UF: Florida's consumer confidence hits post-recession high
GAINESVILLE, Fla. — Floridians’ consumer confidence rose another two points in May to 81 — a third straight month of increases for a post-recession high, according to a University of Florida survey.
“The last time confidence was this high was August of 2007 when it was 82, shortly before the Great Recession began,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. `
Three of the five components used to determine the Florida Consumer Sentiment Index increased. Respondents’ expectations that their personal finances will improve a year from now rose three points to 82. Meanwhile, their overall confidence in the nation’s economic conditions over the coming year increased two points to 81, and their trust in the national economy over the next five years surged eight points to 85.
The survey also showed a decline in two components. Survey takers’ perception that they are better off financially now than a year ago fell three points to 68. In addition, their confidence that now is a good time to buy a big consumer product, such as an automobile, fell one point to 89.
Overall, though, Florida’s confidence shows an upward trend.
“April’s increase was largely due to increased confidence among respondents under age 60 who were optimistic about their personal finances and U.S. economic conditions,” McCarty said.
But the latest survey results show that older Floridians are even more optimistic. For example, confidence among respondents 60 and older in the national economy over next five years increased 15 points to 88.
“As the headlines turn to news other than budget cuts and possible changes to Social Security, consumer confidence improves for Floridians,” McCarty said. “This is especially true for seniors.”
Meanwhile, positive statewide economic news continues to boost confidence. The legislative session in Tallahassee recently ended with a budget increase for the first time in several years. April’s unemployment rate was 7.2 percent, a drop of three-tenths of a percent from March. Construction, retail trade and service sectors saw job increases. Home sale prices improved again by $5,000 to a median price of $165,000. Sales have been strong, and new home construction is under way in some areas of Florida.
The stock market has reached record highs in May, though there are signs of a pullback.
“Investors are now worried that the Federal Reserve may slow its purchases of mortgage-backed securities as an unemployment rate of 7.5 gets close to its target for a normal economy and inflation becomes more of a concern,” McCarty said.
So far, most Floridians have not experienced the negative effects of sequestration. However, this could change as wide-reaching cuts in services and jobs trickle into the economy, McCarty said.
That process may have already begun. Employment in leisure and hospitality is down from March, and Florida’s sales tax revenue in April was less than expected. McCarty suggested sequestration might have affected plans for vacations for workers in other states.
“Our expectation is that the effects of sequestration will be more fully realized as the summer progresses and confidence will likely stay the same or pull back slightly,” McCarty said. “For now optimism among Floridians is growing.”
Conducted May 13-23, the study reflects the responses of 410 individuals, representing 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 May survey can be found at http://www.bebr.ufl.edu/cci.