GAINESVILLE, Fla. – Oct. 1, 2014 – Floridians’ consumer sentiment (previously consumer confidence) for September reached its highest level since before the Great Recession began, according to the University of Florida’s (UF) September survey.
The index inched up one point from August to 83 – a level not seen since April 2007.
“This is a welcome development given that consumer sentiment has been flat for the last few months,” says Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “While we are still about 10 points behind where we would like to be at this point in a recovery, confidence among Floridians is heading in the right direction.”
The small rise was broad-based among all ages and income levels. Of the five components used to calculate the total survey number, two rose, two declined and one was unchanged.
Survey-takers’ overall opinion about whether they’re financially better off now than a year ago rose one point to 75, while their expectation that personal finances will improve a year from now fell one point to 84.
The survey found that confidence in the national economy over the coming year dropped two points to 78, but faith in U.S. economic conditions over the next five years remained unchanged at 80.
Meanwhile, respondents’ perception on whether it’s a good time to buy a big consumer item, such as a refrigerator, shot up four points to 98.
“This is the highest level for this component since March 2007, and a big driver of the rise in sentiment in September,” McCarty says.
A mix of economic indicators affects Florida’s consumers. After showing significant improvement since late 2010, for example, the unemployment rate rose 0.1 percent in August.
Also, the median price of a Florida single-family home declined in August to $180,000 (compared month-to-month) – the first drop since January.
“A recent report by CoreLogic, an Irvine, Calif., research firm, found that 24.3 percent of Florida homes are still underwater, compared with a national average of 10.7 percent,” McCarty says. “The likelihood of a rate hike by the Federal Reserve in 2015 will almost certainly result in an increase in mortgage rates – but significant housing price increases over the next year are not likely.”
Meanwhile, inflation remained low and declined in August, led largely by declines in energy prices. Gas prices in Florida fell more than five cents in September and are predicted to drop lower.
Recent gains in the U.S. stock market, meanwhile, could be offset by sanctions imposed by the U.S. and Europe against Russia. Those heavily impacting European countries that trade more directly with Russia.
“Ultimately, these effects will spill back to Florida indirectly through potential declines in the stock market and more directly by declines in both tourism and housing purchases by Europeans,” McCarty says.
Construction and housing in Florida have been recovering over the past two years, due in large part to population growth. But a Federal Reserve rate hike could lead to a temporary, but natural, stock market correction and a slowdown in housing sales and construction, McCarty adds. When the timing of that rate hike becomes clear, “We can expect at least a temporary decline in our consumer sentiment index in Florida.”
Conducted Sept. 1-25, the UF study reflects the responses of 403 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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