GAINESVILLE, Fla. – Feb. 23, 2011 – Consumer confidence among Floridians remained at 77 out of 100 in February, suggesting a sustainable and improved view of the economy, according to a new University of Florida (UF) survey.
The index rose seven points last month, an unexpected increase according to Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research, considering the economic climate in Florida. However, he considers it noteworthy that the index didn’t change dramatically this month.
“We had expected a correction to last month’s seven-point increase in consumer confidence,” says McCarty. “A second month at this high level makes it much less likely that the increase for January was an aberration and more likely that consumers view the economy and their personal economic situation as having improved.”
McCarty said several factors contribute to Floridians’ increased optimism, and at the top of the list is the bull market in stocks that is lifting portfolios. Another factor, McCarty says, is that people nearing retirement age whose 401(k) accounts were almost halved by the recession have mostly recovered those losses.
Work wages have shown steady improvement and the stimulus agreement, passed by Congress at the end of 2010, is now appearing in workers’ paychecks, increasing optimism about personal finances. Inflation remains in check, McCarty says, but high inflation could resurface by summer. Gas prices have risen again and expected to keep rising, as are prices for basic food items like wheat and corn.
“At 77, the index represents a dramatic improvement over consumer confidence for the past three years,” McCarty says. “The one exception was April 2010, when a confluence of tax rebates artificially lifted confidence. It fell in the following months as those programs ended and the Gulf oil spill raised pessimism. This month, the sustained higher level of confidence is more broadly based and is an indicator that consumers are seeing some stability in the overall economy.”
Among the five components that make up the index, four increased or remained the same. Confidence in purchasing big-ticket items such as cars and appliances had the largest gain, rising three points to 88, and perceptions of U.S. economic conditions over the next year rose two points to 79. Perceptions of U.S. economic conditions over the next five years (81) and perceptions of personal financial situation now compared to a year ago (58) were unchanged.
The only component to decrease this past month was perceptions of personal finances expected a year from now, which dipped three points to 81.
There is also some good news for the unemployed. The national unemployment rate declined from 9.4 percent to 9 percent in January as several major national and international firms such as Google and The Home Depot announced intentions to hire. Florida’s unemployment rate for January won’t be available until March 10, but McCarty hopes the state will see a decline in unemployment as well.
McCarty says housing prices have still shown some declines, but it appears that prices for single-family homes are bottoming out.
The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for February was collected from 439 responses.
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