UF Economists: Good Economic News Fuels Two-Point Hike In Confidence

May 27, 1997

GAINESVILLE — A record high stock market and media reports of a healthy economy spurred a two-point rise in Florida’s consumer confidence in May, University of Florida economists report.

The preliminary consumer confidence index for the month rose to 97, recovering the two points it lost between March and April, said economists with UF’s Bureau of Economic and Business Research, which conducts the monthly survey.

“Consumer confidence is largely affected by what we read and hear in the media,” said Chris McCarty, the bureau’s survey director. “With record highs in the stock market and one report after another indicating a stable and healthy economy, consumers appear to be exuberant.”

Disposable income has risen steadily since January, and despite reports of downsizing, unemployment remains quite low, as does inflation, he said.

Consumers are the most confident they have been in more than a year and a half that now is a good time to buy expensive consumer items, such as appliances and refrigerators. This component rose one point from April to 114 in May, its highest level since September 1995.

Despite high confidence and higher wages, though, there have been signs in the past two months that consumer spending nationally has started to wane, McCarty said. “Auto sales, for example, fell slightly in April, and March figures show a slight decrease in new and existing home sales,” he said. “These declines are not reflected in the outlook of most consumers.”

Nationally, consumer confidence has been rising since January, as measured by the University of Michigan, the index after which the Florida survey is patterned. That index shows national confidence at 101.4 for April, exceeding its record high of 101 for March 1984. Another indicator, the Conference Board index of consumer confidence, dipped slightly in April — down nearly two points to 116.8 — but still reflects high consumer confidence nationally, McCarty said.

Employed Floridians gave similar reports of business activity as last month. For the second month in a row 52 percent of respondents claimed business is better than at the same time a year ago. At the same time, the share who expected extra employees to be hired at their workplace in the next six months increased from 35 percent in April to 39 percent in May.

The Florida Consumer Attitude Survey is conducted every month by the bureau. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for May was calculated from 911 responses, a response rate of 55 percent. Numbers for prior months are based on about 1,000 responses. The margin of error for the index is almost three points. Regional results are subject to a sampling error of almost four points.