Consumer sentiment among Floridians rose less than a point in August to 91.2, according to a new University of Florida study.
Of the five components that make up the index, two rose and three declined. However, since interviews were conducted each day over the entire month, the full impact of the recent stock market drop may not be showing in the data.
Perceptions of personal finances now compared with a year ago fell 2.5 points to 83.4, while expectations of personal finances a year from now declined by half a point to 101.3.
Looking at the national economic outlook, expectations of U.S. economic conditions in the upcoming year rose nearly five points to 88.8, while expectations of U.S. economic conditions over the next five years rose 5.7 points to 88.9.
Opinions as to whether now is a good time to buy big-ticket consumer items like a car or appliance fell 4.2 points to 93.4.
“On balance, the preliminary index for August is relatively upbeat, but this does not show the full effect of the decline in the stock market,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research.
“Prior to the crash that began about a week ago, Floridians were particularly optimistic about the future direction of the U.S. economy.”“ McCarty said. “There were exceptional gains among households with an annual income over $50,000 for both the short- and long-term outlook of the U.S. economy. Much of that optimism was likely erased this week when panic in the Chinese stock market spilled over into U.S. equities. Losses of this magnitude will raise questions among consumers, many who are invested in stocks through retirement accounts.”
Up until a week ago, economic indicators for Florida were relatively positive. The unemployment rate for July was 5.4 percent, down two-tenths of a percentage point from June. Job gains were led by the Trade, Transportation and Utilities sector that includes retail trade, leisure and hospitality. The labor force declined by 53,000, which contributed to lower unemployment, and the labor force participation rate continued to fall and is now at 58.5 percent, the lowest since June 1983.
While the median price of a single-family home in Florida fell by $3,600 to $199,900, the volume of sales remains strong. Consumer prices rose by only one-tenth of a percent, and gas prices in particular have remained low, declining by more than 15 cents since last month. The stock market had been stable for most of the month but is now down more than 10 percent, a decline most economists consider a “correction. “
“Typically, the Federal Reserve would not factor the stock market in their decisions to raise interest rates,” McCarty said. “They were prepared to raise rates in September, but given the mixed economic signals and the global nature of this decline, they will likely wait until December. The central role China plays as an exporter of goods and potential as future consumer of U.S. products means that the effects of the problems in the Chinese economy are likely not over yet.”
Conducted Aug. 1-24, the UF study reflects the responses of 451 individuals who were reached on cellphones, 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.
Details of this month’s survey can be found here.