UF Survey: Consumer Confidence Remains Steady Despite Recession Fears

March 27, 2001

GAINESVILLE, Fla. — Consumer confidence in Florida remained practically unchanged this month, reflecting lingering fears of recession, University of Florida economists said today.

The preliminary index for March rose one point to 93, said Dave Denslow, economist with UF’s Bureau of Economic and Business Research.

“The gain is within sampling error,” he said. “In effect, confidence is unchanged from a month ago, though down strongly from its peak of 112 last August.”

If business investment collapses, consumer spending will be too weak to sustain the current economy, Denslow said. But if investment holds up, consumers will not curb their spending enough to cause a recession, he said.

“The key to the economy is whether businesses keep spending, and that depends more on their confidence than on the Fed or on tax cuts for households,” he said.

Current readings, though down from recent peaks, remain higher than the numbers registered in 1990, when the Iraqi invasion of Kuwait boosted the price of oil and the United States was in its most recent recession, he said.

All the components of the index rose slightly except one: expected national conditions over the next year, which declined from 84 to 77. The decline was especially sharp among male respondents, down from 90 in February to 75 in March.

“If business expectations and consumer expectations move together, that’s bad news,” he said. “It suggests that business investment is likely to decline.”

The bureau conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for March was calculated from 669 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.