UF Economists: Florida Consumer Confidence Drops Amid Market Dive

October 26, 1999

GAINESVILLE — Consumer confidence in Florida dropped four points in October, driven by a nosedive in the stock market and concern over an impending hike in interest rates, University of Florida economists report.

The preliminary index for October fell to 101 but still is high considering that last year at this time it was 96, said Chris McCarty, survey director with UF’s Bureau of Economic and Business Research.

“Our expectation is that consumer confidence will continue to decline as the holidays approach,” McCarty said. “This has been the pattern for the past few years. This has also translated into cautious holiday buying patterns, with consumers favoring discount stores and post-Christmas sales than the traditional trip to the mall.”

The survey component measuring opinions about U.S. business conditions during the next year fell six points to 97, and the one measuring opinions about conditions during the next five years fell eight points to 86, he said.

The fall in confidence also was spurred by increased pessimism over personal finances, McCarty said. That component fell four points to 95.

McCarty pointed out that national indicators of economic vitality have fallen during the past month. The stock market lost more than 1,000 points — 9 percent of its value — from its high during the past year, and although the Federal Reserve Board left interest rates unchanged, many observers expect it to raise rates when it meets again in mid-November, he said.

That, combined with a falling dollar and record trade deficits, has investors nervous, McCarty said.

“Confidence dropped more among higher-income respondents,” said UF economist Dave Denslow. “Last month, many of them lost money in stocks, not enough to depress them, but enough to take the edge off their exuberance.”

The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for October was calculated from 465 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.