UF survey: Personal finance concerns cause dip in consumer confidence

April 24, 2001

GAINESVILLE, Fla. — Consumer confidence in Florida fell two points this month, reflecting widespread concerns about personal finances, University of Florida economists said today.

The preliminary index dropped from 94 in March to 92 in April, said Chris McCarty, survey director at UF’s Bureau of Economic and Business Research.

“Floridians are feeling the effects of the economic slowdown in their pockets,” McCarty said. “During the first two months of the year, much of that decline was along party lines, with Democratic respondents registering the most uncertainty. Now the picture is different. Respondents from all parties are seeing the effects of the economic slowdown on their jobs, their stock portfolios and their 401K statements.”

Until recently, most of the decline in consumer confidence was due to uncertainty on the part of consumers about national business conditions, McCarty said. This month’s survey results show people’s unease about their own circumstances, he said.

When asked about their personal financial situation now compared with a year ago, 46 percent of respondents said they were better off, compared with 50 percent in March, McCarty said. The share who said now was a good time to buy big-ticket items dropped from 63 percent to 59 percent during the same time, he said.

The overall confidence of lower-income households, those under $30,000 a year, fell 11 points in April to 79, largely because of concerns about whether now is a good time for major purchases, said UF economist Dave Denslow. The major-purchase plunged for this group from 108 in March to 86 in April, he said.

“Rising energy prices, shorter work weeks for temporary workers and spent-out credit cards are forcing them to rein in their spending,” he said.

McCarty pointed out that the Federal Reserve’s unexpected cut last week in the discount rate from 4.5 percent to 4 percent was largely due to sagging consumer spending.

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 438 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.