Floridians' economic confidence dips amid talk of tariffs

Economic analysts at the University of Florida had expected a slight uptick in consumer confidence in May. Instead, a survey showed that it dropped in all five areas they measured.
Floridians surveyed statewide last month reported a darker outlook about their personal finances and the future of the national economy than they did the previous month. (Times file photo)
Floridians surveyed statewide last month reported a darker outlook about their personal finances and the future of the national economy than they did the previous month. (Times file photo)
Published June 4

Floridians started feeling less certain about the economy in May.

Every month the University of Florida's Bureau of Economic and Business Research calls about 500 Floridians on their cell phones to ask how they feel about their own finances, both now and a year from now, as well as what they expect for the national economy a year and five years from now, and whether they're ready to pull the trigger on a big household purchase like an appliance.

In May, after reaching its highest level in 17 years, the survey’s measurement of consumer optimism saw its biggest one-month drop since May 2015.

“Most of the pessimism in May stems from worry about Floridians’ personal financial situations,” the bureau’s director of economic analysis, Hector Sandoval, said in an announcement of the monthly numbers.

“Nonetheless,” he added, “it’s worth noting that expectations about national economic conditions in the short- and long-run declined as well. This decline might be a result of the economic disruptions and uncertainty brought by the escalating trade war with China and the new tariff threat impacting the relationship with Mexico, one of the United States’ largest trading partners.”

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After compiling survey answers, the bureau assigns an index score from 2 (the most pessimistic) to 150 (the most optimistic) to the overall level of optimism found among respondents. That score was 101.7 in April. It dropped to 96.4 in May as the result of finding more uncertainty in all five components that make up the survey.

How the 469 state residents felt about their own finances fell among all socioeconomic groups, researchers said, but the drop was steepest for women, those 60 or older, and those with incomes higher than $50,000 a year. There was an overall drop in the feeling that now is a good time for a major household purchase, though men remained optimistic.

Looking to the future, respondents were less confident about where their personal finances will be in a year. This was especially true for those making less than $50,000 a year. And the outlook for the U.S. economy weakened for both the one-year and five-year horizon.

The reversal in outlook came even as Florida' labor market and job gains remained strong and the unemployment rate declined to 3.4 percent in April. The state added 206,100 jobs over a year's time, with the most hiring in education and health services, followed by professional and business services, leisure and hospitality, and trade, transportation, and utilities.

If anything, Sandoval said, researchers had expected a slight uptick in consumer confidence.

“While this is only a single month downturn, it is worth watching,” said Bureau of Economic and Business Research director Chris McCarty, said in a news release on the numbers.

Both the state and national economies have boomed, he noted, and the expansion will become the longest on record in July. But he said it has been fueled by the Federal Reserve's "quantitative easing" purchases of nearly $4 trillion in assets like long-term Treasury bonds and mortgage-backed securities, as well as the temporary stimulus from last year's federal tax cut.

"Recessions are a natural part of the business cycle, and we have likely delayed the next one as long as is possible," McCarty said. "We are seeing signs of the beginning of a slowdown in declining home prices and sales. The recent tariff wars with China, and now Mexico, will likely lead to a recession if they extend through the summer. Declining consumer confidence is often a leading indicator of that.”

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Contact Richard Danielson at [email protected] or (813) 226-3403. Follow @Danielson_Times

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