“Floridians appear to be growing concerned about the short-run health of the U.S. economy,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “As the deadline to adjust the debt ceiling approaches, some Floridians, particularly seniors, may be anticipating cuts to Social Security and Medicare which will likely have to be part of any long-term deficit reduction solution. Others may have concerns about raising the debt ceiling.”
Four of the five index components the survey measures decreased. The largest decline was in perceptions of U.S. economic conditions over the next year, which fell seven points to 61. Perceptions of personal financial situation expected a year from now fell one point to 74, perceptions of U.S. economic conditions over the next five years fell one point to 72 and confidence in purchasing big-ticket items such as cars and appliances dropped four points to 70. The only component to increase was perceptions of personal financial situation now compared to a year ago, which rose one point, to 53.
The declines among senior citizens surveyed were significant with possible cuts to Social Security and Medicare looming. Confidence among those aged 60 and over fell by an average of 7.25 points in four index components. Confidence in purchasing big-ticket items fell 11 points to 68, perceptions of U.S. economic conditions over the next year fell eight points to 55, perceptions of personal financial situation expected a year from now fell six points to 59 and perceptions of personal finances now compared to a year ago dropped four points to 45.
National and international economic woes may have also led to the decline, McCarty said. National unemployment increased to 9.1 percent and the debt crisis in Greece and other Eurozone countries is causing instability in markets worldwide.
Despite bleak economic news nationally, Florida experienced some positives. State unemployment (10.6 percent) declined for the fifth consecutive month, gasoline prices fell almost 15 cents per gallon and the median price for a single-family home — which has increased steadily since February — increased again in May to $135,000. McCarty did caution that foreclosures are expected to pick up again as processing delays abate, which may contribute to lower consumer confidence.
June’s index of 66 is its lowest mark since August 2010.
“Typically I would characterize 66 as quite low for consumer confidence and would not expect much more of a decrease barring a dramatic negative event in the economy,” McCarty said. “I do expect there to be big changes on the way from a budget deal prior to Aug. 2 in order to get an increase to the debt ceiling. This will be the first installment of further budget reductions over the next couple of years that will negatively impact many Floridians. It is likely that consumer confidence will stay in the middle to upper 60s and possibly decline further as the details of the budget deal are revealed.”
The research center, 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 June was collected from 408 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 is 150.