UF Survey: Florida Consumer Confidence Little Changed By Hurricanes

September 28, 2004

GAINESVILLE, Fla. — Hurricanes did little this month to dampen consumer confidence among Floridians, which declined only slightly, University of Florida economists report.

The overall preliminary index fell one point to 94, and three of the survey’s five components dropped.

The biggest decline was a four-point drop in the component measuring perceptions about whether it is a good time to buy big-ticket consumer items, such as appliances and cars. Perceptions about the U.S. economy over the next year fell two points to 87, and expectations about personal finances a year from now fell one point to 102.

Perceptions about personal finances now compared with a year from now remained unchanged at 88, while expectations about the U.S. economy over the next five years increased two points to 91.

“I’m somewhat surprised that the hurricanes have not had more of an effect on consumer confidence this month,” said Chris McCarty, director of the survey research center at UF’s Bureau of Economic and Business Research.

“Typically, we would expect to see that reflected in the question about short-term U.S. business conditions. While this did fall, it wasn’t as dramatic a drop as we have seen with other tragic events, such as 9-11 or the Iraqi invasion of Kuwait,” he said. “It may be that we have not yet talked to some of those affected by the hurricanes, although it appears that phone service was restored to the majority of the affected area.”

Florida has done well in its economic recovery compared with other states, McCarty said. The overall unemployment rate is lower than in many states — 4.5 percent compared with 5.4 percent for the nation as a whole — and tourism has been strong, he said.

“But the recent set of hurricanes will no doubt affect tourism,” said McCarty, adding that agriculture, particularly the citrus industry, already has been hurt. “As the effects of the hurricanes work their way through the economy, it is likely that consumer confidence will fall.”

On a more positive note, confidence among Florida seniors increased this month by four points to 85, the result of greater optimism about personal finances, McCarty said.

“Again, it remains to be seen whether the hurricanes will have some effect on confidence among seniors,” he said. “If so, we would expect to see that appear in the October index.”

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 September was conducted from 426 responses. The error rate is plus or minus 5 percent.

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

The index is benchmarked to 1966, so 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.