Mounting fear over the nation’s economic health both in the short run and the long term dragged down consumer confidence in Florida, which in August fell to the near record low posted at the bottom of the housing bust, a University of Florida report indicated Today (Aug. 30).
Consumer confidence among Floridians fell to 62 on the UF index in August, a confidence level only three points higher than the record-low 59 set in June 2008, according to data compiled monthly by the school’s Bureau of Economic and Business Research.
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“Although none of the index components were at record lows, the combined decrease in confidence across all five components is remarkable,” said Chris McCarty, bureau director, said in a statement. “If past history of this index is any indication, we are in, or at least very near, a recession. We are not likely to know for certain until after the fourth quarter.”
The monthly survey posted downticks among all five of the survey’s indices, with respondents feeling less confident about the national economy and their own personal finances over the near term and beyond.
Respondents over 60 years old were most dramatically more gloomy, as their overall confidence rating dropped nine points from July to 57 in August. Their faith in the U.S. economy over the next five years fell by 16 points.
Economists said the recent debt ceiling and deficit debates, swings in the stock market and questions over longer term issues like health care, pensions and the slow pace of recovery may have spooked older respondents.
“This is no doubt influenced by debt reduction talks, which now routinely include modifications to Medicare and Social Security as part of the solution,” McCarty said.
But caution was not limited to the elderly. The survey found younger respondents also more pessimistic about the country’s long-term economic health and more likely in August to hold off on major purchases. While men generally maintained their confidence, women’s faith in the national recovery fell precipitously both over the next year and the next five years.
The loss of confidence came despite a relatively static economic picture both nationally and across the state. Florida’s unemployment rate remained unchanged from a revised July figure of 10.7 percent while the national jobless rate fell by 0.1 percentage points. Florida housing sales remained steady while the number of foreclosures has tailed off. Housing prices remain low, as do interest rates.
The UF figures were released days after a closely watched University of Michigan survey that also maps consumer confidence. The Michigan survey, released Friday, found consumer confidence plunged in August to 55.7 from 63.7 in July and 74.3 in March. The 25 percent drop in the last three months was the second largest on record. The August decline was especially dramatic in consumer expectations, which fell to their lowest level since 1980.
But the August drop was not totally unexpected. Economists from around the state have said Florida’s rebound would not be seamless and the road to recovery filled with potholes.
Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research, said most forecasts do not have the U.S. slipping back into recession, with all but one closely watched index showing that growth has slowed but the conditions for recession do not exist at the present time. That could change quickly, however, if the economy takes another jolt.
“In August, almost every piece of news was negative or not in the direction you want to see the economy grow,” Baker said.
Baker said the highly publicized federal debate over the national debt ceiling and possible cost cutting measures had an impact on the drop in confidence but the fall was equally prompted by the slow pace of the economic rebound.
“Anyone who hadn’t internalized that it would be a long recovery process is not fully aware,” she concluded.
–Michael Peltier, News Service of Florida