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Turmoil, higher prices cut into consumer confidence

By Palm Beach Business.com

DELRAY BEACH — A month of turmoil, disaster and uncertainty have left consumers in a less hopeful mood. Consumer confidence fell both in Florida and the nation fell in March, according to separate reports released Tuesday, and recent headlines played a major role.

Consumer confidence among Floridians fell 4 points to 72, according to the University of Florida’s consumer confidence index, while dropping 8.6 points to a reading of 63.4, according to the Conference Board’s index.

“There has been a lot of news in March for consumers to process,” said Chris McCarty,  director of the UF survey.  “The unrest in the Middle East and North Africa involving Tunisia, Egypt and Yemen has been both inspirational and unnerving.  The deteriorating circumstances in Libya have been of enormous concern both due to U.S. involvement and the effect on oil production. 

“The earthquake in Japan raises questions about the stability of Japanese products, companies with a base in Japan, as well as reflection on the safety of our own nuclear-based power grid.  Gas prices had already been on their way up prior to these events and are likely to continue rising due to potential shortages from Libya, offline refineries in Japan, increased demand from China and India and seasonal increases as the summer approaches.”

Closer to home, the median price for a single family Florida home fell sharply in January and dropped slightly more in February to $121,900, the lowest level since March, 2001.  Sales tax revenues, though higher than last year are less than projected estimate, requiring deeper cuts to the state budget.  The potential budget cuts are broad-based affecting virtually all
public employees and Medicaid recipients. 

One bright spot was the January employment report that showed Florida’s  unemployment rate falling a tenth of a percent to 11.9.  Most economists do not expect significant declines in unemployment until sometime next year.

The Conference Board attributed much of the decline in its index to rising prices and fear of inflation.

“The sharp decline in confidence was prompted by a sharp decline in expectations,” said Lynn Franco, director of the Conference Board Consumer Research Center. “Consumers’ inflation expectations rose significantly in March and their income expectations soured, a combination that will likely impact spending decisions. On the other hand, consumers’ assessment of current conditions improved, indicating that while the short-term future may be uncertain, the economy continues to expand.”

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DELRAY'S ONLINE BUSINESS AND COMMUNITY NEWSPAPER — PALM BEACH BUSINESS.COM
   
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MARCH 29, 2011 click to go home
 
         
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