Florida Consumer Sentiment Declines for the Third Consecutive Month in May

In May, Florida’s consumer sentiment experienced a setback for the third month in a row, with a 1.4 point decrease to 72.7 from a revised 74.1 in April. A similar trend was observed in the national consumer sentiment.

Factors Impacting Consumer Sentiment in Florida

Hector H. Sandoval, director of the Economic Analysis Program at the University of Florida’s Bureau of Economic and Business Research, attributes the decline in consumer sentiment to the inflation acceleration during May, which eroded purchasing power and increased pressure on household budgets. The revision of April’s figure from 74.6 to 74.1 was also influenced by the inflationary pressures in energy markets towards the end of the month. Although labor market conditions remained stable nationwide, Florida’s labor market continued to soften, with the unemployment rate rising to 4.8% in April, further diverging from the national rate. These factors explain the subdued consumer sentiment in May.

Components of the Consumer Sentiment Index

Out of the five components that constitute the index, four experienced a decrease, while only one saw an increase. Floridians’ perception of current economic conditions took a hit in May. Views of personal financial situations compared to a year ago experienced the steepest decline, falling 3 points from 69.7 to 66.7. Opinions about the ideal time to purchase major household items such as appliances or furniture, slightly decreased by 0.4 point, from 62.7 to 62.3.

Varied Views Across Sociodemographic Groups

Views varied significantly across sociodemographic groups. Women and those with an annual income under $50,000 reported more favorable assessments concerning current financial situations, as well as spending intentions. These favorable views were shared by individuals aged 60 and older and those with an annual income over $50,000.

Future Economic Conditions Expectations

Floridians’ future economic condition expectations were mixed in May. Weaker expectations for the next year were coupled with a more stable long-term outlook. Expectations of personal financial situations a year from now dropped 2.3 points from 87.4 to 85.1. Similarly, expectations regarding U.S. economic conditions over the next year declined 1.2 points from 73.8 to 72.6. Expectations regarding U.S. economic conditions over the next five years slightly increased, rising 0.1 point from 76.8 to 76.9. However, these expectations were divided across demographic groups, with men and people younger than 60 reporting less favorable expectations.

The downward trend in Florida’s consumer sentiment over the past three months signifies increasing pessimism about future economic conditions and spending intentions, which could potentially slow Florida’s economic growth, warns Sandoval. The uncertain near-term outlook, coupled with inflationary pressures, and volatile energy markets present a significant risk. If higher energy costs continue impacting transportation, production, and other business inputs, inflation could remain high for longer than expected, possibly deterring the Federal Reserve from lowering interest rates and keeping borrowing costs high for households and businesses. These factors combined, could continue to dampen consumer confidence throughout the year.

The study encompassing these findings was conducted from April 1 through May 28, reflecting the responses of 326 individuals on cellphones representing a demographic cross section of Florida. The data was weighted based on Florida county of residence, age group, and sex to ensure the representativeness of the Florida population. Phone data quality was maintained by monitoring and reviewing interviews and preventing duplicate records.

The index used by University of Florida researchers is benchmarked to 1966, meaning a value of 100 represents the same level of confidence as that year. The lowest possible index is 2, and the highest is 150.

Detailed findings of this month’s survey can be found at bebr.ufl.edu/florida-consumer-sentiment/.