For all of 2022, Fla. confidence hit its lowest point since UF recordkeeping began in 1985, but drop in Dec. was slight – to 64.0 from Nov.’s 64.4.
GAINESVILLE, Fla. – Consumer sentiment among Floridians fell slightly in December, though the drop was slight – four-tenths of a point to 64 following a revised 64.4 notched in November.
Nationally, consumer sentiment rose 3 points in December.
“As the year winds down, annual average consumer confidence stands at 64.3 points (for all of) 2022, its lowest level on record since the series began tracking consumer confidence in 1985, says Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research. “This is an indication that consumer attitudes have been overwhelmingly gloomy in 2022. The second-lowest annual average was 65.6 points and dates to the Great Recession in 2008.”
Sandoval blames “persistently high inflation” that pushed the Federal Reserve to “aggressively raise interest rates since March to bring inflation down.”
He says depressed consumer confidence raises concerns about the future of the economy and increases the fears of a potential recession in 2023.
Among the five components that make up the index, three increased and two decreased.
Current conditions: Floridians were more optimistic in December about current economic conditions. Views of personal financial situations now compared with a year ago increased slightly – seven-tenths of a point – from 53.9 to 54.6.
Opinions about buying big-ticket items – which could include homes – also increased 2 points from 53.2 to 55.2.
Future expectations: The three components measuring Floridians’ expectations for future economic conditions were mixed.
Expectations of personal finances a year from now decreased 3.1 points, from 79.6 to 76.5. But expectations for U.S. economic conditions over the next year increased slightly – eight-tenths of a point from 62.1 to 62.9.
However, the outlook for U.S. economic conditions over the next five years dropped 2.4 points from 73.3 to 70.9.
“As we move into 2023, the biggest economic challenge facing the U.S. remains elevated inflation,” says Sandoval. “While it is expected that inflation pressures will ease over the course of the year, the inflation rate remains well above the 2 percent target. Therefore, it is likely that the Fed will continue to raise interest rates in 2023, further increasing borrowing costs and the risk of a recession.”
As for consumer sentiment in the Sunshine State, Sandoval says the full impact of the Federal Reserve’s interest rate hikes has not yet been fully felt, but “the labor market has remained strong, especially in Florida, where the unemployment rate has steadily decreased and has remained below the national rate for the past two years.”
In spite of that, though, he expects Florida’s consumer sentiment to remain weak through at least the first months of 2023.”
The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2, the highest is 150.
© 2023 Florida Realtors®
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