GAINESVILLE, Fla. — Consumer confidence in Florida rose one point to 83 in June, one month after dropping to its lowest level in 19 months, a new University of Florida study finds.
The small increase was due to increased optimism over future economic conditions in the United States. Expectations about U.S. economic conditions over the next year rose two points to 76, while expectations of U.S. economic conditions over the next five years rose six points to 84.
Perceptions of personal finances now compared with a year ago remained the same at 79, while expectations about finances one year from now fell two points to 89. Perceptions of whether it is a good time to buy big-ticket items fell five points to 86. All five of the index components are lower than at this time a year ago, and the overall index is down five points from a year ago, the study shows.
“Although confidence increased slightly in June, it was well within the margin of error for the survey,” said Chris McCarty, director of the Survey Research Center at UF’s Bureau of Economic and Business Research. “Consumer confidence doesn’t differ much from the previous month’s reading. Interestingly, confidence among low-income households, those making less than $30,000 a year, has held exactly at 70 every month since March. The movement in confidence is entirely due to changes in the attitudes of middle- and higher-income households.”
Gas prices in Florida, a key driver of consumer confidence for the past two years, have decreased more than 14 cents per gallon through the month of June, primarily because of unexpected increases in imports and more inventory. Prices are still 13 cents higher than the same time a year ago and are expected to increase again in July as holiday travel picks up, McCarty said.
Although most lower-income families have adjusted to higher gas prices, there may be some additional negative impact on middle- and upper-income households if prices rise too much, McCarty said.
Retail sales nationally posted an unexpected increase in May, largely because of gasoline sales. However, other segments that had been experiencing difficulty, such as building supplies, posted gains.
McCarty said he expects the problems in the housing industry to continue dampening consumer confidence. The National Association of Realtors reported Monday that nationwide sales of existing single-family homes in May dropped to their lowest level in four years, and the median price dropped for a 10th consecutive month.
“Moving forward, we still expect consumer confidence in Florida to decline as the effects of the housing downturn intensify,” McCarty said. “The most recent housing data show that nationally, and particularly here in Florida, the prices of existing homes have not fallen to a level to attract enough buyers to work through the massive inventory.
“As prices fall, this will affect consumers who count on rising home values to support spending though home equity lines of credit and refinancing. This is still the big question moving forward into the summer – will the effects of housing spill over into other parts of the economy, or will it be contained to the housing sector? Our opinion is that the effects, at least here in Florida, will be far-reaching.”
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 June was conducted from 400 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.
Ron Wayne, firstname.lastname@example.org, 352-392-0186Source
Chris McCarty, email@example.com, 352-392-2908, ext. 101
SOURCE: Press Release from The University of Florida
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