UF survey: tax refund promise boosts consumer confidence

June 27, 2001

GAINESVILLE, Fla. — Consumer confidence in Florida increased two points this month, most likely reflecting high spirits over the recent news of income tax refunds, University of Florida economists said today.

The preliminary index rose from 92 in May to 94 in June, said Chris McCarty, survey director at UF’s Bureau of Economic and Business Research.

“A good bet is that the bonus tax refunds lifted the confidence index,” said UF economist Dave Denslow. “The timing fits the refunds. But it may be that people plan to save their checks. The share of respondents saying now is a good time for major purchases was down slightly from May.”

During the month of June, people learn whether they will receive a tax rebate check by the end of summer, McCarty said.

More affluent Floridians also learned that the governor would sign a major tax relief package focusing on the intangibles tax, he said, noting that the rise in perceptions of personal finances on the survey is largely centered on households with annual incomes of more than $30,000, he said. Among the survey breakdown categories are those for people with incomes less than $30,000 and those for people with incomes of $30,000 and more.

More Floridians, especially those with higher incomes, responded that they were better off financially this June than they had been a year ago, Denslow said. For people with incomes of $30,000 and more, that component of the index rose to 102 in June, up from 94 in May.

“We actually expected consumer confidence to decline in June, given the loss of jobs in May and some increasingly negative earnings reports from large companies,” McCarty said. “It appears that consumers have not yet thrown in the towel on the economy. While the index is substantially lower than at the same time last year, 94 now compared to 106 then, consumers remain quite optimistic.”

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 425 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.