UF: Floridians’ confidence in economy bumps up a bit

January 28, 2014

GAINESVILLE, Fla. — Consumer confidence among Floridians as measured by an index rose one point in January to 78, according to a new University of Florida survey.

“With a budget deal to fund the government through 2015 and little tolerance for a showdown in Congress over raising the debt ceiling, the budget uncertainties that have affected consumer sentiment over the last several years are at least temporarily on hold,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “Florida seniors are particularly more optimistic as much of the wrangling over the budget had the potential to impact them negatively.”

The index 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.

According to the new survey, respondents’ overall view that they are better off financially now than a year ago fell one point to 68. However, their expectations of being more prosperous this time next year remained unchanged at 78.

Meanwhile, survey takers’ confidence in the U.S. economy for the coming year rose three points to 76, but it shot up nine points to 83 when they were asked to consider the nation’s economic health for the next five years.

Their perceptions about whether it is a good time to buy big-ticket items, such as a car, fell six points to 85.

Continuing signs of an improving economy are fueling Floridians’ guarded optimism. The state unemployment rate declined to 6.2 percent in December, down .2 percent from November, which is lower than the national figure. New jobs appeared in all categories except government employment, which has steadily declined since the recession of 2007-2009. The median price of a single-family home rose in December to $172,630, ending a decline in prices.

“2014 will be a very different year for consumers than we have seen over the past several years,” McCarty said. “Since 2007 there have been a string of events that have affected consumers negatively. This began with the housing crisis and the loss of homeowner equity, followed by significant declines in the stock market, threats of economic collapse in Europe that would reverberate throughout the world, and wrangling in Washington over budgets that affected the pocketbook of most Americans.”

Recently, however, the housing and stock markets have recovered, the European economy has stabilized, and Congress plans to put off deficit reduction battles for at least a year, although it is unclear whether recent declines in the stock market will continue.

“This is welcome news as it creates a more stable and positive environment for the Federal Reserve, which is likely to unwind its extraordinary position in supporting the economy through purchases of Treasuries and mortgage-backed securities,” McCarty said.

Conducted Jan. 14-28, the study reflects the responses of 405 individuals, representing a demographic cross-section of Florida.

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