UF Economist: Florida Consumer Confidence Hits Decade High

January 28, 1997

GAINESVILLE — Florida consumer confidence jumped this month to its highest level in more than seven years, thanks to long-awaited promotions and raises in the workplace, say University of Florida economists.

The preliminary Florida Consumer Confidence Index rose to 95 in January, up from 92 in December and the highest since July 1989, say economists with UF’s Bureau of Economic and Business Research, which conducts the monthly consumer survey.

Wages finally have caught up with other positive trends of the post-recession economy, said UF economist Dave Denslow, who analyzed the survey data.

“Florida was hard hit by the recession at the beginning of the decade,” Denslow said. “And even though the job market improved during the next several years, wages remained stagnant because of downsizing, foreign competition and restructuring. Now many people are telling us they’ve been promoted and gotten raises. They’re feeling better about their jobs, which pay more and are more secure than a year ago.”

The gains occurred across the board, not just in lower-paying jobs, and came more from strong demand for workers than the recent minimum wage hike going into effect, he said.

“What we’re seeing now is that workers are becoming sufficiently scarce, especially those with skills,” Denslow said. “Employers are beginning to compete for them again and they’re offering attractive wages and promotions so they don’t lose their good workers to competitors.”

The results are best interpreted as a continuation of the strong confidence Floridians enjoyed throughout the second half of 1996 and not a reflection of holiday sales, Denslow said. The index’s highest 1996 level was in October when it reached 94, one point below this month’s reading.

“The one puzzle is why Christmas sales weren’t more robust if consumer confidence was so high,” he said. “What I think is happening is that people are starting to bunch their purchases less during the holiday season and spread them out over the rest of the year. Even when buoyant, shoppers are no longer going all-out in December the way they used to.”

Besides improving overall consumer confidence, greater job security and raises also resulted in stronger car and housing purchase plans. The share of respondents contemplating buying a car rose to 18.3 percent in January, up from 15.8 percent in December. At the same time, the share who considered buying a house also rose, from 7.6 percent to 9.1 percent in January.

Of the three regions for which the survey calculates results individually, Orlando led with an index of 99 in January, up from 97 in December. Southeast Florida (Dade, Broward and Palm Beach counties) fell to 93, down from 95 the month before. The Tampa area index stayed at 95.

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 January was calculated from 962 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.