UF: Florida consumer confidence jumps to post-recession high
GAINESVILLE, Fla. — Consumer sentiment among Floridians rose to a post-recession high in June, climbing four points to 82, according to a new University of Florida survey.
“Because the confidence level has been wavering between the upper 70s and low 80s for more than a year, we did not expect this jump,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research.
That surprise comes as Florida experiences a slowdown in housing starts and a rise in unemployment.
All five components comprising the index increased. Survey takers’ assessment of being financially better off now than a year ago rose four points to 75, its highest level since the end of the Great Recession. Their expectations of improved personal finances one year from now increased five points to 81.
Respondents indicated they were also upbeat about the national economy over the coming year, registering a rise of seven points to 81. Their outlook for the next five years rose two points to 78.
Meanwhile, consensus on whether now is a good time to buy big household appliances rose four points to 94, another post-recession record.
June’s burst of optimism was most evident among younger Floridians and those in low-income households. The current personal finances component among households with incomes under $30,000 a year shot up 18 points.
The uptick is puzzling. “This demographic is unlikely to benefit from record levels in the stock market and price gains in the housing market that typically affect higher income households,” McCarty said. And because of a lingering effect of the Great Recession, there has also been delay in household formation among younger Americans who have had difficulty finding well-paying jobs and those saddled with student loans, he said.
Something else may explain the optimism, McCarty said. Gas prices have fallen in the past month, but the Iraq crisis could change that trend. The state has also added jobs over the past year, though they’re mostly low-paying ones. “Many of them are associated with leisure and hospitality,” McCarty said. “Those are the kinds that will be filled by people who live in lower income households.”
Although Florida’s increase in consumer confidence is welcomed news, McCarty said, “it is worth remembering that at the end of two previous recessions occurring in 1990-91 and 2001, consumer confidence was 89.” In contrast, at the end of the Great Recession in June 2009 the index was 69.
“We are now five years out from the Great Recession, and consumer confidence stands at 82,” McCarty said, “but five years after the first two recessions, consumer confidence was at 91 and 93. Clearly something is different about this recovery compared to previous recoveries.”
McCarty also noted that five years after the end of the recession in the early 1990s unemployment stood at 5.4 percent, and five years following the recession in the early 2000s it was 3.4 percent.
Unemployment today is 6.3 percent after five years.
“These mediocre indicators are also strange in light of the massive intervention by the federal government in the form of bailouts, and by the Federal Reserve in monetary policy,” McCarty said. “While the Florida economy is certainly stabilizing, it is not exhibiting trends that would indicate great potential for growth, at least through this year.”
Conducted from June 1-21, the UF study reflects the responses of 425 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.