UF Survey: Shopping Deals Nudge Up Florida Consumer Confidence

June 24, 2003

GAINESVILLE, Fla. — Consumer confidence among Floridians rose in June for the third month straight, buoyed by a strong buyer’s market, University of Florida economists report.

The preliminary index rose two points to 93 in June. In May it rose three points to 91, and in April seven points to 88.

The largest gain was in the component measuring perceptions about whether it is a good time to buy big-ticket items, which rose five points to 105. Views on personal financial situation expected one year from now rose three points to 102, and expected national economic conditions over the next year rose two points to 87. Two components dropped: Expected national economic conditions over the next five years fell four points to 84, and perceptions about personal financial situations now compared with a year ago dipped one point to 84.

“The main reason for the rise in consumer confidence is clearly the favorable buying conditions for consumers,” said Chris McCarty, director of UF’s survey research center at the Bureau of Economic and Business Research. “Floridians see very low interest rates on homes, cars and credit cards. This, coupled with aggressive pricing on the part of retailers attempting to keep them coming into their stores and to liquidate an unexpected growth in inventories, has made for some great deals.”

Respondents reported their personal finances were in reasonably good shape, which is somewhat unexpected given other indicators that suggest a large proportion of consumers may be having economic difficulty, he said.

“The weak point in the economy continues to be the lack of new jobs,” McCarty said. “Claims for unemployment insurance are still well above 400,000 every week, a threshold that for many economists is a red flag for the potential for recession.”

Personal bankruptcies continue to break new records and consumer debt is at record highs, McCarty said. Despite these trends, retail sales are still growing, although nothing like the growth throughout the 1990s, he said.

A mid-month national consumer poll from the University of Michigan shows – unlike among Floridians – confidence among consumers nationwide has fallen, McCarty said.

“That is more the pattern we have been expecting in Florida, that is a gradual fall in confidence as consumers continue to struggle with the negative factors in the economy,” he said.

But so far this has not happened, McCarty said. Florida consumers’ personal finances remain steady, while buying conditions improve, he said.

“Some people have suggested that the South, including Florida, is ahead in the recovery, given the focus on services rather than manufacturing,” he said. “However, the recovery cannot be sustained without some dramatic improvement in the job market. If the current trend continues into the fall, eventually even Floridians will respond with lower levels of confidence.”

The research center conducts the Florida Consumer Attitude survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for June was conducted from 484 responses. The error rate is plus or minus 4 percent.

Consumer confidence is designed to help predict buying patterns by measuring the mood of consumers toward purchasing. Although other economic indicators also are predictors of buying patterns, consumer confidence tends to be available sooner.

The index is benchmarked to 1966, so that a value of 100 represents the same level of confidence for that year. The value of the index is in comparing changes over time rather than looking at an isolated month.