Floridians’ confidence stable as economy improves
GAINESVILLE, Fla. – Jan. 29, 2016 – Consumer sentiment among Floridians fell a very slight amount in January, dropping to 91.5 from December's 91.6, according to the latest University of Florida (UF) consumer survey.
Among the five components that make up the index, three declined and two increased, with Floridians' view of the economy down for both the short and long term.
Expectations of U.S. economic conditions over the next year fell 1.8 points to 84.1; and the outlook for U.S. economic conditions over the next five years fell 4 points to 86.8. One year earlier, both were higher.
Opinions as to whether it is a good time to buy a big-ticket item fell 1 point to 100.9 but it was still higher in a year-to-year comparison.
Perceptions of personal finances now compared with a year ago rose 3 points to 83.7, which is 6.2 points higher than for the same month last year. Expectation of personal finances a year from now rose 3.5 points to 102 – the same reading as January 2015.
"While only three out of five components fell, the biggest change between January 2015 and 2016 was the more than 11-point decrease in anticipation of U.S. economic conditions over the next year," says Hector H. Sandoval, director of the Economic Analysis Program at UF's Bureau of Economic and Business Research.
Sandoval says the "biggest declines in expectations of U.S. economic conditions were observed in those aged 60 and over, and those in households making more than $50,000, (but) this unfavorable perspective is shared by all Floridians in general, independent of their gender, age or income level."
In spite of a lukewarm view of the economy, Florida's economic data reports continue to be mostly positive, particularly in the labor market. Unemployment among Floridians continues to fall, with December's rate at 5.0 percent. There has been a gain of 233,100 jobs since December 2014 – an increase of 2.9 percent. According to the Florida Department of Economic Opportunity, December was the 65th consecutive month with positive annual job growth.
Although inflation is expected to pick up as unemployment falls, the inflation rate decreased as the cost of energy products declined. This generates uncertainty on how the Federal Reserve will respond, given the increase in the interest rates announced last month to stay ahead of inflation. Nonetheless, the low price of gas represents a huge savings for Floridians and puts more money in their pockets.
"Despite the positive trends in the labor market, the decline in Floridians' consumer sentiment, in particular the decline in the short- and long-run expectations on U.S. economic conditions, might be due to the drop in the stock market this year combined with the deterioration of the Chinese economy," Sandoval says. "On one hand, if the turmoil in the stock market persists, this will reduce consumer spending in the medium-run; on the other, job losses might occur as a consequence of China's slowdown."
Conducted Jan. 1-24, the UF study reflects the responses of 427 individuals who were reached on cellphones, representing a demographic cross section of Florida. The index 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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