According to a new study on consumer attitudes released by University of Florida Friday morning, Floridians by and large say they are better off than they were this time last year, but that they expect economic times to get tougher for them in the coming months.
Per a release:
Consumer sentiment among Floridians fell slightly in July to 89, down less than a point from June, according to the latest University of Florida consumer survey.
Of the five components that make up the index, one increased and four decreased. Respondents’ overall view that they are better off financially than a year ago rose by 5.2 points to 84.5, but expectations of personal finances a year from now fell 1.9 points to 101.
Trust in the U.S. economy over the coming year fell 3.5 points to 81.5, while expectations of U.S. economic conditions over the next five years fell 2.8 points to 81.7.
Consensus about whether now is a good time to buy big-ticket items like a car fell one point to 96.5.
“The biggest change between June and July was the upturn in perceptions of personal finances now compared with a year ago,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “Looking at the demographic categories, the big increases for that component were among women, whose index jumped more than 10 points, and households earning more than $50,000, which rose by 9.7 points. But among older respondents, those age 60 and over, it fell 12.9 points.”
The other index components were mostly negative across all demographic groups. “The personal finances index likely benefited from stock market gains early in the month, before it fell in the latter part,” McCarty said. “We expect the personal finance indicator to be lower by the end of data collection in late July, particularly given the recent market reaction to the decline in the Chinese stock market.”
Economic data in Florida continues to be mostly positive. Unemployment among Floridians continues to fall and in June was at 5.5 percent. This is close to what economists have considered the “natural” rate of unemployment, around 5 percent — although there is debate as to whether 4 percent is now more appropriate given demographic trends such as the mass retirement of Baby Boomers.
While Florida gained jobs in June, a big contributor to the lower unemployment rate was a decline in the size of the labor force (those who are employed or looking for work) of 65,000 persons. Unlike the national trend, Florida’s labor force participation rate continues to fall. At 58.9 percent, it is now the lowest since 1983. “Florida must reverse this trend to make further economic gains,” McCarty said.
Housing prices continue to rise; the median price of a single family home in Florida is up to $203,500 and total June sales are up 19.6 percent from a year ago. Florida housing prices for 2015 are now very near the trend line, but are still more than 20 percent lower than peak prices in 2006.
New home construction has been weak as many consumers, particularly millennials, opt for renting multi-family units rather than buying a house. This is the main driver of the lowest homeownership rate in 50 years.
Gas prices have started to fall again after a six-month rise. Given the end of summer vacations and the fall in oil prices, this trend is likely to continue through the fall. Inflation remains relatively low although recent readings were high enough that the Federal Reserve may raise interest rates later this year.
“The Fed will likely raise interest rates in either September or December, although probably not much more than two-tenths of a percentage point,” McCarty said. “Given that the international economic environment is relatively calm, with more certainty regarding the situation in Europe and a possible deal with Iran over nuclear weapons, there is not a better time for the Fed to start undoing the massive monetary intervention they used to guide the economy through the Great Recession.”