Florida's consumer confidence slips amid doubts about personal finances
May 26, 2009
GAINESVILLE, Fla. — Florida’s consumer confidence dropped one point in May to 71, reflecting pessimism about personal finances despite an improved national economic outlook, the latest University of Florida survey finds.
The index component measuring perceptions of personal finances now compared with a year ago fell four points to 40, one point above its all-time low record of 39 in December. In contrast, expectations of personal finances a year from now rose five points to 90, the highest level since October 2007.
“The makeup of the consumer confidence index in May reflects optimism about the economy in the short run, but the decline in perceptions of current personal finances to near record lows is noteworthy,” said Chris McCarty, director of UF’s Survey Research Center at the Bureau of Economic and Business Research. “Floridians are saying they don’t have the money now to buy, but they expect to within a year.”
Perhaps consumers also are wondering what happens when the government’s infusion of stimulus money runs out, McCarty said. “While they expect the U.S. economy to improve over the next year, they are beginning to question its long-term viability,” he said.
Of the remaining index components, perceptions of the U.S. economy over the next year rose four points to 73, while perceptions of U.S. economic conditions over the next five years fell four points to 78. Perceptions of whether it is a good time to buy big-ticket consumer items fell six points to 72.
The economic environment for consumers is mixed. On the plus side, housing prices in Florida appear to be stabilizing in some markets, although foreclosures are still high, McCarty said. In many areas, housing prices have fallen to a level that could not sustain a much larger drop, he said.
In other positive news, the unemployment rate fell two-tenths of a percent in April to 9.6 percent, McCarty said. Rising unemployment has been a big concern for policymakers in anticipating a recovery, he said.
However, the stock market continues to show volatility, although it is appearing to have a sustained rally, he said.
Also of concern is that retail sales have been down for the past two months, reflecting pessimism about the economy, even though April’s decline was small, McCarty said. Also, gasoline prices have risen 25 cents in the past two weeks, as is typically the case when summer travel approaches, he said.
“Moving forward, we still anticipate at least a short-term decline in confidence over the next couple of months as the impact of the state budget is felt and the effects of a GM (General Motors) bankruptcy move through the system,” McCarty said.
However, on balance, the economic news, while not necessarily good, is not shockingly bad, either, he said.
“Like the end of hurricane season, Floridians are grateful for a day, week or month without facing economic destruction,” he said. “At this point, they just want to get about the business of cleaning up the mess.”
The overall index for April was revised from a preliminary figure of 71, which was reported earlier, to 72 after all the survey data had been collected at the end of the month.
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 May was conducted from 408 responses. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year.