Consumer sentiment among Floridians hit a post-recession high of 86 in November, an increase of two points over October, according to a monthly University of Florida survey.
“The last time sentiment was this high in Florida was March 2007, over 7 ½ years ago,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research.
Of the five components comprising the index, three increased, one decreased and one remained unchanged. Survey takers’ perception that they are better off financially now compared with a year ago increased two points to 75, but their expectations of personal financial gains a year from now fell a point to 82.
The survey also shows that confidence in U.S. economic conditions over the next year rose three points to 85, while faith in the national economy for the next five years remained unchanged at 86.
Finally, respondents’ view that now is a good time to buy big-ticket items, such as appliances, rose three points to 100, the highest that component has been since February 2007.
November’s confidence rise was unexpected.
“We had been expecting a slight decline in sentiment in the November reading related to the election,” McCarty said. “Since 2006, the index had fallen in the November of a presidential or mid-term election, in part due to the even split between Democrats and Republicans in Florida. Given the close race for governor, we expected a decline.”
While confidence among Democrats did decline, he said, “it was not enough to outweigh increased confidence overall.”
Improving economic conditions in Florida also helped lift public confidence. The state’s October unemployment rate fell one-tenth of a percent to 6.0, which is slightly higher than the national rate of 5.8 percent. The state added 34,000 jobs since September, while the labor force rose by 22,000.
The median price of a single-family home fell $3,000 to $177,000, although that price is 4.6 percent higher than a year ago. Mortgage rates, meanwhile, are at near-historic lows with the average 30-year fixed rate below 4.0.
Growth in housing prices will help drive the recovery, but it could slow in the coming year as a number of factors, including the possibility of a Federal Reserve rate hike, may make housing less affordable, McCarty said.
Stock market record highs in November may have spurred an increase of four points for consumer sentiment scores for upper-income households, which are in contrast with lower-income households that showed a decline of seven points.
November gasoline prices averaged about $2.83 a gallon nationally, thanks in part to increased oil supply from fracking in the U.S., coupled with a decrease in demand internationally as Europe, China and many emerging markets lower their consumption due to slower economies, McCarty said.
“While we are still behind where we should be this far out from the end of the recession, this rise in sentiment bodes well for the holiday season,” McCarty said. “Although retail sales have been mixed over the past year and actually declined in September, expectations are that this will be an excellent holiday season with growth forecast at more than 5 percent.”
Cheaper gas prices, low interest rates, a booming stock market and relatively stable housing prices also should make consumers wealthier than they have been, McCarty said, “although much of that wealth is concentrated in upper-income households.”
Conducted Nov. 1-20, the UF study reflects the responses of 414 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.