UF Economists: Florida Consumers Buoyant, Unfazed By New Millennium

January 25, 2000

GAINESVILLE, Fla. — Consumer confidence in Florida rose three points in January, reflecting unbridled optimism in the nation’s economy and waning concerns over the vanquished Y2K bug, University of Florida economists report.

The preliminary index for January inched up to 107, just one point lower than the all-time high of 108 last February and an unexpectedly strong culmination to the holiday season, said Chris McCarty, survey director with UF’s Bureau of Economic and Business Research.

“The end of year was strikingly different from previous years in terms of consumer confidence and its effects on retail sales,” McCarty said. “For the past several years, consumer confidence has declined through December, then recovered in January. This year consumer confidence fell in October, but has been climbing steadily since then.”

In contrast to previous years in which November and December retail sales were weak, this year saw strong sales during the traditional holiday buying season, McCarty said.

“The end of the millennium caused no fears, and consumers appear ready to continue their buying behavior,” he said.

There also was a significant gain in the survey component measuring opinions on whether to buy big-ticket consumer items such as appliances and cars that often are purchased on credit, McCarty said. That component has been falling since September and has now recovered to the September level, he said.

“A big boost to the index in January came from more respondents saying that now is a good time to buy major household items,” said UF economist Dave Denslow. “In December, many said it was not a good time for such purchases, probably because the stores were crowded for the holidays.”

The survey component measuring consumers’ perceptions of their personal financial situation now compared with a year ago fell from 102 to 98 in January, McCarty said. Although this is a significant drop, consumers are still optimistic overall about personal finances, he said.

“With inflation still in check, high wages and employment, and steady gains in the stock market, consumers have reason to believe that they are in good financial shape,” he said.

The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for January was calculated from 529 responses. The margin of error for the index is 3 percent.

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