GAINESVILLE, Fla. — Consumer confidence among Floridians
rose five points to 67 in December, reflecting optimism
about new presidential leadership in January despite
unprecedented pessimism about personal finances, a new
University of Florida study finds.
“Consumers are looking forward to a shift in the economy
toward something better in 2009,” said
Chris McCarty, director of UF’s Survey Research Center at
the Bureau of Economic and Business Research. “As with the
past month, consumers are confident that the new
administration
will resolve the economic crisis and that much of the
intervention so far will work.”
Four of the five components that make up consumer confidence
increased. Perceptions of whether this is a good time to buy
big-ticket consumer items rose nine points to 71;
perceptions of U.S. economic conditions over the next year
rose seven points to 62; perceptions of personal finances a
year from now rose six points to 87; and perceptions of U.S.
economic conditions over the next five years rose five
points to 78. However, the one component of the index to
drop — perceptions of personal finance now compared with a
year ago — dropped one point to a new record low of 39,
McCarty said. “Floridians are reporting the worst financial
situation for themselves since we started the index in the
mid-1980s,” he said. The numbers were lower for senior
citizens and low-income households, McCarty said. For survey
respondents earning less than $30,000 a year, perceptions of
personal finance now compared with a year ago tumbled from
37 to 24, he said.
The results are disturbing, McCarty said, because that
particular index component is most telling
when trying to predict consumer spending.
In all likelihood, the recession will last well into 2009
and consumer confidence will decline in the
first quarter of 2009 with the lack of immediate relief, he
said. “Job losses have been severe and are unlikely to have
peaked,” he said. “Florida has been particularly hard hit
compared to other states, shedding more than 200,000 jobs in
the past year. With unemployment at 7.3 percent, it
will be at least six months before consumer confidence
improves considerably.” About the only bright spot for
Floridians is the lower overall cost of gasoline and energy
prices, which have shown steep declines over the past
several months and seem resistant so far to attempts by the
oil-producing countries to prop them up, Mc- Carty said.
While interest rates have come down, lines of credit are
still out of reach for many consumers, he said. Housing
prices continue to fall, although some areas of Florida
appear to have turned
the corner and may actually benefit from the spring real
estate season if credit becomes more available,
he said. “Retail sales this holiday season have been
abysmal, reflecting a pullback in consumption that is in
line with the severity of this prolonged recession,” he
said.
While some media outlets are characterizing the pullback
in consumption as a sign of a fundamental
shift in patterns of consumer behavior, McCarty said it is
worth noting that in most recessions, except
for the one in 2001, a pullback in consumption is the normal
pattern. “There is no doubt that the decrease in
consumption and borrowing are much higher than most
recessions, but we should be cautious about declaring this a
new era for the American consumer,” he said. 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 conducted from 427
responses.
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. Based on the University of
Michigan method, the index is benchmarked
to 1966, so a value of 100 represents the same level of
confidence for that year.
The value of the index is in comparing changes over time
rather than looking at an isolated month.
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