The biggest drop came in confidence for making big-ticket purchases, which authors call “not surprising” given inflation’s impact on the state’s residents.
GAINESVILLE, Fla. – Florida consumer sentiment slipped for a second consecutive month in February, hitting 68.4 – a drop of 1.1 points from January’s revised figure of 69.5 in January. It’s the index’s lowest level in 10 years.
Among the five components that make up the index, one increased and four decreased.
Current situation: Floridians’ opinions about personal finances now compared to a year ago decreased 1.5 points, from 65.1 to 63.6. However, the biggest component drop this month is in opinions on whether it’s a good time to buy a major household item like an appliance. That number dropped 3 points, from 57.3 to 54.3.
“Opinions about personal finances now compared with a year ago have fallen to the lowest level in the past eight years,” says Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research. However, “this is not surprising given that consumers are paying more for necessities such as food, energy and housing. Last month, the annual rate of inflation reached a four-decade high of 7.5%. While job creation has been strong and wages have risen due to a tight labor market, higher consumer prices are absorbing some of these gains.”
Future expectations: Expectations for personal finances a year from now decreased 1.1 points, from 82.5 to 81.4. Similarly, expectations about U.S. economic conditions over the next year decreased slightly, dropping one-tenth of a point from 68.8 to 68.7.
However, outlooks for U.S. economic conditions over the next five years increased six-tenths of a point, from 73.5 to 74.1.
Florida’s economy continues to improve, especially in terms of employment. Initial unemployment claims in Florida, an indicator of layoffs, are comparable to the period before the pandemic, suggesting labor demand is strong.
“Despite the robust gains in employment, except for the spending intentions component of the index, the four remaining components are all below the levels recorded during the worst point of the COVID-19 recession in April 2020,” Sandoval says. “Since the global economy is still recovering from the supply shocks associated with the pandemic, we expect consumer sentiment to remain low in the months ahead.”
Russia’s invasion of Ukraine could also play a role in next month’s consumer sentiment study, especially if it disrupts energy supplies and exacerbates inflation in Europe and elsewhere, Sandoval adds.
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