UF Economists: Consumers In Buying Mood Despite Two-Point Setback

April 29, 1997

GAINESVILLE — Florida’s overall preliminary consumer confidence in April dropped two points, but a two-point rise in the perception that now is a good time to buy expensive items such as cars, appliances and furniture was the highest since September 1995, University of Florida economists say.

A surging dollar abroad and better pay at home encourage many Floridians to buy big-ticket items, said economists with UF’s Bureau of Economic and Business Research, which conducts the monthly consumer survey.

“Floridians are enjoying low prices caused by the dollar’s strength in international currency markets,” said UF economist Dave Denslow. “At the same time, many are receiving pay hikes and promotions.”

The overall drop in confidence still leaves the index at 95, the fourth consecutive month it has registered at or above that high level.

The high index suggests that retailers as well as merchants who sell big-ticket items can still expect customers, Denslow said.

“Consumers may be shopping for good deals, but they are not yet retreating in their spending,” said Chris McCarty, the bureau’s survey director. “Although some reports from retailers suggested that sales in March were down from January and February, our numbers indicate that consumers still have not scaled back spending. Inflation remains low, and the quarter-point rise in interest rates has not affected consumers yet.”

People’s perception of their personal finances fell from 95 in March to 89 in April, but UF economists caution that the March figure was an aberration during a year in which this component was consistently lower than 90.

Respondents who reported their personal finances to be worse than they were a year ago cited downsizing, inflation and poor health as the main reasons.

“Last month, almost twice as many respondents as this month attributed improvement in their personal finances to better money management,” McCarty said. “Also, a larger proportion of respondents claimed ill health affected them financially. Of those respondents, 74 percent are not employed and may have to pay more out-of-pocket costs for health care.”

The fall in the personal finance component was balanced by increases in other parts of the survey. There was the two-point rise in perceptions as to whether this was a good time to buy big-ticket items. There also was a one-point increase in perceptions of personal financial conditions a year from now.

Two of the three regions for which the survey calculates results individually experienced declines in confidence.

In Southeast Florida, consumer confidence fell four points to 93 in April. Four of the five components registered a drop, with perceptions of whether it is a good time to buy big-ticket items being the only one to rise. Confidence in Tampa fell, but by a statistically insignificant two points. In Orlando, it remained unchanged, but perceptions of whether now is a good time to buy major items fell by six points.

Employed Floridians gave pessimistic reports about business conditions in April. The share of respondents claiming business was better than at the same time a year ago fell four points to 52 percent. At the same time, the share who expected extra employees to be hired at their workplace in the next six months fell from 36 percent in March to 34 percent in April.

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 April was calculated from 974 responses, a response rate of 54 percent. 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 a sampling error of almost four points.