UF Economists: Consumer Confidence Unfazed By Events In Asia Or Flint

July 28, 1998

GAINESVILLE — If Asia’s economic problems mean trouble for Americans, it’s news to Floridians, whose consumer confidence for July rebounded to near-record high levels, University of Florida economists report.

The preliminary consumer index for July registered 105, regaining two points from last month and two points shy of the all-time high of 107 set in May, said survey director Chris McCarty, with UF’s Bureau of Economic and Business Research, which compiles the report.

“With their jobs secure, their wages rising and gasoline prices and interest rates low, Floridians are telling us that turmoil in Japan and Flint, Mich., (from the GM strike) don’t faze them,” said UF economist Dave Denslow. “They plan to keep right on buying.”

With increasing numbers of survey respondents saying their personal finances are strong and the time is right to buy big-ticket items, Floridians’ consumer confidence in January rose from very confident’ to exuberant’ levels and has stayed there, Denslow said.

Leading the two-point gain in confidence from last month were increases in consumers’ perceptions of the national economy over the short and long run, McCarty said. These two index components declined between May and June, but more than made up for the loss between June and July, he said.

But even though consumer spending nationally has been strong, some economists foresee a slowdown as the urge to spend available money plays itself out, he said.

“Rather than spend now, the recent trend has been more toward saving and investment,” McCarty said. “This late in the growth phase of the business cycle, most consumers may have already made their discretionary purchases and are now investing toward their retirement. This means that Madison Avenue will have to try harder to get consumers to part with their money. It should be an interesting next few months as we move toward the holiday season.”

All four of Florida’s regions tracked in the survey either experienced the same upswing in consumer confidence that the statewide figures showed or stayed the same. The biggest gain was among Central Floridians, where the index increased six points between June and July because of gains in perceptions of the national economy, McCarty said.

The component measuring people’s perceptions about their personal finances both now and in the future fell in Central Florida, as it did in North Florida, where it experienced its largest drop.

Employed Floridians gave slightly more pessimistic reports of business conditions than last month. Forty-seven percent — compared with 50 percent in June — 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 two points to 35 percent.

“Floridians who are employed may be seeing some of the effects that are responsible for lower earnings among some companies nationally,” McCarty said.

The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for July was calculated from 826 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 also are predictors of buying patterns, consumer confidence tends to be available sooner than those indicators, McCarty said.