Average annual consumer confidence at record low, December consumer confidence remains depressed amidst The Fed’s war on inflation
Consumer sentiment among Floridians fell slightly four-tenths of a point to 64 from November’s revised figure of 64.4. On the contrary, national sentiment rose nearly 3 points.
“As the year winds down, annual average consumer confidence stands at 64.3 points in 2022, its lowest level on record since the series began tracking consumer confidence in 1985. This is an indication that consumer attitudes have been overwhelmingly gloomy in 2022. The second-lowest annual average was 65.6 points and dates to the Great Recession in 2008,” said Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.
"Persistently high inflation over the past year has prompted the Federal Reserve to aggressively raise interest rates since March to bring inflation down; a depressed consumer confidence outlook raises concern about the future of the economy and increases the fears of a potential recession in 2023,” Sandoval added.
Among the five components that make up the index, three increased and two decreased.
Floridians’ opinions about current economic conditions were more optimistic in December. Views of personal financial situations now compared with a year ago increased slightly by seven-tenths of a point from 53.9 to 54.6. Similarly, opinions as to whether now is a good time to buy a big-ticket household item such as a refrigerator or furniture increased 2 points from 53.2 to 55.2. However, these views were divided across sociodemographic groups with men and people with an annual income above $50,000 expressing less-favorable views to both components.
The three components corresponding to Floridians’ expectations about future economic conditions were mixed. Expectations of personal finances a year from now decreased 3.1 points from 79.6 to 76.5. On the contrary, expectations about U.S. economic conditions over the next year increased slightly eight-tenths of a point from 62.1 to 62.9. Finally, the outlook of U.S. economic conditions over the next five years dropped 2.4 points from 73.3 to 70.9. Future outlooks were split by demographics with no discernible patterns except for women, who consistently expressed more favorable views across the three components.
“As we move into 2023, the biggest economic challenge facing the U.S. remains elevated inflation. While it is expected that inflation pressures will ease over the course of the year, the inflation rate remains well above the 2 percent target. Therefore, it is likely that the Fed will continue to raise interest rates in 2023, further increasing borrowing costs and the risk of a recession,” Sandoval said.
“Though we have not yet seen the full impact of the Fed's actions on the economy, the labor market has remained strong, especially in Florida, where the unemployment rate has steadily decreased and has remained below the national rate for the past two years. Despite this, we anticipate that Florida's consumer sentiment will remain weak throughout the first months of 2023,” Sandoval added.
Conducted November 1 through December 24, the UF study reflects the responses of 291 individuals who were reached on cellphones and 313 individuals reached through an online panel, a total of 604 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/florida-consumer-sentiment/