UF Economists: Sales Fall But Consumer Confidence Hits Eight-Year High

June 24, 1997

GAINESVILLE — Florida’s consumer confidence index hit an eight-year high in June thanks to a rare combination of healthy wages and low unemployment, but retail sales are reaching a saturation point, University of Florida economists report.

The preliminary consumer confidence index for the month rose to 100, gaining three points from May, said economists with UF’s Bureau of Economic and Business Research, which conducts the survey.

The last time Florida’s index was higher was when it reached 101 in June 1989, a year before the beginning of the last recession.

“Consumer confidence both here in Florida and nationally is through the roof,” said Chris McCarty, the bureau’s survey director. “This is an unusual set of circumstances. While wages are up, unemployment, interest rates and inflation are low. Yet the demand for goods has not outpaced the supply, despite what should be a consumer sector flush with money.”

Nationally, auto, home and retail sales are beginning to drop and in Florida, retail sales have slackened, McCarty said. The decline may be the natural result of consumers reaching a point where they have already made most of their major purchases, he said.

“During the last few years home and auto sales have been high, and retail sales have been relatively strong,” he said. “Perhaps consumers perceive themselves to have reached a certain lifestyle and they just don’t need any more for now.”

The positive survey results indicate that moderation in Florida’s retail sales does not imply worried consumers, added UF economist Dave Denslow. “The softening of sales growth comes from two sources; first, consumers have stocked up on cars and clothes and second, credit card companies are pushing plastic less aggressively,” he said.

Perceptions about it being a good time to buy major household items — one of the five indicators upon which the consumer confidence index is based — fell two points this month.

Although men and women both experienced gains in consumer confidence, women experience only a one-point increase compared to two points for men.

Women reflected a greater caution in the long-term national economy and whether now is a good time to buy, McCarty said. “As women tend to make more household purchases than men, they may be in a better position to experience signs of an economic downturn,” he said.

There were few age differences in the survey responses. While those aged 60 and over are usually somewhat less confident than their younger counterparts, they were generally positive except for perceptions of the long-term national economy and whether it is a good time to buy.

Employed Floridians gave mixed reports of business activity. Fifty-three percent — the same percentage as last month — said business activity was better than at the same time a year ago. But the share who expected extra employees to be hired at their workplace in the next six months fell from 40 percent in May to 35 percent in June.

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 June was calculated from 824 responses, a response rate of 62 percent. Numbers for prior months are based on about 1,000 responses. The margin of error for the index is almost three points.