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Wednesday, October 26, 2011

Florida's consumer confidence steady in October

Fla.’s consumer confidence steady in October

GAINESVILLE, Fla. – Oct. 26, 2011 – Following a modest gain in September, consumer confidence among Floridians fell a point in October to 63. The lowest index possible is a 2; the highest is 150, and the latest reading is four points above a record low of 59 set in June 2008, according to the University of Florida.

While it’s not a strong reading, it compares favorably to a nationwide survey released yesterday that found a more significant drop.

“Consumer confidence (in Florida) continues to be in the doldrums,” says Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. That confidence level could remain stuck for some time because “there have been no consistent economic developments over the past couple of months to push confidence lower or raise it from its historically low levels.”

While four of the five indicators used in the survey showed improvement in September, only two rose in October. The overall view that personal finances are better now than they were a year ago rose five points to 54. Expectations that the economy will improve a year from now also increased, rising two points to 55.

Meanwhile, perceptions that personal finances will improve a year from now dropped two points to 72. Respondents also were gloomier about the long-run prospects for the economy; expectations that it will strengthen over the coming five years dropped one point to 67. Finally, the component measuring whether now is good for buying big-ticket items, such as automobiles, laptops, and dishwashers sank four points to 70.

The report found that consumer confidence remains shaky despite reports of slight economic improvement in some sectors. Florida’s unemployment rate, for instance, dropped one-tenth of 1 percent to 10.6 percent, after remaining fixed at 10.7 percent for three months – but it’s still far better than the record high 12.5 percent in March 2010.

“One thing to keep an eye on is the size of the labor force,” McCarty says. “Unemployment is the percent of (people) unemployed (who are) looking for work. When people stop looking, for a variety of reasons, they are not counted. Although Florida’s labor force increased by 14,000 from August to September, it is still down 26,000 from September of 2010.”

Housing prices in Florida also appear to be bottoming out but may be in for more tough times, McCarty says. “A large overhang of unprocessed foreclosures and a reduction in the maximum loan Fannie Mae and Freddie Mac will finance may put further pressure on housing prices.”

McCarty thinks that consumers may get more stressed when the national stage again turns to cost-cutting issues. “We must keep in mind that the Super Commission (in Congress) is required to come up with recommendations for budget cuts by Nov. 23 or automatic cuts will be triggered,” he says. “Regardless of the outcome, we can expect renewed media coverage similar to the debt ceiling discussion in August that many consumers found unnerving.”

On the positive side, Florida’s seniors continue to report declining personal finances but that could change when cost-of-living adjustments to Social Security payments begin in January.

© 2011 Florida Realtors®

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