UF: Florida consumer confidence unchanged in August
GAINESVILLE, Fla. — Florida’s August consumer confidence level was 77, a figure unchanged since July, according to a monthly University of Florida survey.
“Floridians seem somewhat resilient in the face of the economic challenges facing the U.S. and Florida this coming January,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. The new year could bring an end to federal tax cuts and automatic spending cuts unless the Congress and the president take action.
Of the five components researchers use to assess the economic mood of Floridians, two showed a boost in confidence. Respondents’ faith in U.S. economic conditions over the coming year rose one point to 76, while their optimism about the national economy over the next five years went up four points to 83.
Two other components, however, revealed a drop in confidence. Floridians’ overall perception that now is a good time to buy a big-ticket item, such as an automobile or computer, declined two points to 80. In addition, their perception that they are better off financially today than they were a year ago dipped by two points to 62. Meanwhile, their expectations that personal finances will improve a year from now stayed the same as July at 85.
Floridians are reasonably optimistic, despite possible economic setbacks nationwide that could occur if a set of expiring tax breaks and automatic spending cuts at the federal level happen at the same time, McCarty said.
In fact, the UF survey indicates that both the overall index and several of the components used in the survey are near post-recession highs.
“It appears that, at least for the month of August, Floridians are either not aware of the problem or they are assuming Congress will somehow fix it,” McCarty said. “This is true for both young and old, and lower- and higher-income households.”
A steady stream of good economic news may be contributing to the sustained optimism. For instance, although the median housing price dropped $3,000 from the previous month to $148,000, it still is substantially higher than a year ago. “Although these prices are 40 percent lower than their peak value in 2006, prices are slowly moving up instead of down,” McCarty said.
The stock market also could be boosting confidence as it continues to hold onto recent gains with the Dow still up more than 5 percent for the year. Florida’s unemployment rate edged up in July by two-tenths of a percent to 8.8, but employment gains have been more broadly based across the job market than previously, McCarty said. Though gas prices have risen since July, they are still 30 cents below their recent high of $3.85 for a gallon of regular gasoline.
“While consumers are optimistic compared to other post-recession months, they are still pessimistic when compared to the entire history of the index,” McCarty said. For example, although current consumer confidence for Floridians is only a point below the post-recession high of 78, it is far below what was considered normal prior to the Great Recession.
“In the 24 years of data prior to 2008 when confidence fell sharply, more than two-thirds of those years were above 90,” McCarthy said. Only two were below 80, and they occurred during the recession of 1991 and 1992, he said.
In contrast, confidence levels in three of the years since 2008 have averaged below 70, and no month has been above 78.
“Our expectation is that consumer confidence will go a bit lower as the election approaches,” said McCarty. “A critical point will be the presidential debates beginning in October. This may be the first opportunity for Floridians to hear how the financial problems coming in January may be addressed.”
Conducted Aug. 12-23, the UF study reflects the responses of 432 individuals who represent a demographic cross-section of 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.
Details of the August survey can be found at http://www.bebr.ufl.edu/cci.