Consumer Confidence Tumbles in Florida
Record-high gas prices and a weak Florida housing market caused consumer confidence in the Sunshine State to fall to its lowest point since October 2005, according to a University of Florida study.
On a scale that has 100 representing the same level of confidence from the prior year, the index for May was at 82, three points lower than in April, said Chris McCarty, director of the Survey Research Center at UF’s Bureau of Economic and Business Research, which conducts the survey.
“Consumers in Florida are growing much more pessimistic about the economy and their finances,” McCarty said.
“A gallon of gas in Florida has risen more than 13 cents in the past week and 26 cents compared to the same time a year ago. Although it is typical for prices to increase as summer approaches, we are now at record highs.”
The source of the decline was broad-based, with the biggest drop in perceptions of whether it is a good time to buy big-ticket consumer items, such as appliances and cars.
Much of the pessimism in the last month is occurring among upper-income households, which McCarty speculated is a result of a weak Florida mortgage market, as the stock market has been on the rise.
“We must keep in mind that Florida is among a few states, like California, that may experience serious effects from the problems in the real estate market,” he said.
“People often consider vacations as discretionary spending, which could impact Florida as a primary vacation destination. There is also an impact on employers who cannot get employees to move here, or to transfer, because of problems buying or selling houses.”
Many aspects of the housing decline have yet to play out, McCarty added. Besides construction workers, real estate agents and others directly involved in the construction and sale of housing, retailers and service industries are also affected by declining home equity.
“We expect consumer confidence to remain the same or continue to decline as gas prices and housing continue to negatively impact consumers,” he said. “If we see significant declines in the stock market in June, a further drop in consumer confidence is a virtual certainty.”
The inability to take out Florida home equity loans negatively impacts spending across the state, as those dollars would be pumped into the economy.
Consumer confidence nationally, on the contrary, bounced back unexpectedly in May, helped by optimism about the job market.
Despite widespread bad credit mortgage problems, New York-based Conference Board said Tuesday its Consumer Confidence Index rose to 108.0 in May, up from a revised 106.3 in April. Analysts had expected around 104.5.
SOURCE: TCPalm.com
