Consumer sentiment experiences small decline in May back to six-month average in May

After two months of consecutive increases, consumer sentiment among Floridians dropped 1.4 points in May to 81.6 from a revised figure of 83 in April, while the national consumer sentiment plummeted 5.4 points.

Among the five components that make up the index, two increased and three decreased.

Floridians’ opinions about current economic conditions were more optimistic in May. Views of personal financial situations now compared with a year ago increased three-tenths of a point from 72.6 to 72.9. Similarly, opinions as to whether now is a good time to buy a major household item like an appliance increased seven-tenths of a point from 76.7 to 77.4. Opinions were split across socio-demographic groups, with women and people age 60 and older consistently expressing less favorable views across both components.

“It is not surprising that Floridians reported that their current economic situation was more favorable compared with a year ago. Florida’s unemployment rate peaked at 14.2% in May last year, while the number of continued claims of unemployment benefits reached over 2.1 million, meaning that around 25% of the labor force was receiving unemployment insurance. Nonetheless, it is surprising that perceptions of current economic conditions increased only marginally, suggesting that a long climb is still ahead,” said Hector Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.

On the contrary, the three components corresponding to Floridians’ expectations about future economic conditions declined in May. Expectations of personal finances a year from now decreased 1.5 points from 92.3 to 90.8. Likewise, anticipations of U.S. economic conditions over the next year decreased 2.1 points from 85.7 to 83.6. These expectations were divided as well with men and people age 60 and older reporting less favorable views across these two components. Finally, expectations of U.S. economic conditions over the next five years dropped 4.3 points from 87.5 to 83.2, the largest decline in this month’s reading. This reading is shared by all Floridians, but is particularly strong among men, people younger than 60, and people with an annual income above $50,000.

“Overall, Floridians are more pessimistic in May, stemming from their perceptions about future economic conditions, particularly the long-run national economic situation. Although the economy is bouncing back, future expectations can be explained by the recent jump in inflation which will decrease purchasing power over time if it is not temporary as anticipated by economists,” Sandoval said.

“Despite this month’s drop, consumer confidence among Floridians has remained largely unchanged over the past six months, averaging 81.3 points over that period. Looking ahead, we expect consumer sentiment to hover around that average,” Sandoval added.

Conducted April 1 through May 27, the UF study reflects the responses of 293 individuals who were reached on cellphones and 298 individuals reached through an online panel, a total of 591 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 this month’s survey can be found at https://www.bebr.ufl.edu/sites/default/files/csi/csi_2021_1_june.pdf.