Consumer Confidence Remains High in Southeast

Consumer confidence in Florida and throughout the Southeast remained high in the second half of this year and was sunnier than the national outlook.

However, there are doubts - mostly in the South Florida housing market.

Those recent findings are from an RBC Centura look at consumer attitudes and spending. The bank said its RBC Southeastern Consumer Attitudes and Spending by Household (CASH) Index for the second half of 2006 was 99.8 out of a baseline of 100 points, established in 2002.

That’s a slight increase from 99.5 for the first half of the year.

Southeastern consumer confidence took a nosedive in the second half of 2005, following a devastating hurricane season and subsequently higher energy costs. In the second half of 2006, however, consumer confidence levels rebounded by 25 points and stabilized during the third and fourth quarters as home loan rates remained low.
The optimistic outlook for the Southeast far outpaces the national index for the July-to-December periods - at 99.8, compared with 85.4.

RBC Centura said that deviation is not surprising because the Southeast region typically has a more-positive attitude toward the economy than the rest of the nation. There is no doubting the economic progress in Florida over the first half of this decade.

Overall, the bank said consumer confidence was driven largely by optimistic expectations for the future and confidence in job security.

With a positive outlook for the future and good job security, the Southeast seems positioned nicely for continued economic growth, RBC economists said. The drop in economic confidence following Hurricane Katrina has corrected and the Southeastern attitudes have returned to normal.

Despite a real estate market that has priced out many buyers, Florida mortgage rates have remained low, leading many to believe the worst is over for the real estate bubble. However, many don’t share this opinion, and conflicting theories permeate from local economists.

As far as negatives, RBC Centura said:

• Consumer confidence in the Southeast cooled significantly regarding the housing market. For the last six months of 2006, only 39 percent said it is a good time to buy real estate, down six percentage points from 45 percent in the first half of 2006.
• Nearly half of Southeastern residents (49 percent) said they are less comfortable making a major purchase. Six months ago, it was 45 percent.