Are Floridians More Optimistic than Rest of U.S.?
While Americans’ attitudes declined a bit in Jan., a monthly UF study of Floridians found a 1.4-point increase overall with an uptick in expectations for the future.
GAINESVILLE, Fla. – In January, consumer sentiment among Floridians increased 1.4 points to 65.4 from December’s revised figure of 64. At a national level, sentiment increased over five points. Yesterday, the Conference Board noted a slight dip in overall Americans’ optimism.
“The increase in consumer sentiment in January stems from improvements in Floridians’ expectations about the future, particularly their expectations of a year from now,” says Hector Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.
Sandoval calls those views “consistent with a falling inflation outlook. After peaking at 9.1% in June, inflation has steadily declined to 6.5% in December. It is expected that price pressures will continue to ease over the next few months, preventing households from experiencing further hardships.
Among the five components that make up the index, four increased and one decreased.
Current conditions: Floridians’ opinions about current economic conditions in January were mixed. Views of personal financial situations now compared with a year ago increased 1.1 point from 54.6 to 55.7. On the other hand, opinions as to whether it’s a good time to buy a major household item like an appliance decreased three-tenths of a point from 55.2 to 54.9.
Future conditions: Outlooks about expected future economic conditions were positive. Prospects for individual’s personal finances a year from now increased 3.3 points from 76.5 to 79.8. Similarly, expectations about U.S. economic conditions over the next year increased 1.6 points from 62.9 to 64.5.
This long-range optimism even extended five years into the future. Views of U.S. economic conditions over the next five years increased 1.1 points from 70.9 to 72.
Meanwhile, the Florida labor market continued to strengthen in December, with more jobs being added. According to the latest Florida jobs report, the unemployment rate ticked down by 0.1 percentage point in December, reaching 2.5% – only one-tenth of a percentage point above the lowest rate on record.
In line with this, the number of Florida workers seeking unemployment benefits is hovering around pre-pandemic levels, indicating a tightening labor market.
“Prices have been declining over the second half of 2022 as the Fed swiftly increased interest rates,” says Sandoval. “Despite this, the U.S. economy grew at an annual rate of 2.9% in the last quarter of 2022.”
Inflation, however, remains well above the Federal Reserve target of 2%.” While the Fed will likely raise rates this week, it’s not expected to be a large increase similar to last year.
Still, “continued increases in interest rates will ultimately slow down the economy and trigger a recession,” adds Sandoval.
Sandoval remains positive, though, “Looking ahead, with the assumption the labor market remains robust, we expect consumer sentiment to improve slowly as inflation pressures continue to ease.”
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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