Consumer confidence nose dives in Florida, soars nationally

By Palm Beach Business.com

DELRAY BEACH — Perhaps it’s the proximity of the gulf oil spill and the threat it poses to the state’s economy, but consumer confidence in Florida plummeted this month while nationally it soared.

The University of Florida’s consumer confidence index for May fell 7 points to 71, while the Conference Board Consumer Confidence Index increased nearly 6 points to 63.3, it’s highest point in the last 12 months.  Both reports were issued Tuesday.

The decline in Florida confidence was expected, as two major stimulus programs aimed at consumers — appliance rebates and tax credits for homebuyers — ended.

Said Chris McCarty, director of the UF survey: “Last month’s index was largely elevated by the question asking consumers if it is a good time to buy big ticket items.  With the tax rebates for homebuyers running out at the end of April, it was a good time for a major purchase.  The energy efficient appliance rebate added to perceptions of good buying opportunities in April.

“Without that stimulus that particular component fell, although not to pre-April levels. The largest drop was in perceptions of short term economic conditions which fell 14 points.  This probably reflects declines in the stock market and to some extent interpretations by consumers of the effect of the Gulf oil spill.  It is not unusual for major events making their way into that particular component.”

The Conference Board report was more upbeat.

"Consumer confidence posted its third consecutive monthly gain, and although still weak by historical levels, appears to be gaining some traction,” said Lynn Franco, director of the Conference Board’s research center. “Consumers’ apprehension about current business conditions and the job market continues to slowly dissipate. Consumers’ expectations, on the other hand, have increased sharply over the past three months, propelling the expectations index to pre-recession levels.”

The UF survey's April number of 78 was the highest in more than a year; the May downturn brings the index back to the range where it’s lingered for most of the past 12 months.

“We expect Florida’s consumer confidence to remain in the low 70s or lower for the next several months, unless the effects of the oil spill show a direct effect on Florida, the stock market continues to decline, or Florida has a bad hurricane season.” McCarty said.