UF Economists: Consumer Confidence Continues To Boost Clinton

September 24, 1996

GAINESVILLE — Another boost in consumer confidence in September may strengthen Clinton’s lead in Florida less than two months before the presidential election, but is no guarantee of a robust holiday season ahead for retailers, say University of Florida economists.

The preliminary Florida Consumer Confidence Index edged up another point to 92 this month, climbing a total of four points since May, say economists with UF’s Bureau of Economic and Business Research.

“This latest reading continues to solidify Clinton’s position in Florida,” said Chris McCarty, the bureau’s survey director. “Nearly all the polls say Clinton has a healthy lead in Florida. It appears the economy is cooperating with the president’s campaign so far.”

But while confidence in the national economy rose this month, Floridians’ confidence in their personal financial situations actually declined, he said. The one-point rise in the index is due entirely to big gains in consumers’ perceptions of the U.S. economy over the next year and over the next five years, at record levels since January 1995.

“What people are telling us is that personally they see their financial situation deteriorating somewhat, but they think everyone else will be doing well,” McCarty said. “Some of this may be due to the media attention to the growth of the U.S. economy as it relates to the election. People may be anticipating a Clinton win and assume the economic growth will continue.”

“All the high profile economic news reported in September was good,” agreed UF economist Dave Denslow. “Inflation was tame and the unemployment rate plunged. The rise in our index this month reflects that news.”

While the bull market and upcoming elections are the main reasons for people’s optimism in the national economy, inflation, wage stagnation or the loss of a job are most often cited by people pessimistic about their finances, McCarty said.

Retailers looking ahead to the holiday season should keep this pessimism in mind because it is more likely to drive shopping behavior than perceptions about the health of the national economy, McCarty said. “Although others might disagree, I think that consumer confidence may decline as we get closer to the holiday season,” he said. “When it comes to spending money, people are more likely to look at their personal situation than their perceptions about the national economy.”

Adding to the effects of this decline in people’s confidence in their own finances are stagnant wages, high consumer debt and the possibility of a rise in interest rates from the Federal Reserve Tuesday (9/24), he said.

Of the three regions for which the survey calculates results individually, Southeast Florida regained the losses it registered from the month before while consumer confidence in Tampa and Orlando fell.

Floridians who are employed gave mixed reports about business conditions for September. The share of respondents claiming business was better than at the same time last year fell five points to 46 percent. At the same time, the share who expected extra employees to be hired at their workplace in the next six months increased from 34 percent in August to 36 percent in September.

“These two indicators will be important to watch as the holiday season approaches,” McCarty said. “The assessment of business activity will be particularly telling during the month of November when the holiday shopping season moves into full swing.”

The Florida Consumer Attitude Survey is conducted every month by the bureau. Respondents are all 18 or older and live in households telephoned through random digit dialing. The preliminary index for September was calculated from 878 responses. 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.

The index is patterned after the University of Michigan’s confidence index for the United States. Both indexes use 1966 as the base year. Numbers below 100 indicate that consumers are less confident than they were in 1966, when the index was 100.