Florida’s consumer confidence has jumped to the highest post-recession levels in June, now standing at 82 points, according a University of Florida survey released Tuesday.
“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 Survey Research Center director Chris McCarty, who runs the UF Bureau of Economic and Business Research.
All five elements making up the index increased, surprising researchers in light of Florida’s recent slowdown in housing starts and a slight rise in unemployment.
The opinion that Floridians are better off financially better than a year ago rose to 75, a four-point increase and the highest reported level since the end of the Great Recession of 2008.
Expectations that personal finances will be even better one year from now also rose five points, now at 81.
Respondents are also upbeat about the national economy for the upcoming year, up seven points to 81. The five-year outlook rose to 78, up two points.
Another post-recession record is the feeling that it is now a good time for major purchases such as household appliances, increasing four points to 94.
Younger Floridians and low-income households show the most pronounced surge of optimism. What puzzled researchers is that economic optimism in households with earnings under $30,000 a year shot up 18 points in June.
“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,” said McCarty. The lingering effect of the Great Recession is noticeable in families with younger Americans; many burdened with student loans and still having difficulties finding higher-paying jobs.
One possible explanation, said McCarty, is that gas prices have dropped in the past 30 days. However, the crisis in Iraq could change that. Florida also added jobs in the past year, but they are mostly low paying and associated with leisure and hospitality industries.
“Those are the kinds that will be filled by people who live in lower income households,” he added.
Although the confidence is welcome news, McCarty told UF reporter John Dunn that it is important to remember that consumer confidence was 89 at the end of two previous recessions: 1990-91 and 2001.
In June 2009, at the supposed end of the Great Recession, the index levelled out at 69.
“We are now five years out from the Great Recession,” McCarty said, “and consumer confidence stands at 83. 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,” he added.
Unemployment stood at 5.4 percent five years after the recession’s end in the early 1990s; it was only 3.4 percent five years following a period of recession in the early 2000s.
Today, five years after the Great Recession, Florida unemployment today is 6.3 percent.
“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 noted. “While the Florida economy is certainly stabilizing, it is not exhibiting trends that would indicate great potential for growth, at least through this year.”
The UF study took place June 1-21, using responses from 425 individuals from a demographic cross-section of Florida.
Researchers benchmarked the index at 1966, setting 100 as the confidence level of that year. The score ranges from a low of 2 to a high of 150.
Full details of the June survey are at http://www.bebr.ufl.edu/cci.