Fears about the economic effects of the BP oil spill caused a slight decline in Florida’s consumer confidence in July, while expectations about personal finances reached a record low, according to a new University of Florida survey.
“It was no surprise that consumer confidence remained subdued among Floridians in July as the oil from Deepwater Horizon continued to flow into the Gulf most of the month,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “This comes at a time when other economic indicators were showing signs of changing for the better.”
Consumer confidence fell two points to 65, its lowest point in 16 months, with respondents especially pessimistic about their future finances.
“Perceptions of personal finances a year from now is at the lowest level ever recorded as Floridians do not anticipate a good outcome to the spill’s effect on the Florida economy,” he said.
That component of the index fell four points to 72. Three of the other four components also dropped and one rose. Expectations of U.S. economic conditions over the next year fell three points to 61, while expectations of U.S. economic conditions over the next five years fell two points to 69. Both of these components are at their lowest levels since February 2009. Perceptions of whether it is a good time to buy big-ticket consumer items fell one point to 76. Perceptions of personal finances now compared with a year ago rose two points to 48.
“Although Florida was by no means recovered from the recession, there were signs that the economy was turning around prior to the oil spill,” McCarty said.
Housing prices continue to reflect a market where prices have hit bottom, although sales are down as a result of the spent demand from the tax rebates that ended in April. “It is possible that prices could decline further, particularly if the effects of the oil spill ultimately reach the west coast of Florida or if perceptions of these effects remain negative,” he said.
Florida’s jobless rate has actually declined for the third month, down from a record 12.3 percent in March to 11.4 percent in June.
While some of this decline is still due to the enormous number of Census workers hired, many of those people would already have been laid off by June, McCarty said. This trend is reflected in the loss of 25,000 jobs in government, which has been more than offset by increases in other sectors, such as jobs associated with tourism — 7,000 — and administrative and waste services — 7,700 — which possibly relate to the oil spill cleanup.
There are anecdotal reports that taxable sales in the future will decline, due to declines in tourism and cautious Florida consumers, uncertain about the effect of the oil spill.
At this point, however, the spill’s effects appear to be confined to Florida Panhandle, but perceptions outside Florida among tourists and potential in-migrants around the globe are hampering the state’s economic recovery.
The research center conducts the Florida Consumer Attitude survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for July was 420 responses.
