UF Economists: Florida's Consumer Confidence Drops, But Remains High

June 30, 1998

GAINESVILLE — Although growing pessimism about the national economy caused Florida’s consumer confidence to drop from its record high in May, business conditions remain strong, University of Florida economists report.

The preliminary consumer index for June registered 104, down from 107 last month, said survey director Chris McCarty, with UF’s Bureau of Economic and Business Research, which compiles the report.

“Although the index fell by three points, consumer confidence in Florida and nationally is still very high,” McCarty said. “Some of the drop in perceptions about the U.S. economy may be related to the recent volatility in the stock market and news from abroad that the Asian financial crisis may persist. However, many consumers probably don’t pay much attention to the stock market and international finance.”

Respondents attributed the decline to expectations that the business cycle will eventually turn downward, loss of confidence in politicians and a sense that Americans have lost their moral direction, McCarty said.

The drop in confidence appears to affect all types of respondents. In past surveys, some groups of people — such as the elderly or low-income residents — were harder hit than others, he said.

The survey component measuring perceptions of the U.S. economy over the next year fell from 112 in May to 105 in June, while the component measuring perceptions over the next five years fell from 94 to 85. The other three components were relatively constant, McCarty said.

“With the index still well over 100, it is far too early to talk about a turn for the worse in terms of confidence,” he said. “With few exceptions, U.S. businesses are still going strong, which translates into a favorable economic climate for consumers.”

Three of the four Florida regions tracked in the survey experienced the same downturn that the statewide figures showed. Most of the drop in Central and southeast Florida came from increased pessimism about the national economy, while the big concern in North Florida was whether it is a good time to buy big-ticket items. In southwest Florida, confidence remained the same.

Employed Floridians gave mixed reports of business conditions. Fifty percent — compared with 53 percent in May — said business was better than at the same time a year ago. The share who expected extra employees to be hired at their workplace in the next six months remained at last month’s 32 percent.

The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for June was calculated from 930 responses. Numbers for prior months are based on about 1,000 responses. The margin of error for the index is 3 percent.

Consumer confidence is designed to help predict buying patterns by measuring consumers’ mood toward buying. Although other economic indicators also are predictors of buying patterns, consumer confidence tends to be available sooner than those indicators, McCarty said.

Nationally, both the Conference Board and the University of Michigan’s reports fell slightly in May. The Florida index is patterned after Michigan’s.