Florida consumer sentiment in February drops from record high
After three months of positive gains, consumer sentiment among Floridians fell 3.3 points in February to 94.0, according to the latest University of Florida consumer survey.
The pattern in Florida is similar to consumer sentiment at the national level, which also dropped 2.2 points in February to 96.3 from January’s record 98.5 according to the University of Michigan’s survey of consumers.
“While readings about current economic conditions increased slightly, expectations for the future decreased sharply among Floridians in February,” said Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.
Floridians’ perceptions of their personal financial situation now compared with a year ago ticked up six-tenths of a point this month, from 87.7 to 88.3. Opinions as to whether now is a good time to buy a big-ticket household item such as an appliance inched up seven-tenths of a point, from 100.7 to 101.4.
“The increase in these two components reflects that current economic conditions have improved in general among Floridians. These perceptions are particularly strong among men, those 60 and older and those with income levels over $50,000,” Sandoval said.
However, all three components that ask about future economic conditions showed a marked decrease. Expectations of personal finances a year from now showed the greatest decline in this month’s reading, dropping 6.6 points from 106.0 to 99.4.
Opinions about the national economy were also negative: Expectations of U.S. economic conditions over the next year decreased 5.2 points, from 96.8 to 91.6. Anticipated U.S. economic conditions over the next five years fell from 95.1 to 89.3, a 5.8-point drop.
“Expectations about future economic conditions increased between November and December of last year, but have declined since then. Floridians are pessimistic about their future personal finances independent of their socioeconomic and demographic status. The greatest declines in perceptions about the national economy were among women, those under age 60 and those with annual income above $50,000,” Sandoval said.
Until September 2016, the current economic conditions components and the future expectations components moved together in tandem. But from September 2016 until February 2017, the future expectations components went up faster and stayed above the components reflecting current conditions.
“Expectations about the U.S. economy improved greatly before and right after the presidential election, perhaps because the population was optimistic about the incoming administration,” Sandoval said. “However, these expectations are turning pessimistic in February and the gap between the present perceptions and future expectations has disappeared.”
Overall, economic activity has expanded and the labor market continued to strengthen in the U.S. As a result, earlier this month the Federal Open Market Committee decided to keep the benchmark overnight lending rate target at a range of 0.5 percent to 0.75 percent.
In recent months, Florida job gains have remained strong and the unemployment rate has remained low, reflecting the state’s positive economic environment.
Economists look to consumer sentiment as an early signal of future conditions, because confidence among consumers leads to spending and consumption. “High levels of confidence are important to keep the economy growing,” Sandoval said. “The next few months will be key to assessing the potential economic outlook for the following years.”
Conducted Feb. 1-23, the UF study reflects the responses of 489 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.