Consumer confidence among Floridians dropped for a third consecutive month falling to 68 in April as the economy struggles because of domestic budget woes, soaring gas prices and international unrest, according to a new University of Florida survey.
Four of the indexs five components decreased, including perceptions of personal financial situation expected a year from now, which fell 11 points to 69, a record low. Thats the largest single-month decline in that component since July 1990, when tensions in the Middle East and an oncoming recession led to a similar decline.
The speculation, said Chris McCarty, director of UFs Survey Research Center in the Bureau of Economic and Business Research, was that the sharp decrease was created by seniors who are increasingly hearing deficit-reduction plans that include Medicare, and low-income households who at the state level are anticipating cuts to Medicaid and other programs. But a closer look at the survey results indicates the decline in confidence is more widespread.
A further examination of the data shows that the component declined across all categories and dropped 17 points among respondents under age 60, McCarty said. It appears that the public is beginning to understand that budget cuts at the state level and deficit reduction at the national level will likely affect everyone in the U.S., young and old, rich and poor.
Confidence in purchasing big-ticket items such as cars and appliances had the second-largest drop, falling five points to 75. Perceptions of U.S. economic conditions over the next year dropped two points to 65, and perceptions of personal financial situations now compared with a year ago fell one point to 57. The only index component that didnt decrease was perceptions of U.S. economic conditions over the next five years, which remained at 74.
We think Floridians have, for the most part, processed the news from Libya and Japan and are now focused on state and national debates about the budget, said McCarty. At the state level, many people know the options the Florida Legislature is considering, although it is still unclear what will actually become law. At the national level, the conversation has only begun, at least in the public eye. Inevitably deficit reduction will have to involve modifications to at least one of the big three entitlement programs, Medicare, Medicaid and Social Security, and very likely all three. As details of those modifications unfold, consumer confidence may decline further as those three programs collectively affect virtually all Floridians.
Despite the decline in confidence among Floridians and gas prices across the U.S. rising to near or above $4 a gallon, there was some positive news regarding home sales and unemployment. McCarty said Florida home sales increased and the median price of a single-family home in the state is $126,300, up $4,400 from the previous month. State unemployment fell 0.4 percent to 11.1 percent, and unemployment was down nationally as well. McCarty said the unemployment rate should decline over the next five years because of a combination of job creation and a declining labor force as the baby boom generation moves into retirement.
The research center, a part of the Warrington College of Business Administration, conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for April was collected from 402 responses.
The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest possible is 150.
Explore further: Study finds Illinois is most critical hub in food distribution network