Consumer confidence unchanged among Floridians in December

December 28, 2010

GAINESVILLE, Fla. — Florida’s consumer confidence this month remained unchanged from November’s mark of 71, but there was significant movement among the five components that comprised the index, according to a new University of Florida survey.

The most noteworthy changes had to do with Floridians’ present and future perceptions of the economy. Perceptions of personal finances now compared to a year ago fell five points to 51, while perceptions of personal finances a year from now rose two points to 80. Perceptions of U.S. economic conditions over the next year fell four points to 65 while perceptions of economic conditions over the next five years rose one point to 78. Confidence also rose for buying big-ticket items such as cars and appliances as that index rose one point to 78.

“It is worth noting the growing divide between what consumers say they have in terms of their personal finances, and what they expect for the future,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic Business and Research.
Confidence declined four points to 66 for respondents age 60 and over, while it rose three points to 75 for those under age 60. Younger Floridians were particularly optimistic about their personal finances a year from now which rose seven points to 97.

The most drastic decline for seniors was their assessment of their personal financial situation now from a year ago which fell 10 points to 48.

“Consumer confidence among Floridians has settled into a long-term pattern, oscillating between the upper 60s and low 70s,” McCarty said. “Historically numbers this low would be consistent with recessionary levels. The recession of 2008-2009 changed that. Unlike past recessions where consumers led the recovery, this recovery is leaving a substantial proportion of the population behind.”

Rising unemployment has hindered recovery and Florida is lagging behind the national average. Florida’s unemployment rate edged up to 12 percent in November while nationally it increased to 9.8 percent, said McCarty. McCarty also noted the preliminary estimate of national consumer sentiment as measured by the University of Michigan is up more than two points, almost three points higher than Florida.

For Florida to rebound more quickly, McCarty believes stark changes need to be made.

“Businesses are being more productive with less and looking overseas for future business,” McCarty said. “It is clear that this trend will not change by doing business as usual. Particularly here in Florida there must be dramatic changes in the types of business we engage in. This means moving away from an economy based primarily on development and construction to one with a stronger manufacturing sector, whether that is high technology manufacturing or not.”

Despite the increase in unemployment there are some positives. Housing prices have been steady through most of 2010, although the median price for an existing single-family home in Florida fell in November to $132,700, down from $136,600 in October. A year ago the price was $139,300. The stock market, a source of present and future income for many Floridians, has made up much of the losses from the crash in 2008-2009, McCarty said.

McCarty also said that retail sales, travel and tourism related to holiday season could be another major source of growth for Florida.

“Early indications are that holiday sales are higher than was originally expected,” McCarty said. “Those who still have jobs have paid down debt and are in a position to make discretionary purchases. Retailers are offering large discounts on some items, particularly electronics, which has also boosted holiday sales. It remains to be seen whether this holiday season ends up being as strong in terms of profits as sales volume indicates. Over the next few years the inability of the large number of unemployed to add to sales will be a drag on what would normally be a consumer-led recovery.”

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 December was collected from 438 responses.