Florida Consumer Sentiment Bounces Back in June

June 26, 2015

GAINESVILLE, Fla.—Consumer sentiment among Floridians rebounded 1.6 points in June to 89.5 after a nearly 7-point tumble in May, according to the latest University of Florida consumer survey. 

Of the five components that make up the index, three increased and two decreased. Expectations about personal finances a year from now surged nine points to 103.3, erasing a large decline in May.

However, perceptions of personal finances now compared with a year ago fell 5.9 points to 78.3 following a 1.1-point decline in May.

Expectations of U.S. economic conditions over the next year dropped 1.7 points to 83.9, while expectations of U.S. economic conditions over the next five years rose 2.8 points to 84.1. Perceptions as to whether it is a good time to buy big-ticket items like a car rose 3.5 points to 97.8.

“The overall gains in the Florida index in June were among older and low-income households,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “These two demographic groups showed particular strength in their expectations about personal finances a year from now and were the only groups with higher scores than last month regarding their current finances being better than a year ago. In contrast, households with more than $50,000 in income reported a 12-point decline in their perceptions of their current personal finances.”

McCarty noted that this pessimism was unusual given that most economic indicators that would affect upper-income households remain positive.

The unemployment rate in Florida rose in May by one-tenth of a percentage point to 5.7 percent, mirroring U.S. unemployment, which also rose slightly to 5.4 percent. Experts think the U.S. unemployment rate increased because of growth in the labor force, presumably because some “discouraged” people who were previously not seeking work now started looking for a job as more opportunities emerged.

However, Florida gained 268,500 jobs while its labor force declined by 27,000. Unlike the U.S. unemployment rate, the increase in Florida unemployment was due entirely to rounding; rates were functionally unchanged month to month. Although the U.S. labor force participation rose from 62.8 percent to 62.9 percent, Florida’s labor participation rate declined from 59.6 percent to 59.3 percent.

Currently the stock market is still near record highs and the Federal Reserve has put off an interest rate hike for the time being, at least until September. However, the stock market has been somewhat volatile in June, and those with investments are increasingly wary that equities are overpriced.

Housing sales and prices have been strong this spring: The median price for a single-family home is higher than both the previous month and a year ago. Higher-income households may be concerned about a potential drop in housing prices given that they are more likely to own their home, but so far that fear is not realized. 

Counter to forecasts, gas prices rose in June by over 10 cents, which disproportionately affects lower-income households. Inflation in the U.S. rose four-tenths of a percent in May, a good sign for the Federal Reserve, but excluding food and energy rose only one-tenth of a percent. 

“There are signs that the labor market in the U.S. is healing, with the economy adding jobs, jobless claims falling and more people returning to the labor market,” McCarty said. “Florida has made consistent employment gains, but the jobs we have created tend to pay less than national averages and Florida labor force participation is still historically low.”

McCarty pointed to the situation in Europe as a potential dark cloud over consumer sentiment. “The fear is that Greece getting special treatment or exiting the EU could spark problems with other nations in financial distress,” McCarty said. “This could ultimately affect the U.S. economy and Florida in particular because many tourists and homebuyers now come from Europe.”

Conducted June 1-22, the UF study reflects the responses of 413 individuals who were reached on cell phones, 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