Consumer confidence sinks in Florida, nationally

By Palm Beach Business.com

DELRAY BEACH — Consumer confidence continues to evaporate, according to two private reports released Tuesday.

The University of Florida’s consumer confidence index fell three points in February to a reading of 63, hovering above its all-time low by only four points.

The Conference Board’s consumer confidence index plummeted to 25 from a reading of 37.4 in January, reaching yet another all-time low. The Conference Board launched the index in 1967.

“We saw a temporary increase to confidence in December and January that seems to have been related to optimism about the effectiveness of federal intervention into the economy, and perhaps more importantly, the change to a new administration,” UF survey director Chris McCarty said. “It is now clear that neither of these will result in a quick fix to the economy and confidence reflects that.”

Lynn Franco, director of The Conference Board Consumer Research Center, citing the rapidly deteriorating jobs market and worsening business conditions, said the survey suggests the overall economy has weakened further.

“Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence and driven expectations to their lowest level ever,” Franco said. “In addition, inflation expectations, which had been easing over the past several months, have moderately picked up. All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months."

McCarty said consumers generally don’t see how the stimulus package and the federal money pumped into the banking system will help them. Some banks have survived because of the aid, but remain reluctant to make loans.

McCarty added the stimulus package does have considerable help directed at consumers, including extended unemployment benefits and health insurance, and tax cuts. Still, it will take time to turn the economy around.

“There is no doubt that we will be working through this recession through this year into 2010,” McCarty said. “ But eventually the economy will turn around. Consumer confidence will remain below 70 most of 2009, as the underlying problems that led to the recession are worked out.”

Nationally,  consumers' appraisal of overall current conditions, which was already bleak, worsened further. Those claiming business conditions are "bad" rose to 51.1 percent from 47.9 percent, while those saying business conditions are "good" edged up to 6.8 percent from 6.5 percent last month.

Consumers' assessment of the labor market turned considerably more pessimistic in February. Those saying jobs are "hard to get" increased to 47.8 percent from 41.1 percent in January, while those stating jobs are "plentiful" fell to 4.4 percent from 7.1 percent.

Consumers' short-term outlook turned significantly more negative this month. Consumers anticipating business conditions will worsen over the next six months increased to 40.5 percent from 31.1 percent, while those expecting conditions to improve declined to 8.7 percent from 12.8 percent in January.

The employment outlook was also much grimmer. The percentage of consumers expecting fewer jobs in the months ahead increased to 47.3 percent from 36.9 percent, while those expecting more jobs declined to 7.1 percent from 9.1 percent. The proportion of consumers expecting an increase in their incomes declined to 7.6 percent from 10.3 percent.