UF: Florida's consumer sentiment bounces back in November

November 26, 2013

GAINESVILLE, Fla. — Consumer sentiment among Floridians recovered from last month’s drop, rising to 76 in November from the revised reading of 70, according to a new University of Florida survey.

“As expected consumer sentiment among Floridians regained much of the loss from September to October as the shutdown and debt ceiling debate came and went,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “However, at 76 we are several points away from our post-recession high of 81. We also note that the October reading was revised down one point to 70 indicating just how much of an effect it had on consumer optimism.“

Four of the five components used in the survey went up. Survey takers’ overall perception that now is a good time to buy big-ticket items such as a car increased 16 points to 94. “That component is now at the highest since April 2007 when the economy was showing signs of the bursting housing bubble which led to the Great Recession,” McCarty said.

Consumer confidence in U.S. economic conditions over the coming year rose nine points to 75, while expectations for the nation’s economic well being over the next five years rose two points to 73.

Meanwhile, respondents’ assessment of whether they are better off financially now than a year ago rose six points to 67.

Only one component showed a decline. Consumers’ expectations of improved personal finances a year from now fell two points to 72.

Florida’s seniors were this month’s most pessimistic consumers. “They were likely concerned over the potential consequences of a default on U.S. debt, such as potential delays in the distribution of Social Security and the negative effects such a default would have on an otherwise strong stock market,” McCarty said.

The recent UF survey, however, indicates their concern has eased now that the federal shutdown is over. November’s confidence level for those 60 and older showed a 13-point increase to 76.

Other economic indicators show mixed signs. Florida’s unemployment level for October was down to 6.7 percent, the lowest it has been since August 2008 when the recession began. It is also lower than the national average of 7.3 percent. However, it is worth noting that the unemployment rate can decline because jobs are created, or because people drop out of the workforce because they stop looking for work. Like many previous reports this one shows that the labor force declined by 9,000 between September and October.

Sectors showing the most growth in Florida were in construction, goods producing, and leisure and hospitality. Government employment, however, continued to decline.

“The stock market continues to be a bright spot and will likely remain so until the Federal Reserve begins to aggressively taper its support of the economy through the purchase of mortgage-backed securities,” McCarty said. “While the Fed could do this in December at least to signal that they are willing to do so, they are unlikely to withdraw significantly from their position until at least the second quarter.”

McCarty said he expects little change in Florida consumer sentiment in December.

“Barring any economic surprises consumer sentiment should not change much until January,” he said. “Given cautious consumers and inconsistent retail sales data and a short holiday season between Thanksgiving and Christmas, we expect holiday sales to be weak compared to last year.”

Conducted Nov. 13-26, the UF study reflects the responses of 405 individuals, representing a demographic cross-section of Florida.

The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest is 150.

Details of the November survey can be found at http://www.bebr.ufl.edu/cci.