Good buying conditions boost Florida's consumer confidence this month

April 27, 2010

GAINESVILLE, Fla. — Shoppers rushing to take advantage of home and appliance rebates caused Florida’s consumer confidence to spike in April by six points to 77 despite the state’s record unemployment, according to a new University of Florida survey.

The last time consumer confidence was at or above 77 in the Sunshine State was in October 2007 when it was 79, the same month the Dow Jones Industrial Average peaked at 14,168, said Chris McCarty, survey director of UF’s Bureau of Economic and Business Research.

“Florida’s consumers have been full of surprises the past several months,” McCarty said. “Much like the reading for January, this rise in confidence was completely unexpected. Last month Florida broke its all time record for unemployment at 12.3 percent. Yet Floridians are far more optimistic this month than last.”

Much of the increase is fueled by a dramatic rise in perceptions of buying conditions, McCarty said. The biggest jump among the index components was that measuring perceptions of whether it is a good time to buy big-ticket consumer items. It rose 14 points to 87.

“We believe this is a combined effect from the appliance rebate, which pumped $17.5 million into the Florida economy in a matter of days, as well as the tax rebate for both first-time homebuyers and those who have been in a home for the past five years,” he said. “These rebates are set up to run out at the end of this month and many consumers are rushing to buy homes to qualify for the rebate.”

Both rebates’ effects can be seen in higher sales revenues and higher sales of new and existing homes, McCarty said. Sales tax revenues going into the state’s General Fund were about 1.1 percent over estimates for February, with March sales likely to show a similar trend, he said.

“The big question is what happens when the rebates run out in May and the stimulus dollars are spent,” he said.

Consumers also were more optimistic than last month about short- and long-term economic conditions in the United States, McCarty said. “This reflects a stock market that remains at relatively high levels despite some difficult news, including charges by the SEC against Goldman Sachs and the possibility that Greece will not get the help it needs to solve its debt problems,” he said.

In all, four of the five components rose and one stayed the same. In addition to the 14-point increase in perceptions about buying big-ticket items, expectations of U.S. economic conditions over the next year rose 10 points to 80, while expectations of U.S. economic conditions over the next five years rose six points to 79. Perceptions of personal finances now compared with a year ago remained unchanged at 55, while expectations of personal finances a year from now rose two points to 84.

This month is very unusual in that the University of Michigan’s preliminary index, which measures national consumer confidence, was 69.5 for April — down four points from March — compared with Florida’s reading of 77, McCarty said.

“For the U.S. the present conditions index, which includes perceptions of buying conditions, fell for U.S. consumers, but rose for Floridians,” he said. “This is puzzling as by most measures the U.S. economy is in much better shape as a whole than is Florida.”

National unemployment has remained at 9.7 percent since January, compared with Florida’s rate of 12.3 percent, which topped the previous record of 12.2 percent last month and in May 1975, McCarty said. Florida began tracking unemployment in the 1970s, he said.

Retail sales nationwide have been unusually robust since the beginning of the year, with particularly strong showings from clothing, electronics and this month from car sales, McCarty said. The overall savings rate was down to 3.1 percent in February, less than half of the 6.4 percent reached in May of last year, he said.

“Consumers are clearly optimistic that the United States is in recovery and that the economy will at least not get any worse,” he said. “Therefore some of the spending may be pent up demand from households that were cautious about spending when the recession was at its height and when job losses were on the rise.”

Although long-term unemployment remains a serious problem in the near term, it appears that layoffs have mostly stopped, 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 April was collected from 400 responses.