GAINESVILLE, Fla. – Oct. 30, 2013 – Florida’s consumer confidence fell sharply in October to 71, a seven-point drop compared to September and its lowest level in nearly two years, according to a new University of Florida (UF) survey.
“This is the lowest reading since December 2011 following the last debt ceiling showdown in August of that same year,” says Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research.
“Confidence among Floridians was already declining prior to any indication of a shutdown and debt ceiling debate,” McCarty adds. “However, there is no doubt that confidence in September took a hit as we replayed the events of August 2011 – the last time the U.S. was precariously close to a default. Much like the rest of the country, Floridians were not happy with the prospect of defaulting on our national debt and a prolonged shutdown of federal services.”
All five components used in the UF index decreased. Respondents’ overall consensus over whether they are personally better off financially now than a year ago fell three points to 62. Their expectations of improved personal finances a year from now was 74 – a decline of six points from September.
The survey-takers’ confidence in the U.S. economy over the coming year dropped eight points to 68, and their outlook for the nation’s economic health over the next five years sank two points to 73. Both components are at their lowest level since December 2011.
Meanwhile, their view that the present is a good time to buy a big-ticket item, such as a vehicle, fell 11 points to 80.
“Respondents age 60 and over registered a 12-point drop in expectations of U.S. economic conditions over the next year, and a 20-point drop in perceptions as to whether it is a good time to buy big-ticket items,” McCarty says. Seniors were the survey’s most pessimistic respondents, possibly because a federal government default would delay Social Security checks and negatively affect the stock market, hurting retirement accounts.
“As the holiday season is upon us, we estimate weaker-than-usual sales as the Florida consumer remains pessimistic, particularly since new debates among lawmakers are due in January,” McCarty says. “The effect of this could be reversed if lawmakers signal agreement on the postponed debt-ceiling debate sooner.”
Conducted Oct. 1-24, the UF study reflects the responses of 411 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.
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