Florida’s consumer confidence declined one point in September to 76, continuing a four-month slide, according to a University of Florida survey.
“The decline is definitely a trend and one that is now being reflected in other economic data,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. This trend also suggests that Floridians could face another recession if the federal government shuts down, McCarty said.
Three of the five components dropped. Respondents’ confidence in the U.S. economy over the next year fell two points to 74. Meanwhile, their faith in the national economic health over the next five years went down six points to 72. Expectations of improved personal finances a year from now was 78 — down three points.
“The decline is once again concentrated among lower-income households who are particularly pessimistic about their current and future personal finances,” McCarty said. “The growing pessimism about long-term U.S. economic conditions was fueled by lower-income respondents and seniors.”
Respondents’ overall opinion that their personal finances are better now than a year ago was unchanged at 63, a figure that has stayed level for three months. Finally, survey-takers’ response to the question of whether now is a good time to buy a big ticket item such as a computer rose three points to 90.
Florida’s economic sentiment may be a bellwether for the national mood, McCarty said.
“It is worth noting that our July reading was among the first economic indicators to show what now appears to be a slowdown in both Florida and U.S. economic indicators,” McCarty said.
A closer look at recent economic news that seems positive helps explain the growing pessimism, McCarty said. For example, Florida’s most recent unemployment figures showed a decline to 7 percent, which is three-tenths of a percent lower than the national average and much lower than the peak of 11.4 percent during the last recession. However the drop in unemployment was in large part due to a decline in the size of the labor force, a familiar pattern seen over the past few years, McCarty said.
Florida actually lost more than 4,000 jobs between July and August. The impact of this loss was masked by a large number of workers who have stopped looking for work. Their departure from the workforce makes the overall unemployment rate look better than it really is, McCarty said.
There is another odd twist, he added. Construction and government jobs that suffered most during the recent recession actually increased last month. In contrast, Florida’s job declines were in educational services, real estate, general services, and the leisure and hospitality sector, a category that had been strong.
Meanwhile, Florida sales tax data now show state revenue projections for August were overestimated, although by a much lower amount than in previous months, McCarty said. “If the current trend continues, the Florida Legislature will not have as much of a surplus as previously expected to allocate during the next legislative session in spring 2014,” he added.
Even Florida’s housing prices, which have been rising in recent months, may begin to slow. The median price of a single-family home in Florida was down by $4,500 to $175,000 from July to August. “Although this price is higher than the same time a year ago, it is the first decline in prices since January,” McCarty said. “In the short run, housing is likely to be less of a driver of a recovery in Florida.”
The next hurdle for the economy is another battle over the national debt ceiling and a potential federal government shutdown in the next couple of weeks, McCarty said.
“A shutdown of even a short duration would likely be enough to trigger another recession,” he said. “Many economists have suggested we are due for another one given historical patterns.”