GAINESVILLE, Fla. – July 26, 2011 – Increased optimism about making major purchases played a significant role in consumer confidence, according to a new University of Florida survey. UF’s monthly index rose two points in July to 68.
Four of the five components that make up the index increased or remained unchanged. The biggest improvement was in confidence to purchase big-ticket items such as cars and appliances, which rose five points to 77.
“Some of this may have to do with declines in gas prices during the month of June and much of July,” says Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “This leaves more money in people’s budgets for other purchases.”
The other index components that rose were perceptions of personal finances now compared with a year ago, which increased three points to 57, and expectations of personal finances a year from now, which climbed one point to 75. Expectations of U.S. economic conditions over the next five years remained at 72. The only component to decline was perceptions of U.S. economic conditions over the next year, which fell one point to 59.
Another reason for the increase was improved confidence among seniors, which rose five points to 66. A decline recorded last month, McCarty says, was due in large part to seniors’ uncertainty over potential cuts to Medicare and Social Security. Although the federal government has not yet released its budget plans, the delay in reducing those programs may have led to a slight improvement. Seniors may also have learned that proposed entitlement cuts might not affect those in or near retirement as much as previously thought.
State unemployment was unchanged in June at 10.6 percent, ending five consecutive months of decline (national unemployment was 9.2 percent as of July 8). Home sales in Florida were down in June, but the median price for a single-family home ($138,000) in Florida increased for the fourth consecutive month.
The research center, part of the Warrington College of Business Administration, conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for June was collected from 414 responses. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest is 150.
© 2011 Florida Realtors®
Reprinted with permission. Florida Realtors®. All rights reserved.