UF Survey: Gloomy Job Picture Still Hurts Florida Consumer Confidence

August 26, 2003

GAINESVILLE, Fla. — Consumer confidence among Floridians fell in August for the second month in a row amid growing concerns over a gloomy job market, University of Florida economists report.

The preliminary index dropped two points to 90 primarily because of declines in two of the survey’s five components: perceptions of short term economic conditions, which fell seven points to 81, and expectations about personal finances over the next year, which fell four points to 101.

“Although there are signs of an economic recovery, it appears to be unlike previous recoveries in that many people are still without jobs,” said Chris McCarty, director of UF’s survey research center at the Bureau of Economic and Business Research. “This month’s decline in confidence appears to be more pronounced among lower-income respondents and the elderly. These respondents are the most likely to be impacted by the current job climate.

Low-paying jobs are the biggest casualties in the new economic environment, which also happen to be the ones sought by low-income people and the elderly, McCarty said. Primarily because of the recent accounting scandals, many retired people must return to work, and the jobs they tend to take are temporary or low paying, he said.

On the positive side, surveys of business managers of large companies suggest officials there are more confident than they were a year ago, and are starting to expand operations or launch new ventures, a critical part of any recovery, he said.

One of the primary measures of job growth is the number of people filing each week for unemployment insurance claims, McCarty said. For the past few weeks, this number has been teetering around 400,000 claims a week, a level usually associated with a declining labor market, McCarty said.

“Recent data suggest a trend toward fewer claims, which is typically indicative of an expanding labor market,” he said. “However, some economists have suggested that the declining claims may reflect workers who are simply running out of benefits, or who have taken temporary or low-paying jobs. The latter scenario would not be a solid foundation for a recovery.”

What remains to be seen is how many of the jobs lost are permanently lost because of either productivity gains or export of certain jobs to other countries, McCarty said. Currently, unemployment claims are at 3,363,000, which is considered very high compared to the 2,129,000 claims about six months prior to the 1990-91 recession, he said.

The survey component measuring consumers’ expectations of national economic conditions over the next year rose four points to 85. The other two components each fell one point. The one measuring perceptions of personal finances compared with a year ago dropped to 80, while the one measuring perceptions of whether the time is right to buy major household items declined to 107.

The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for August was conducted from 391 responses. The error rate is plus or minus 5 percent.

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

The index is benchmarked to 1966 so that a value of 100 represents the same level of confidence for that year. The value of the index is in comparing changes over time rather than looking at an isolated month.