Consumer sentiment among Floridians remained flat at a post-recession high of 82 for the third consecutive month in August, according to a University of Florida survey.
“While an overall reading of 82 is historically nowhere near a recessionary level, it is also not a number associated with strong economic growth,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “However, it is higher than the confidence level for the U.S., which declined from 81.8 last month to 79.2 mid-month. While U.S. consumers are somewhat more pessimistic, Florida consumers are holding steady.”
The five-component survey showed mixed results. Survey participants’ perception of being financially better off now than a year ago remained unchanged at 73, while their confidence in having improved personal finances a year from now rose three points to 84.
Trust in the national economy over the next year fell two points to 78, and confidence in U.S. economic conditions over the next five years dropped one point to 80.
Respondents’ opinion about whether now is a good time to buy a big consumer item, such as a car, went down one point to 92.
Age and income were key factors in this month’s study. The overall index fell four points for those under age 60 but rose four points for those aged 60 and over. Households with incomes over $30,000 saw a drop in confidence of four points, while confidence among low-income households remained flat. Further analysis found increased pessimism among respondents ages 50 to 65, who may be concerned about their current personal finances. If this continues, it may be a sign they feel unprepared for retirement, McCarty said.
“These results suggest the Florida economy is not growing rapidly,” McCarty said. “While it’s good news that the index is not volatile, we would like it to be about 10 points higher given that the recession ended more than five years ago. “
The state’s unemployment rate for July remained at 6.2 percent, matching the national rate. Florida’s unemployment rate has wavered between 6.2 and 6.3 percent since December 2013, after previously declining each month for 19 months. Florida lost jobs in July, primarily in manufacturing, services, wholesale trade and government; this loss was balanced by a decline in the labor force.
“Florida’s wages have been relatively flat, and a larger percentage of the labor force is working part-time when they would like to work full-time,” McCarty said.
Housing prices in July were higher than a year ago, but they were flat compared with June’s figures. The median price of an existing single-family home was $185,000 for both months. Mortgage rates remained near historical lows, yet housing sales slowed in July. “Some of this is due to a pull-back from investors — many who paid cash,” McCarty said.
Near-record stock market highs continue to generate optimism among some Florida consumers, McCarty said, “although there is increasing speculation that a correction in stocks, typically defined as a decrease of 10 percent or more, is likely in the next year.”
Looking ahead, all eyes are on the Federal Reserve, McCarty said.
“The debate among members of the Federal Open Market Committee, which sets short-term interest rates, reflects discussions among economists about where the economy is headed,” McCarty said. “Members are split with some seeing us firmly on the road to recovery and advocating for increased interest rates to head off inflation. Others see signs of weakness and stagnation and advocate a delay in raising interest rates.”
The Fed’s final decision, he said, will make a big impact on borrowing in Florida, especially in the housing market.
Conducted Aug. 1-21, the UF study reflects the responses of 396 individuals 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.