Florida consumers' smile flops along with economy
© St. Petersburg Times, published February 2, 2001
Anybody got some Economic Prozac?
At least half of Florida's consumers look like they will need a big pick-me-up before their personal financial outlook improves.
The latest monthly consumer confidence survey of Floridians by the University of Florida shows confidence fell sharply in December and remained down in January. Typically, consumer confidence bumps up at the start of a new year after the financial pressures of holiday purchasing and year-end matters are past.
Not this time. Florida's consumer confidence index, revealed this week, declined briskly from 104 in November to 95 in December. The index stayed at 95 in January.
Think of the consumer confidence index as a thermometer that measures the relative financial well-being of Floridians.
An index of 95 is not a "gee, I'm totally depressed" number. But it's bearish. And a far cry from the mass euphoria we've seen the past few don't-worry-be-happy years when the index was rocking as high as 112 or higher.
Consider this: The Florida consumer confidence index has not dropped as low as 95 since June 1993. That's 91 months ago.
Why such a bummer mentality? Sure, talk of recession is turning folks more cautious. But Florida's messy presidential election outcome has split the state's population between the pessimists and optimists, survey results suggest.
Democrats and independents surveyed showed a much lower level of confidence in the economy than Republicans, according to University of Florida survey director Chris McCarty. That represents more than half of Floridians.
"I don't usually like to make much of politics in these survey results," McCarty says. "But this is hard to ignore."
President George W. Bush needs to show that his economic initiatives, such as his proposed tax cuts, will work and benefit a range of people.
Floridians who registered the sharpest drop in confidence are those who make less than $30,000. When asked in the survey if this was a good time to buy a major household item, this segment's index fell from a bullish 107 in December to 87 in January.
A 20-point drop in one month's time. That's like jumping off a cliff.
Not only are Floridians who earn less more vulnerable to slower economic times and layoffs. They also tend to vote Democratic.
Let's be clear. A consumer confidence index of 95 is not the kind of figure we'd see at the bottom of a recession. In December 1991's lousy economy, this index was in free fall and landed at 67. That's 28 points lower than January 2001's figure.
But consider how fast things can change. Just four months earlier, in July 1991, the consumer confidence index was at 93.
Will Fed chairman Alan Greenspan's aggressive interest rate cuts calm the doubts about Bush and help lift Florida's outlook? Eventually. But for awhile, McCarty suggests, Floridians will probably just wait and see. And that index of 95, or so, will stick around.
Thanks to the Fed's bold interest rate cuts, banks and other institutions did not waste time slashing rates on certificates of deposit. According to the highest yields listed in the St. Petersburg Times business section each Wednesday from a sampling of area lenders, the top CD rates are way down since early December. A 6-month CD was 6.75 percent then but is now 5.75 percent. A one-year CD then was 6.8 percent but is now only 5.75 percent. And a five-year CD that was 7.06 percent then has trickled down to 5.85 percent. . . .
Slowdown, so long: Chief executive departures continued at a rapid pace in January with 119 CEO exits. Nearly one out of four came from the dot-com sector, according to the Challenger, Gray & Christmas outplacement firm. That's the second highest figure that it has on record. . . . Among the recent exits by local CEOs: Tim McGuire, who stepped down from Tampa's young Bay Cities Bank, an institution started by former First Florida Banks chief Bronson Thayer. The bank quickly bumped up exec Gregory W. Bryant to take over and
formally named him president last week. . . .
Domino theory? Oldsmar contract manufacturer Genesis Manufacturing Inc. was squeezed into bankruptcy last fall after one of its largest customers could not pay what it owed Genesis. That customer appears to be Sarasota's struggling Elcotel, a player in the pay phone business. Last week, it was Elcotel's turn to file for bankruptcy protection. No word if the corporate ripples stop there. . . .
-- Contact Robert Trigaux at email@example.com or (727) 893-8405.
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