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Florida Consumer Confidence Drops To Recessionary Levels

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By MICHAEL SASSO, The Tampa Tribune

Published: January 30, 2008

TAMPA - With talk of recession in the air, Florida consumers haven't been this anxious about the economy since 1991.

That's the finding of a consumer confidence survey out Tuesday from the University of Florida's Bureau of Economic and Business Research. The bureau this month asked 533 Floridians about their current financial situations, expected financial situations a year from now and their expectations for the national economy.

The overall consumer confidence index, which is benchmarked to a level of 100, fell to 70 this month from 74 in December. Generally, an index level in the low 70s is only seen during periods of recession, survey director Chris McCarty said. The last time the index sunk to 70 or lower was in December 1991, McCarty said.

Not surprisingly, low-income Floridians were the most pessimistic. Those with incomes under $30,000 a year had a confidence index of 58, and those with incomes above $30,000 had a level of 74.

The declining Florida confidence mirrored a general decline across the United States. On Tuesday, the Conference Board, a business research group, noted that U.S. consumer confidence fell to a level of 87.9 this month from 90.6 in December.

What to make of the University of Florida survey is debated. McCarty suggested it's a sign Florida "almost certainly" is in a recession.

"There is still some possibility that recessionary conditions will remain localized to some states, such as Florida and California," rather than spreading to the entire country, he said.

However, Scott Brown, chief economist of Raymond James & Associates in St. Petersburg, said the jury is still out on whether Florida is in a recession. Brown said economic figures suggest the overall U.S. economy will grow slowly in the near future, but won't actually contract.
Conventional wisdom is that a recession is marked by two consecutive quarters of decline in the gross domestic product, which is the value of goods and services produced in a geographic area in a year. However, the body that measures recessions, the National Bureau of Economic Research, looks at host of economic indicators to determine a recession, including GDP, employment and industrial production.

Brown said consumer confidence can be hurt by media reports of potential recessions, so he doesn't rely on them too heavily. McCarty acknowledged that news reports can affect confidence, but he insisted the survey indicates a weak economy.

"If the underlying economy wasn't that bad, the Federal Reserve wouldn't do an emergency three-quarter point rate cut," McCarty said, referring to the Federal Reserve's interest rate cut last week.

Reporter Michael Sasso can be reached at msasso@tampatrib.com or (813) 259-7865.

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