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Consumer confidence soars in Florida but sinks nationally

By Palm Beach Business.com

DELRAY BEACH — Consumer confidence rose sharply in May but fell sharply nationally, according to separate reports released Tuesday.

The University of Florida’s consumer confidence index gained three points to 77, its highest reading since January, largely on a more optimistic view of where the economy is going. Perceptions of where the economy is now versus a year ago declined slightly, but expectations for the economy a year from now and five years from now increased.

“This is a welcome turnaround in consumer confidence,” UF survey Director Chris McCarty said. “The rise in confidence in May was particularly strong among, those under age 60 and those with household incomes above $30,000.”

The Conference Board results contradict the findings of the Reuters/University of Michigan consumer sentiment index, released Friday, which rose to its highest level since 2007. The two surveys, however, use different methodology — UF uses the same system as the University of Michigan.

The UF survey and the Conference Board results do agree in a couple of areas — in both surveys, consumers were less confident about current conditions and more optimistic about the economy in the relative short term. And despite the dip, the Conference Board results were not entirely negative.

"Consumers were less positive about current business and labor market conditions, and they were more pessimistic about the short-term outlook,” the Conference Board’s Lynn Franco said. “However, consumers were more upbeat about their income prospects, which should help sustain spending.”

McCarty said the optimism over the future is somewhat surprising, given the “dooms day” scenario the Congressional Budget Office recently provided if Congress can’t come to an agreement over the budget. That’s because of an automatic trigger included in a budget deal approved last year that will automatically allow the Bush era tax cuts to end while cutting both domestic and military spending.

On the other hand, gas prices continue to fall, the unemployment rate is down and housing prices are rising, all trends that tend to brighten the mood of consumers.

 “The increase in confidence this month reversed the trend we were repeating from last year,” said McCarty.  “If we can continue this trend it will bode well for Florida’s economy.  Increased confidence typically means increased consumer spending that will result in more jobs.  This may be a challenge however as news about the fiscal cliff moves outside beyond economic articles and talk shows and into the mainstream media.”