UF Economists: Consumer Confidence Remains At Historic Record High

March 31, 1998

GAINESVILLE — Florida’s consumer confidence sustained its record-setting pace in March, matching the all-time high set in February, University of Florida economists report.

The preliminary consumer confidence index for the month remained steady at 106, the highest it has registered since the survey began in 1984, said survey director Chris McCarty, with UF’s Bureau of Economic and Business Research, which compiles the report.

“This is the economy that just won’t quit,” said McCarty. “Confidence is high as a reflection of very favorable conditions for consumers. Interest rates remain low, personal income is still growing, yet inflation is almost nonexistent. The persistence of inflation to remain low despite increases in personal income and low unemployment have left many economists baffled.”

Consumers continue to feel the time is right to buy big-ticket items such as appliances and furniture that typically are bought on credit, McCarty said. Not only are first-quarter retail sales high, but home sales in February rose 8.7 percent over the previous month, he said.

Meanwhile, consumer borrowing continues to slow, indicating consumers are paying down outstanding debt rather than incurring new debt, he said.

“The measure of confidence is up 10 points from a year ago,” said UF economist Dave Denslow. “The biggest gain has come in how Floridians view the national economy. Now, 68 percent of our respondents expect good times for the nation, up from 52 percent a year earlier. Floridians’ personal finances also remain solid. Only 16 percent now say they have become worse off during the past year, down from 21 percent in March 1998.”

Although consumers’ euphoria provides no guarantee against a 1998 recession, it does make one unlikely, Denslow said. “When everyone is smiling, it takes a strong blow to knock the economy off course,” he said.

Regionally, Central and southwest Florida experienced slight declines in consumer confidence, while North and southeast Florida posted gains. But residents of all regions are confident about their personal finances and the economy in general, given that none of the regional indexes dipped below 106, Denslow said.

Both at home and at work, consumers were very satisfied with the state of the economy. Fifty-six percent of employed Floridians — compared with 51 percent in February — said business was better than at the same time a year ago. The share who expected extra employees to be hired during the next six months rose from 34 percent in February to 35 percent in March.

The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for March was calculated from 952 responses. Numbers for prior months are based on about 1,000 responses. The margin of error for the index is 3 percent.

The consumer confidence index and its five components are not percentages. The minimum value for these indexes is two if all respondents answered pessimistically on all five questions and 150 if all respondents answered optimistically on all five questions. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year.

Nationally, the Conference Board recovered from a slight downturn in January to rise 10 points to 138.3 in February, while national consumer confidence as measured by the University of Michigan rose from 106.6 in January to 110.4 last month. The Florida index is patterned after Michigan’s.