Florida consumer confidence down five points in March

GAINESVILLE, Fla. – March 26, 2008 – Florida’s consumer confidence fell five points to 68 in March, a new University of Florida study reports.

The overall index is two points below its January level, which then marked its lowest point in 16 years, says Chris McCarty, director of UF’s Survey Research Center at the Bureau of Economic and Business Research. In February, it rose three points to 73 before dropping in March.

“Consumer confidence is now the lowest it has been since December of 1991, when it hit a record low of 64,” McCarty says.

Four of the five components that make up the index fell this month. The largest decrease was in perceptions about national economic conditions over the next year, which fell 12 points to 53, followed by perceptions of national economic conditions over the next five years, which fell nine points to 74. Perceptions of whether it’s a good time to buy big-ticket household items fell four points to 65, and perceptions of personal finances now compared with a year ago fell one point to 64.

However, one of the five index components rose, with a two point increase in consumers’ expectations of their personal finances one year from now.

Home sales and prices, both of which have fallen disproportionately in Florida for the past year, are among the factors affecting Floridians as well as everyone else in the United States, McCarty says. “Our economic problems are unlikely to turn around over the next several months,” McCarty says. “However, some of what needed to happen has already occurred.”

McCarty believes that home prices are falling to reasonable levels and, in parts of Florida, are now where they would have been without the run-up over the past few years.

“We expect housing prices in many Florida markets to bottom out by July, following another weak home-buying season,” he says. “Although it will be a long time before real estate returns to 2005 prices, it will be a reasonable time for Floridians waiting to buy a house to enter the market.”

And with the passage of the property tax amendment, those Floridians with Save Our Homes equity will be in a good position to move within Florida, McCarty says.

“Many economists expect slow growth to return by the end of the year and solid growth to return by early next year,” he says. “It is useful to keep in mind that there are investors out there with money to lend, an essential ingredient for a growing economy. When they are confident that their investments will grow, they will return.” It also is clear from the international fallout that the U.S. economy is firmly integrated into the global markets and stands no chance of failing, he says.

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 March was conducted from 399 responses.

Consumer confidence is designed to help predict buying patterns by measuring the mood of consumers toward purchasing. Although other economic indicators also predict buying patterns, consumer confidence tends to be available sooner. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year. The value of the index is in comparing changes over time rather than looking at an isolated month.

© 2008 FLORIDA ASSOCIATION OF REALTORS®

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