UF Researchers: Consumers Are Optimistic But Have Long-Term Worries

March 25, 1997

GAINESVILLE — The preliminary Florida Consumer Confidence for March was 96, the same as February’s, University of Florida economists say.

Also, the index of consumers’ perception of their own financial status was 95 in March, a dramatic rise from an index of 88 in February. On the other hand, consumers’ view of business conditions in the United States fell from 100 in February to 94 in March.

“Consumers who were more upbeat about their current financial situation report wage increases and better jobs as the reason. However, a larger proportion of those asked in March than in February believe that economic conditions in the U.S. will be worse in the next year than they are now,” said Chris McCarty, survey director at UF’s Bureau of Economic and Business Research, which conducts the monthly survey.

Other parts of the survey showed no significant changes.

Those fears about the national business picture may be well-founded, said UF economist Dave Denslow.

“Each month since October, more and more of our respondents have reported pay hikes,” Denslow said. “If workers across the nation are enjoying similar gains, the Federal Reserve is likely to boost interest rates to reduce the threat of inflation. That would be bad news for Floridians who have run up their credit cards but good news for retirees who may collect more from their savings.”

Consumers in Southeast Florida, Tampa and Orlando reported little change in overall confidence from February to March. In a reflection of the state, consumers in Tampa reported a sharp rise in their personal financial situation and a drop in their view of the national economy a year from now. That may be a result, at least in part, of demographics.

“The Tampa area has a higher proportion of Republicans than the other two regions. The pessimism about U.S. economic conditions appears to be higher among Republicans than Democrats,” McCarty said.

Among employed consumers, 55 percent reported business activity to be higher in March than during the same time a year earlier. That’s a six-point jump from February. The increase is a reflection of wage increases and continued low interest rates, which have led many consumers to make purchases now rather than wait.

In addition, the survey shows, 36 percent of employed consumers expect extra employees to be hired during the next six months, up from 31 percent in February.

The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for March was calculated from 879 responses, a response rate of 54 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 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 consumers are less confident than they were in 1966.