Consumer confidence among Floridians dropped for the first time after four consecutive months of gains, according to a University of Florida survey.
Consumer confidence in Florida sank three points in July to 79 from a revised reading of 81, according to UF’s Survey Research center in the Bureau of Economic and Business Research.
“We were surprised by this sudden decline,” said Chris McCarty, director of UF’s Survey Research Center. “Consumer confidence at the national level as measured by the University of Michigan actually rose slightly in July to 85.1. This raises questions as to what is happening that led to Florida’s decline.”
Four of the five components measured in the index decreased. Overall perceptions among respondents that they now are better off financially than they were a year ago fell three points to 66. Meanwhile, their expectations of better personal finances a year from now dropped six points to 76.
Among the other indexes, confidence in the nation’s economy over the coming year fell three points to 79, and consumer’s faith in the country’s economic health over the next five years fell seven points to 75, according to the survey.
Only one component in the index saw an increase. Floridians feel that now is a good time to buy big-ticket items, such as new cars, which rose four points to 96.
“The drop in confidence seems to be driven by pessimism among younger respondents with lower incomes,” McCarty said. “This age group reports not only lower current personal finances now compared to a year ago, but their expectations of lower personal finances a year from now fell too, dramatically dropping from 101 to 87 for those under 60 and from 82 to 68 for those with incomes under $30,000.”
Economists have pointed out that young people are disproportionately being left behind in the economic recovery, McCarty added.
“Another possibility is that these are early signs of the negative effects of sequestration, something many economists have been expecting,” McCarty said. “There are many ways the automatic cutbacks at the federal level can trickle down to the state level.”
Among them are dramatic funding cuts for Head Start, a program that low-income parents rely on for education and meals for their children. Some families depend on the funding for summer programs that allow them to work during summer when most public schools are closed.
“The big question is whether the decline in confidence turns out to be an outlier or whether we will see a trend down in the next few months,” he said.
Source : Shaun Bevan