UF Economists: Florida Consumer Confidence Rises To Near All-Time High

July 28, 1999

GAINESVILLE — Consumer confidence in Florida gained two points in July, reflecting unbridled optimism in the national economy and the belief that recession is unlikely, University of Florida economists report.

The preliminary index for July measured 106, only two points below the all-time high of 108 registered in February, said Chris McCarty, survey director with UF’s Bureau of Economic and Business Research.

“Optimism about U.S. business conditions for the short and long term really carried the index this time,” McCarty said. “Given the long history of good economic news, consumers seem to feel that a recession is a long way off. The quarter-point rise in the overnight lending rate initiated by the Federal Reserve had little effect on consumers, although it has led to some selling in the stock market.”

Retail sales continue to reflect consumer optimism, with the most recent data showing that June sales are up .1 percent from May and 8 percent from June 1998, McCarty said. Meanwhile, inflation remained unchanged between June and July, he said.

Differences in the levels of confidence by consumers continue to follow normal patterns, he said.

Men are significantly more confident than women, and those with higher incomes are more assured than those with lower incomes, McCarty said. The elderly, being on fixed incomes that are not likely to change for the better, are significantly less optimistic than younger respondents, he said.

“These effects of the strong economy are far-reaching,” said UF economist Dave Denslow. “Even among young people with no college, twice as many say they are better off this year than last year than those who say they are worse off. These would be among the first to be affected by a recession.”

Optimism increased despite a decline in the component measuring perceptions of personal finances, which fell from 100 in June to 97 in July, and a similar three-point decline in the measure of perceptions as to whether it is a good time to buy major household items.

Three components of the index experienced gains. Expectations about the U.S. economy over the next year rose 12 points, and optimism about U.S. business conditions over the next five years rose five points. Perceptions of expected financial situation in a year rose two points.

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 491 responses. The margin of error for the index is 4 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.