Consumer sentiment among Floridians fell almost three points in September to 87.9, according to the latest University of Florida consumer survey. Among the five components that make up the index, four declined and one increased.
Perceptions of personal finances now compared with a year ago fell 2.1 points to 80.5, while expectations of personal finances a year from now fell 3.5 points to 96.9. Views of U.S. economic conditions over the next year fell 5.9 points to 83, while anticipated U.S. economic conditions over the next five years fell 6.1 points to 82.3. The only increase was in opinions as to whether now is a good time to buy big-ticket items like a car, which rose 3.5 points to 96.7.
“Given the correction in the stock market at the end of August, we expected our index to decline this month,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “The market is reacting to growing weakness in the Chinese economy, a significant driver of global economic growth. This indicates lower global demand and raises uncertainty over economic and political stability in a region that has become reliant on China as the anchor.”
The stock market shake-up is reflected in the breakdown of consumer sentiment components by demographics. The sharpest declines were among older respondents and those making more than $50,000 per year on the short- and long-run expectations of U.S. economic conditions.
“Both groups are likely concerned that further market corrections are coming,” McCarty said. “While U.S. stock markets have stabilized in the short run, we are down 5.4 percent for the year and at one point were down more than 10 percent.”
Other parts of the Florida economic picture are more positive. The unemployment rate declined again in August to 5.3 percent, only two-tenths of a percentage point higher than the U.S. rate of 5.1. Unlike previous reports, the primary job gains were in private education and health services. There was a modest decline in the labor force, which contributed to lower unemployment.
The labor force participation rate declined again and is now down to 58.4 percent. While the Florida labor force participation rate has historically been lower than the U.S. average given the higher proportion of seniors, Florida’s participation rate has declined sharply relative to the nation’s rate since the beginning of the year and is now 4.2 percentage points lower than the U.S. rate.
“This is a trend that must change for Florida’s economy to improve,” McCarty said.
Housing prices for August, while up over 11 percent from a year ago, flattened compared with July. Mortgage rates have been declining since June with the rate for a 30-year fixed mortgage at 3.79 percent, making it a good time to buy a home for those who can qualify and afford the down payment.
Retail sales have been weak, in part due to falling energy prices. Gas prices will go below $2 a gallon in many parts of Florida by the end of the year.
“There was a lot of anticipation leading up to the Federal Reserve meeting in September, with about half of economists expecting a small rate increase and half expecting rates to stay the same,” McCarty said. “While the Fed decided to leave rates alone, they have signaled that there will be a modest increase either in October or December. Another factor that may affect confidence in October is the possible government shutdown over funding for Planned Parenthood.”
Conducted Sept. 1-20, the UF study reflects the responses of 426 individuals who were reached on cellphones, 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 this month’s survey can be found at http://www.bebr.ufl.edu/csi-data