UF Survey: Consumer Confidence Falls As Concerns Turn To Finances

February 27, 2001

GAINESVILLE, Fla. — Consumer confidence in Florida fell last month as concerns over the results of the presidential election widened to include fears about personal finances, University of Florida economists said today.

The preliminary index for February dropped three points to 92, said Chris McCarty, survey director for UF’s Bureau of Economic and Business Research.

“We have reported a decline in perceptions of U.S. business conditions in previous months, but these appeared to be tied to bad feelings about the outcome of the elections,” McCarty said. “This month the fall in perceptions of personal finances tells us that consumers are now feeling the effects of the economic slowdown in their wallets. We do not anticipate an increase in consumer confidence anytime soon.”

While an index level of 92 is still relatively high, the decline from the all-time high of 112 in August suggests the slowdown is having a real effect on consumers, McCarty said.

Declines in perceptions of personal finances were relatively even across political party lines, but the disparity concerning the national economy continues to widen, he said.

In January, 47 percent of Republican respondents felt business conditions in the United States would be good during the next year, compared with 25 percent of Democratic respondents, McCarty said. In February that changed to 54 percent for Republicans and 21 percent for Democrats, he said.

“It is clear that those respondents who are Republican like what they are hearing from Washington while Democrats remain skeptical,” McCarty said.

Overall, 42 percent of those surveyed in February said they were better off than they were a year ago, compared with 50 percent in January. Similarly, 45 percent of the respondents in February said they would be better off in a year, compared with 48 percent in January.

“The question now is whether high fuel prices, volatile stock prices and news reports about the threat of recession will worry people enough to cause a downturn,” said UF economist Dave Denslow. “So far consumer have put themselves on alert but have not panicked.”

For households with incomes of more than $30,000, the ones who spend the most, the index of whether now is a good time for major purchases was 103 in February, Denslow said. Although down slightly from January’s 107 and considerably from the 128 registered a year ago, that is still a solid number, he said.

“If spending plans remain at this level, we’re more likely to have a soft landing than an outright recession,” Denslow said. “Retail sales will soften but not plunge.”

The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for February was calculated from 796 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.