Consumer confidence among Floridians suddenly jumped by three points to 77 in May, reversing a three-month decline, according to a monthly University of Florida survey. The latest figure is nine points higher than it was a year ago.
“This is a welcome turnaround in consumer confidence,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “The rise in confidence in May was particularly strong among those under age 60 and those with household incomes above $30,000.”
The sudden rise in consumer confidence is strange given “the potential ‘fiscal cliff’ due at the beginning of 2013 that is now being reported in the news,” McCarty said. Several pressing economic issues, unless acted upon by Congress and the president, could dampen the current optimism, he said.
Expiring Bush tax cuts will result in higher taxes for most households. In addition, mandated automatic cuts in domestic and military spending and yet another battle over raising the debt ceiling could shake consumer confidence as early as next year.
But, several trends should give Floridians something to be upbeat about – the drop in gas prices, almost 33 cents a gallon over the past month and the falling jobless rate which now stands at 8.7 percent.
Despite the downward trend in the unemployment rate, more than 800,000 Floridians are out of work and still can’t find a job. Also, the construction sector remains in the doldrums, since the bursting of the housing bubble, and there have been substantial job losses in the government sector.
According to McCarthy, many job seekers have become discouraged and quit looking for work, but as the recovery takes hold, some of them will re-enter the labor force. This will result in an increase in unemployment, but it will actually be a sign of healing in the job market, he said.
“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.”
The UF survey was conducted between May 12-24, and reflects the responses of 411 individuals, representing a demographic cross section of Florida.
