GAINESVILLE, Fla. - Nov. 29, 2006 - Lower gas prices, high employment levels and possibly the mid-term election results boosted consumer confidence in Florida by three points in November to 93, University of Florida economists report.
"Consumers in Florida are optimistic going into the holiday season," said Chris McCarty, director of the survey research center at UF's Bureau of Economic and Business Research. "This should be good news for retailers. Our expectations had been that high levels of consumer debt coupled with the downturn in the housing market would be a burden on consumers, who would in turn curtail their spending. Based on these results, this does not appear to be the case just yet."
The rise in confidence was broad-based, with increases in four of the five components. Perceptions of U.S. economic conditions over the next five years registered the biggest gain, jumping eight points to 93. Expectations about U.S. economic conditions over the next year rose four points to 87. Perceptions of personal finances a year from now rose three points to 100, while perceptions of personal finances now compared to a year ago rose two points to 84. The only component to decline was the perception of whether it is a good time to buy big-ticket items, which fell by one point to 100.
"Interestingly, one of the largest gains was in the component measuring long-term economic conditions," McCarty said. "Given the lack of any major economic events in November, one has to wonder whether the election results in Florida, nationally, or both, had an effect."
High employment levels and lower gasoline prices likely had a positive influence on consumers, McCarty said. But on the negative side were record debt levels and the housing downturn, he said.
"The buildup of inventory has led to sharp declines in housing sales statewide, as well as declines in prices in selected markets," he said. "The collateral damage from this is potentially severe in Florida, particularly among those who depend on housing as a substantial source of wealth."
But so far these fears, as measured by consumer confidence, have not been realized, he said.
"At this point, I would have to forecast at least a moderate holiday season based on these results," McCarty said. "Any severe downturn in the economy due to housing is not likely until 2007. Although it might still happen, it is not likely this close to the holidays."
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 November was conducted from 426 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 predict buying patterns, consumer confidence tends to be available sooner. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for the year. The value of the index is in comparing changes over time rather than looking at an isolated month.
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