Anna Maria Island Real Estate Sales Blog

Recent Survey Shows Consumer Confidence is Up in Florida!

Florida consumer confidence rises six points

GAINESVILLE, Fla. – Aug. 27, 2008 – Consumer confidence among Floridians made huge gains in August, rising six points to 67 from its revised July index, suggesting a turning point as state residents come to grips with the bleak economic picture, a new University of Florida study finds.

Four of the five index components rose – two by double-digits – and the remaining one was unchanged. The overall index is eight points higher than June’s reading of 59, which was the lowest in the survey’s 25-year history. The July index rose by two points to 61, one point higher than the preliminary index that was reported last month.

“It looks like June will be the low point for consumer confidence,” says Chris McCarty, director of UF’s Survey Research Center at the Bureau of Economic and Business Research. “Consumers in Florida have now absorbed most of the bad economic news. Although gas prices are coming down a bit, consumers have now adjusted to higher prices. Much of the pain from the housing downturn has also been absorbed. At this point, most people are looking forward to a turnaround in the economy some time next year.”

There are signs that housing prices are beginning to stabilize in the Sunshine State, McCarty says.

“While prices in Florida markets are still declining, the pace of the declines has slowed,” he said. “Overall, the median price of a home in Florida, excluding condos, is beginning to flatten.”

McCarty said he believes retrospective data will show that home prices bottomed out in July for most Florida markets and that stabilization of housing prices will ultimately lead to stability in financial markets.

Just as the housing crisis affected people’s attitudes about the economy, retail sales have dipped with the drop in consumer confidence, McCarty said.

“Florida’s sale tax revenues have continually declined, time and again falling under levels forecast by state economists,” he said.

Department stores are struggling against competition from low-cost chains, and further changes in the retail sector are likely as baby boomers migrate to Florida to retire over the next decade, altering the state’s demographic profile, he said.

“We will no doubt have a very weak holiday season, but many people are looking past that to better times,” he said of the state’s retail markets.

McCarty said he believes the overall reading for consumer confidence will remain below 70 over the next few months but will not fall below 60, as it did two months ago, or even near it.

“In the short run, I expect consumer confidence to be volatile, reacting to gasoline prices and the stock market,” he said. “I don’t think we will see another low like June any time soon, but I also don’t believe the economic correction is completely over and that consumer confidence is on a trend upward.”

The largest increase among the five components this month was in expectations about U.S. economic conditions over the next year, which rose 12 points to 63. That component had been holding steady at 51 for the prior three months. Expectations about U.S. economic conditions over the next five years also made big gains, increasing by 10 points to 78.

Among the other categories, perceptions of personal finances now compared with a year ago rose five points to 51, while perceptions of personal finances a year from now rose three points to 83. Perceptions as to whether it is a good time to buy big-ticket items remained unchanged at 59.

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 August was conducted from 405 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. Based on the University of Michigan method, 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®