Young Floridians Confident Amid Improved Economy; Seniors Uncertain

June 29, 2004

GAINESVILLE, Fla. — Consumer confidence among Floridians in June regained some of its losses from the previous month, driven by a nationwide job market recovery, fewer unemployment claims and a revival in retail sales, University of Florida economists report.

The overall preliminary index gained two points to 95, and four of the survey’s five indexes also rose.

The biggest increase in the overall index was in the component measuring expectations about personal finances a year from now, which rose four points to 103. Perceptions about personal finances now compared with a year ago rose three points to 85, and expectations about the U.S. economy over the next year rose two points to 87. Perceptions about whether it is a good time to buy big-ticket items rose three points to 110.

The only component to decline measured expectations about the U.S. economy over the next five years, which fell three points to 87.

“The rebound in June reflects what happened on the national level as measured by the University of Michigan,” said Chris McCarty, director of the survey research center at UF’s Bureau of Economic and Business Research. “The increase in Florida was smaller than at the national level, but now the Florida index is at exactly the same level as the nation.”

A number of economic indicators have suggested the economy is improving, he said.

With a single exception, jobless claims reports steadily have been coming in below the benchmark level of 350,000 per week, McCarty said. In past recoveries, when claims fell below this level net job creation began to rise rapidly, he said

“The economy has been producing jobs, now recovering roughly 1 million of the 2.5 million jobs lost since the recession,” he said. “And retail sales figures were positive, particularly in gasoline and autos.”

Chain-store sales have been reasonably strong until today, when a new report indicated they had dropped, he said.

Confidence among Floridians under age 60 rose four points to 98 in the June survey, but it declined four points to 87 among those 60 and older, McCarty said.

“While seniors reported a sharp increase in their personal finances now compared to a year ago, more of them anticipate being worse off over the next year, and their expectations about the U.S. economy are extremely negative,” he said. “Given Florida’s anticipated pivotal role in the upcoming elections and the high voter turnout among the elderly, this number is one to watch.”

McCarty speculates the decline may be the result of less confidence among the elderly about the changes in Medicare coverage of prescription drugs, as well as increasing concerns about their ability to live off Social Security.

“It should be noted that this is a one-month decline with a rather small sample,” he said. “It’s something that should be checked in months leading up to the election.”

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 413 responses. The error rate is plus or minus 5 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.