Florida's high unemployment rate continues to hurt consumer confidence
GAINESVILLE, Fla. — Florida’s consumer confidence fell in February by two points to 72, reflecting concerns about unemployment that is growing worse statewide even as it improves for the nation at large, according to a new University of Florida survey.
“While national unemployment edged downward in January to 9.7 percent, Florida’s unemployment increased to 11.8 percent,” said Chris McCarty, survey director of UF’s Bureau of Economic and Business Research. “This month Floridians may be coming to terms with the possibility that Florida’s economy will not recover at the same pace as other states.”
Three of the components that make up the index declined, and two increased.
Expectations of U.S. economic conditions over the next year fell five points to 67, while expectations of U.S. economic conditions over the next five years fell four points to 75. Perceptions of personal finances now compared with a year ago rose one point to 54, while expectations of personal finances a year from now fell four points to 82. Perceptions of whether it is a good time to buy big-ticket consumer items rose one point to 81.
The two-point decline in the overall index follows a five-point increase in January to 74.
“January’s index seemed more optimistic than it should have been given the economic climate in Florida,” McCarty said. “It’s worth noting that January’s higher index value was based on data collected prior to the release of unemployment figures for Florida.”
On the positive side, respondents report progress in their current personal finances, McCarty said. Some of the optimism may result from increased saving, improvement in home prices compared to the past two years as well as a sense of stability in the U.S. stock market, he said.
“There is no question that the economy is in better shape than it was even one year ago,” he said. “Financial markets are functioning and banks are lending, although they are being cautious. Many of the bad loans made during the latter part of the housing boom have cleared and the extent of the effects is now largely known.”
In other positive news, layoffs have largely abated, he said.
All five of the components that make up the February index are above what they were a year ago, he said.
“The problem comes down to employment and the potential effects of extended high unemployment on other areas of the economy, such as retail sales and housing,” McCarty said. The long-term unemployed, those out of work for more than six months, now make up nearly 40 percent of all the country’s unemployed, he said.
Although data on long-term unemployment by state are not available, certain sectors that Florida relies on are disproportionately represented, such as construction, McCarty said. Many of the long-term unemployed in Florida are getting close to running out of benefits, he said.
“This month it is very likely that unemployment in Florida will top 12 percent,” he said. “It is hard to imagine how Florida’s consumer confidence will make any substantial gains when unemployment continues to increase.”
Consumer confidence is being sustained in the upper 60s and lower 70s by those who have managed to keep their jobs during the recession, McCarty said.
“If unemployment continues to remain above 10 percent through 2010, as is expected, consumer confidence and consumer spending are likely to remain anemic,” he said.
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 February was collected from 457 responses.