GAINESVILLE, Fla. — Consumer confidence among Floridians surged six points to 71 in April amid indicators of flattening housing prices statewide and news that the economy has not worsened, a new University of Florida survey finds.
“The size of the increase comes as somewhat of a surprise,” said Chris McCarty, director of UF's Survey Research Center at the Bureau of Economic and Business Research. “We had expected confidence among Florida’s consumers to move up and down in a fairly narrow window from the low to the upper 60s.”
While there are certainly some signs that the economy may be improving, such as housing prices possibly hitting their lowest point, many negative conditions still exist, such as continuing job losses, McCarty said. Florida’s unemployment rate of 9.7 percent is the highest since 1976, he said.
“However, in balance, consumers seem to have absorbed most of the bad news and are at least not seeing things getting much worse,” he said. “Perhaps we really have seen the bottom in terms of Florida consumer confidence, which was back in June of last year.”
In that month, consumer confidence sunk to 59, its lowest level in the index’s 25-year history.
All five of the components in April rose. The biggest jump was in perceptions of whether it is a good time to buy big-ticket items, such as cars and appliances, which jumped 15 points to 77. Perceptions of U.S. economic conditions over the next year climbed nine points to 69, while perceptions of U.S. economic conditions over the next five years rose three points to 82. Perceptions of personal finances a year from now increased five points to 85, while perceptions of personal finances now compared with a year ago rose two points to 44.
Despite these positive signs, there is still enormous uncertainty surrounding the economic recovery, McCarty said.
The massive interventions by the federal government, the Federal Reserve and governments around the world have had obvious effects, although there is debate whether the effects are all positive, McCarty said. At the same time, stock markets around the world have experienced a recent rally that some economic pundits characterize as the beginnings of a recovery but could turn around quickly with bad news, he said.
If housing prices nationally begin to stabilize, this would help establish the value of some of the toxic assets held by banks and at least indicate how deeply the recession has hurt the global economy, he said.
“Consumers seem to characterize the economy by those events both in their personal lives and in the news that are changing the most, whether those be good or bad,” he said.
There has not been much news recently about very large bailouts, nor have there been many notable bankruptcies of very large companies, although there is a strong possibility that General Motors Corp. and Chrysler may end up having to declare bankruptcy, McCarty said. Were that to happen, it would likely cause at least a temporary drop in consumer confidence, even here in Florida, he said.
Barring something of that magnitude, consumer confidence may continue to improve as various sectors of the economy begin to recover, he said.
“For Floridians specifically the next big news will probably be the Florida state budget and the effects it will have on taxpayers, who stand to pay more in various fees, and those who depend on state revenue for their employment,” he said. “The effects of this may not be known well into May.”
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 April was conducted from 406 responses. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year.
Source: University of Florida Media Release
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