UF survey: Florida consumer confidence surges upward in January
GAINESVILLE, Fla. — Consumer confidence among Floridians surged in January, up seven points to 77 from a revised December reading of 70, marking a steady rise in optimism, according to a University of Florida survey.
Four of the five categories measured by the survey reveal increased optimism. For instance, the overall perception among survey takers that they are better off financially than they were a year ago rose four points to 60, the highest figure since March 2008 when the U.S. economy began to falter. Expectations that their personal finances will improve by this time next year also rose eight points to 86.
In addition, confidence in the nation’s economy over the next year went up dramatically by 14 points to 74. Trust in the U.S. economy over the next five years was upbeat, too, moving 10 points to 83. These figures parallel results of a University of Michigan study that show consumer confidence across the nation shot up from 69.9 in December to 75 in January.
Only when it came to deciding if the present is a good time to buy big-ticket items such as an automobile or a refrigerator, did confidence among respondents sag, falling four points to 81.
“Consumer confidence in Florida is now back to the level it was in January 2011,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “We are beginning the year with the same pattern as last year where there were relatively steady increases in confidence from the end of the summer with a surge to 77 in January 2011. This was followed by seven months of decline with the low of 61 in August 2011 when Congress debated the debt ceiling.”
The UF survey shows these increases ranged across income and age groups, except for lower income respondents whose perceptions of current personal finances declined slightly. Results also indicate little difference in confidence among political parties, which indicate that the rising consumer confidence is most likely linked to perceptions of the economy rather than concern about the upcoming November elections, McCarty said.
Employment gains, especially in trade, transportation and utilities, may help explain the boost in confidence. However, McCarty said, the drop in unemployment may also reflect a decline in the labor force, along with adjustments the Bureau of Labor Statistics used to remove seasonal fluctuations in its unemployment calculations.
“The employment report for January will help identify if this is indeed a trend,” he said.
Encouraging news about housing prices and stock market investments, which are the major asset sources for most households, also may be helping to buoy Floridians’ spirits, McCarty said. For instance, the median price of a single-family home increased in December to $134,300, a $4,000 gain from the previous month. In addition, the stock market is near a post-recession high.
“Concrete plans to modify Social Security and Medicare have been shelved, at least temporarily, which is a relief to many seniors,” McCarty said.
Finally, although gas prices have increased nearly 20 cents a gallon over the past month, inflation overall remains low. In addition, interest rates are at near record lows and the Federal Reserve has announced plans to keep them low for the next two years.
“While many aspects of the economy are better this year, it remains to be seen whether this level of confidence will be sustained,” McCarty said. “The biggest threat to the U.S. economy, and therefore Florida, is the recession in Europe which would affect Floridians primarily as decreased demand for Florida tourism, decreased demand for houses from foreign investors, and the stock market portfolios of workers and retirees whose investments would include companies with exposure to much of Europe. However, barring a very negative outcome to the turmoil over European debt, this pattern of confidence, if sustained, bodes well for Florida.”
The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest is 150.
The UF survey was conducted between Jan. 2 and Jan. 25, and reflects the responses of 420 individuals statewide.