UF Economists: Consumer Confidence Hits Highest Record In Its History

February 24, 1998

GAINESVILLE — Florida’s consumer confidence soared to its highest record ever in February, reflecting unprecedented enthusiasm for the national economy over both the short- and long-term outlooks, University of Florida economists report.

The preliminary consumer confidence index for the month rose two points to 106, the highest it has registered since the survey began in 1984, said UF’s Bureau of Economic and Business Research, which compiles the report.

“Consumers are nothing less than euphoric about the economy, and nothing on the horizon such as potential war in Iraq or the Asian financial crisis seems to be affecting that,” said Chris McCarty, the survey director.

“The rise in confidence from January to February comes from all groups of Floridians,” said UF economist Dave Denslow. “Men and women, young and old, dropouts and college graduates all feel better about the national economy because their personal finances are strong. They are responding not to scandals in the White House but to lower mortgages on their own houses, not to Iraq but to prices at the pump, not to Southeast Asia but to sales at the mall. Their jobs seem secure, and their paychecks buy more.”

The record high is somewhat ironic because the last time the possibility of war with Iraq was imminent, in 1990, it triggered a dramatic downturn in confidence, McCarty said. This time, respondents report perceiving stable U.S. business conditions, with many citing the stock market as an indication of that stability, McCarty said.

Nearly 80 percent of Floridians think now is a great time to buy big-ticket consumer items such as cars and appliances, and 63 percent think U.S. business conditions will remain good over the next year, he said.

Regionally, Central Florida posted the largest gains of all four of Florida’s regions, climbing from 105 in January to 112 in February. In addition to the large increases in optimism about the national economy, Central Floridians were very upbeat about personal finances. This was offset, though, by pessimism as to whether it was a good time to buy big-ticket items, McCarty said.

Both north Florida and southwest Florida reported gains as well. Residents of north Florida felt good about personal finances but were less optimistic about the national economy. Southwest Floridians’ gains came from views about the national economy, while southeast Florida registered no change.

Both at home and at work, consumers were very satisfied with the state of the economy. Fifty-one percent of employed Floridians — compared with 46 percent in January — said business was higher than at the same time a year ago. The share who expected extra employees to be hired during the next six months rose from 32 percent in January to 34 percent in February.

The Florida Consumer Attitude Survey is conducted monthly by the bureau. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for February was calculated from 862 responses. Numbers for prior months are based on about 1,000 responses. The margin of error for the index is 3 percent.

The consumer confidence index and its five components are not percentages. The minimum value for these indexes is two if all respondents answered pessimistically on all five questions and 150 if all respondents answered optimistically on all five questions. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year.

Nationally, the Conference Board index fell in January by nine points to 127, while national consumer confidence as measured by the University of Michigan rose from 102 in December to 107 in January. The Florida index is patterned after Michigan’s.