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Despite positive economic indications, Florida’s consumer sentiment tumbles in August

Consumer sentiment among Floridians plummeted 6.7 points in August to 93.3 from a revised figure of 100 in July. This sharp decline is in line with the University of Michigan’s reading for the U.S., which fell by 8.6 points. The last time consumer sentiment dropped more than six points was in May 2015.

All five components that make up the index declined.

Opinions of personal financial situations now compared with a year ago decreased 9.2 points from 96.3 to 87.1, the steepest decline in this month’s reading. This opinion is shared by all Floridians across different sociodemographic groups; however, it is particularly stronger among women, those 60 and older, and those with annual income under $50,000. Similarly, opinions as to whether now is a good time to buy a major household item like an appliance decreased 5 points from 103.9 to 98.9. These downward readings were shared by all Floridians with the exception of men, whose reading showed a positive change.

“Overall, these two components indicate that Floridians’ opinions about current economic conditions have deteriorated in August,” said Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.            

Similarly, the three components representing the expectations of future economic conditions worsened in August. Expectations of personal financial situations a year from now fell 5.5 points from 108.1 to 102.6. Expectations of U.S. economic conditions over the next year plummeted 7 points from 97.4 to 90.4. Expectations of U.S. economic conditions over the next five years decreased 6.9 points from 94.4 to 87.5. These expectations are shared by almost all Floridians, but again, they are particularly stronger among women.

“Consumer confidence declined across all five components in August. The last time this happened was in May 2019, when the escalating trade war with China and the new tariff threat with Mexico were likely behind the sharp decline in consumers’ opinions about their current and future personal financial situation,” Sandoval said. “In this month’s reading, these less-favorable opinions and expectations are most likely due to the ongoing trade war with China and the new round of tariffs starting Sept. 1 and Dec. 15. The inversion of the yield curve that occurred in mid-August indicated that markets were anticipating a slow economic growth ahead and a recession in the following months.

“Although the latest movements in consumer confidence anticipate a declining economic position, economic indicators in Florida are still favorable,” Sandoval said.

Florida’s economy continued to expand, with more jobs added and further declines in the unemployment rate. Compared with a year ago, the number of jobs increased by 227,200 in July, reaching more than 10 million jobs in total. Among all industries, education and health services gained the most jobs, followed by professional and business services, leisure and hospitality, and trade, transportation and utilities. The unemployment rate in July was 3.3%, 0.1 percentage points lower than June and 0.2 percentage points up from the lowest rate ever recorded since the data are available.

“Despite the positive economic indicators, we anticipate further declines in consumer confidence in the coming months due to the ongoing trade war with China, threats of higher tariffs, and the recent signs of the beginning of a slowdown,” Sandoval said.

Conducted August 1-29, the UF study reflects the responses of 403 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

Perry Leibovitz September 4, 2019