Stock Market Rally, Elections Prompt Jump In Florida Consumer Confidence

November 24, 1998

GAINESVILLE — A dramatic rebound on Wall Street and satisfaction with the November elections led to a pronounced turnaround in consumer confidence among Floridians this month, bucking the normal year-end pattern and raising optimism of a good holiday shopping season for retailers, University of Florida economists say.

The index rose four points from October to 100, said Chris McCarty, survey director with UF’s Bureau of Economic and Business Research, which conducts the survey. In addition, expectations of U.S. business conditions during the next year rose from 83 to 98 in November, and perceptions of business conditions during the next five years rose five points to 85.

“This may change our outlook for the holidays,” McCarty said. “Consumers might be in the mood to spend more than we originally predicted when confidence was following its pattern of decline. Now, with confidence up, retailers may see significant increases over last year. The resurgence could not have come at a better time for retailers.”

The turnaround broke a trend of the past three years.

“In 1995, 1996 and 1997, confidence declined in October and bottomed out in December. January then marked an increase,” McCarty said. “It appears that confidence has been buoyed by the results of the November elections.”

The Fed’s cuts in interest rates and an apparent drop in concern over the Asian economy also contributed to consumers’ improved mood, McCarty said.

Still, he said, some uncertainty remains in the holiday scene. While an expected mild winter may make it easier to get to stores, it also may dampen sales of winter clothing.

UF economist Dave Denslow said people are expecting the economy in the foreseeable future to do especially well.

“The most notable change in November is a drop in the number of people who see a recession coming,” he said. “In October, the share of respondents predicting bad times was 31 percent. That figure is now down to 22 percent. Consumers are optimistic again about the short-term health of the economy.”

All four Florida regions tracked by the survey showed increases in consumer confidence. The largest increases were in Central and north Florida, each of which gained seven points. Southeast and southwest Florida each rose three points to 99 in November.

Perceptions of current personal finances were up in Central and north Florida, but the biggest gains came from perceptions of U.S. business conditions during the next year. In both Central and north Florida, that component jumped 23 points to 105 and 98, respectively. Central Floridians are particularly optimistic about business conditions during the next 12 months, with that survey component rising to 105.

The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for November was calculated from 945 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.