Consumer confidence in Fla. dropped a bit again in May, only slightly higher than the June 2008 reading. Regular monthly drops seem to track inflation’s rise.
GAINESVILLE, Fla. – Florida consumer sentiment deteriorated for a second month in a row in May, dropping to 61.5 from a revised figure of 63.5 in April. May’s reading is now only 2.7 points above a record low of 58.8 set in June 2008.
“Consumer sentiment among Floridians has not improved since the beginning of the year,” says Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research. “In fact, consumer sentiment has been on a downward trajectory since July 2021, one month after the annual rate of inflation first indicated signs of soaring prices across the board with annual rates exceeding 5%.”
Among the five components that make up the index, one increased and four decreased.
Current conditions: Floridians’ opinions about their personal finances now compared with a year ago dropped 3.9 points from 58.8 to 54.9, the largest decline in May’s reading. Similarly, opinions as to whether this is a good time to buy a major household item like an appliance decreased 1.1 points from 51.7 to 50.6.
Future expectations: Floridians’ expectations about future economic conditions were mixed. On the one hand, expectations of personal finances a year from now increased slightly from 74.4 to 74.8. On the other hand, expectations about U.S. economic conditions over the next year dropped 3.1 points from 63 to 59.9.
Similarly, outlooks of U.S. economic conditions over the next five years decreased 1.9 points from 69.4 to 67.5. Notably, all Floridian demographic groups shared the more pessimistic outlooks.
“While Floridians expressed more optimism regarding their future personal financial situation, their views concerning the outlook of U.S. economic conditions reflect uncertainty as the Fed attempts to deliver a soft landing while combating the highest inflation in 40 years,” says Sandoval. “Although widely anticipated, as the Fed’s rise in interest rates ripples through the economy, it will make it more expensive to purchase a car or a home or carry a credit card balance. Additionally, higher interest rates also raise the possibility of increased unemployment, reduced economic activity and a recession.”
Sandoval expects consumer sentiment numbers to remain week at least for a few months “as the effects of higher interest rates are yet to be felt throughout the economy, and as global challenges including rising food and energy prices, the war in Ukraine and COVID-induced lockdowns in China remain a concern.”
The index UF researchers use is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2, the highest is 150.
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