GAINESVILLE, Fla. — Consumer confidence among Floridians inched up one point to 68 in January despite worse than expected holiday retail sales and the state being tied for 10th place in the percentage of unemployed workers, a new University of Florida study finds.
The makeup of the results was quite different from last month, with perhaps the biggest change in the component measuring perceptions of personal finances now compared with a year ago. It broke a four-month trend downward to rise five points from last month’s record low of 39.
In other changes, perceptions of personal finances a year from now fell three points to 84; perceptions of national economic conditions over the next year fell four points to 58; perceptions of national economic conditions over the next five years fell one point to 77; and perceptions of whether it is a good time to buy big-ticket items rose five points to 76.
“Overall, Floridians are more optimistic this month than last month, although the overall numbers are still historically low,” said Chris McCarty, director of the UF's Survey Research Center at the Bureau of Economic and Business Research. “Moving forward there is no reason to believe that the economy will improve dramatically for the next two quarters. This recession is more severe than most, and there are some aspects that are different than others.”
Employment nationally has fallen dramatically, and Florida’s high number in the percentage of jobless is the result of a combination of factors, McCarty said. Construction, which two years ago represented one of the largest percentages of employment in the Sunshine State, has ground to a near halt, and there have been declines in service sector jobs related to the real estate crisis as well as the tourist industry — another casualty of a pullback in consumer discretionary spending, he said.
“Retail sales for the holiday season ultimately proved to be even lower than many forecasts, and sales will continue to be weak as consumers cut back in reaction to the recession,” McCarty said.
Most economists forecast higher unemployment through 2009 and some even into 2010, although most of these predictions do not take into account any intervention by the federal government, such as the $825 billion stimulus package making its way through Congress, he said.
Florida’s 8.1 percent unemployment in December — the latest month for which statistics are available — is higher than the national rate of 7.2 percent, McCarty said.
McCarty said he was not surprised that the component measuring perceptions of personal finances compared with a year ago rose this month, given that it was so low before. But Floridians remain very pessimistic.
“At some point things cannot get much worse, or at least we hope they won’t,” he said. “So answers to this question have to turn the corner at some time.”
Similarly, the optimism last month about national economic conditions over the next year, which jumped seven points, and over the next five years, which rose five points, may have been out of line with actual events and more about expectations relating to the transition to a new presidential administration, he said.
The index component measuring perceptions about whether it is a good time to buy big-ticket items has risen for the fourth month and reflects the continued deep discounting from retailers across the board, McCarty said. The problem is, and will continue to be, access to credit that is often necessary for big-ticket purchases, he said.
“Although loans are available to many consumers, first-time buyers of items from cars to homes often find it difficult to get financing,” he said.
“Eventually this recession will turn around, and pent up consumer demand and reorganized businesses will lead to economic growth,” he said. “Unfortunately, that will probably not begin to occur until the fourth quarter of 2009 or the first quarter of 2010 when bank balance sheets have fully processed the extent of the bad loans.”
The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for January was conducted from 417 responses. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year.
- Cathy Keen
- Chris McCarty
- Source: University of Florida Press Release