Floridians gain confidence in the economy

By Palm Beach Business.com

DELRAY BEACH — Confidence among Florida’s consumers rose in August, the first gain since April, according to a report released Tuesday by the University of Florida.

Consumer confidence also shot up nationally to an August reading of 54.1 from 47.4 in July, according to a separate report released by the Conference Board, a nonprofit business research group.

“We had anticipated an increase in consumer confidence in August based on what appeared to be an unjustifiably large drop in July,” UF Survey Director Chris McCarty said. “While the economic environment is by no means bright, the decline in July seemed unsustainable given the lack of any very bad economic news and some encouraging signs in Florida’s housing market and the stock market.”

The index is based on five questions on the economy and personal finances that researchers ask Florida residents. Floridians responded favorably on all but one question: whether this is a good time to buy a big- ticket item. That component fell 5 points.

The Conference Board similarly asks consumers a series of question in constructing its index. There was big shift in consumer expectations of the economy.

"Consumer confidence, which had posted back-to-back monthly declines, appears to be back on the mend,” said Lynn Franco, director of the Conference Board Consumer Research Center. “The present situation Index increased slightly, mainly the result of an improvement in consumers' assessment of the job market. The expectations Index improved considerably and is now at its highest level since December 2007.

“Consumers were more upbeat in their short-term outlook for both the economy and the job market in August, but only slightly more upbeat in their income expectations. And, as long as earnings continue to weigh heavily on consumers' minds, spending is likely to remain constrained."

McCarty doesn’t see much change either way in the index as the economy turns from recession to recovery.

“Unfortunately, while Florida housing is showing signs of improving, the overall state economy in the long run will likely lag other parts of the economy given the prospects for a turnaround in employment,” McCarty said. “Real estate sales, construction spending and tourism have all been major sectors in the Florida economy over the past two decades.

“As the country moves into recovery over the next year, these sectors of the Florida economy will certainly stabilize, but will not grow.
“Florida needs a new approach.”