florida consumers in December, say University of Florida economists.
The preliminary Florida Consumer Confidence Index for December dropped two points to 91 this month, say economists with UF’s Bureau of Economic and Business Research, which conducts the monthly consumer survey.
“Considering that wages have been stagnant until very recently and that consumer debt is still at record levels, this translates into a mediocre holiday season for retailers,” said Chris McCarty, the bureau’s survey director. “Even though the consumer confidence index is actually four points higher than December of last year, our original prediction of a 3 to 5 percent increase in holiday sales over last year appears accurate.”
One of the main contributors to the drop was consumers’ perceptions of their personal finances now compared to a year ago; that indicator fell four points from November to 83. Another element was consumers’ feelings on whether it is a good time to buy big-ticket items. That indicator fell five points to 102.
Consumers remain somewhat optimistic about their financial situation in the coming year, as that component increased one point to 101 from November to December. Expectations about the national economy over the next year remained unchanged, but a three-point drop in expectations about the national economy over the next five years reflects consumer worries about the possibility of an economic downturn on the horizon.
“The election process, with its emphasis on the health of the economy, provided a lift to consumers, which buoyed consumer confidence,” McCarty said. “With the election over, consumers are settling into another four-year Clinton term. They now have reservations about their personal economic situation.”
The year 1996, however, closed with stronger overall consumer confidence than marked the end of 1995, with retirees leading the way.
Among respondents 65 and older, the index jumped 13 points, from 77 in December 1995 to 90 in December 1996. The share of older Floridians expecting the economy to improve over the next five years rose from 25 to 40 percent.
“Florida’s retirees feel much more secure about Medicare now than a year ago and many of them fared well on Wall Street,” said UF economist Dave Denslow.
McCarty believes the increase in confidence, particularly among the elderly, is due primarily to an increase in consumers’ confidence in U.S. business conditions.
“Consumers, both young and old, report a decline in their personal financial situation from this time a year ago,” he said. “It is very likely that unless something unforseen occurs, consumer confidence will decline over the next year as the election euphoria wears off. This will translate into weaker retail sales in 1997.”
Of the three regions for which the survey calculates results individually, Orlando was the only one to register lower confidence, showing a two-point decline from November to 94. Tampa and Southeast Florida experienced gains in consumer confidence and are higher than this time last year.
Employed Floridians gave pessimistic reports about business conditions in December. The share of respondents claiming business was better than at the same time a year ago fell five points to 48 percent. At the same time, the share who expected extra employees to be hired at their workplace in the next six months fell from 34 percent in November to 31 percent in December.
The Florida Consumer Attitude Survey is conducted every month by the bureau. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for December was calculated from 841 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.