UF Economists: Consumer Confidence Hits Year's Second All-Time High

April 28, 1998

GAINESVILLE — Florida’s consumer confidence broke a new record in April by registering 107, its highest level since the survey began in 1984, University of Florida economists report.

The preliminary consumer index is one point above the all-time high set in February and repeated in March, said survey director Chris McCarty, with UF’s Bureau of Economic and Business Research, which compiles the report.

“Low inflation and low interest rates translate to high optimism for consumers nationwide,” McCarty said. “The stock market, which has remained above 9,000 since mid- April, adds to that confidence.”

“Dark clouds are hard to find in the Sunshine State,” added UF economist Dave Denslow. “Only 14 percent of our respondents expect to see a recession anytime soon, and a mere 5 percent say that they personally will become worse off financially.”

Gains occurred in three of the survey’s five components; those representing current and future finances and long-term U.S. business health. The only component to decline was consumers’ perceptions about whether it was a good time to buy big-ticket items that are often purchased on credit, such as furniture and appliances. Views on the short-term U.S. economy did not change.

McCarty cautioned, though, that many analysts continue to foresee a major correction in the stock market this year, perhaps stimulated by the Federal Reserve Board. If the Fed raises interest rates, many people may be forced from maintaining balances on credit cards with minimum payments over the edge into bankruptcies, already at record highs, he said.

U.S. companies’ efficiency and productivity has pushed up the stock market’s value, as has massive investment by baby boomers anticipating retirement, he said.

Regionally, Central and southeast Florida experienced increases in consumer confidence, while North and southwest Florida reported modest declines.

Southeast Floridians reported higher financial well-being than any other area of the state, registering a 10-point gain in their assessment of their finances now compared to a year ago and a five-point gain in their future financial expectations.

Employed Floridians gave less optimistic reports of business conditions. Fifty-one percent — compared with 55 percent in March — said business was better than at the same time a year ago. The share who expected extra employees to be hired at their workplace in the next six months fell from 35 percent in March to 32 percent in April.

The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for April 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.

Consumer confidence is designed to help predict buying patterns by measuring consumers’ mood toward buying. Although other economic indicators are also predictors of buying patterns, consumer confidence tends to be available sooner than those indicators, McCarty said.

Nationally, both the Conference Board and the University of Michigan indexes rose in February but declined again in March. The Florida index is patterned after Michigan’s.