Florida, nation at odds over U.S. economy
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Nationwide, increasingly optimistic consumers see the U.S. economic cup as half full and rising.
In Florida, folks apparently would rather hoard what's left in their economic cup and wait for better times to refill it.
Two consumer confidence surveys unveiled Tuesday delivered distinctly different outlooks on the waffling economy.
Are we poised, as one survey hints, for a quick financial bounce back? Or, as the other survey suggests, are we bungee-jumping with no-give rope?
Not even Fed chairman Al Greenspan knows for sure.
On Tuesday, the New York-based Conference Board's survey showed a sharp rebound in the nation's consumer confidence, a level higher than economists expected (see story above).
In contrast, a monthly survey by the University of Florida found the confidence of Floridians has dipped dramatically since last summer.
From the survey's all-time high, a confidence index of 112 reached in August, Florida consumers registered a 91 in May. (The confidence survey uses an index of 100 pegged to the confidence level measured in 1966.)
The UF survey also found Floridians' personal financial outlook in May grew downright bearish.
When asked how their personal financial situation compared with a year ago, Floridians registered the lowest index level in years. That component of the survey fell five points from 91 in April to 86 in May.
Let's put that in more practical terms. In April, 45 percent of those asked said they were better off than at the same time last year. Only 40 percent said that in May.
"Perceptions of personal finances are now as low as they have been since December 1996," says Chris McCarty, survey director at UF's bureau of economic and business research.
What do the upbeat Joe Six-Packs elsewhere in the country know about the economy that we here in Florida are missing?
Let's weigh the latest economic evidence.
UPBEAT: The Federal Reserve has cut interest rates a remarkable five times since January. The Dow has crawled back above 11,000. And in both the national and Florida surveys, consumers agree this is a pretty good time to buy major household items.
DOWNBEAT: Since Dec. 1, U.S. employers have announced about 700,000 job cuts, mostly in the auto, telecommunications and retail sectors. The Nasdaq, which closed Tuesday at just over 2,175, is still about 1,000 points below where it stood one year ago. For the first time since 1995, the U.S. economy grew by less than 2 percent for two consecutive quarters, the government reported this month.
At UF, McCarty's no naysayer. But this week he's thumbing his nose at the rosy results of the bigger national survey. He believes his own survey results and predicts consumer confidence will sink lower before heading north again with much authority.
Here are McCarty's three takes on the up-down economy:
1. Don't underestimate the clout of five quick interest rates cuts in supporting consumer confidence. But imagine what dark financial thoughts consumers would be considering without those cuts.
2. Don't overreact to a sustained dip of 91 in Florida's consumer confidence index. That's lower than any recent level but not even close to the all-time low index of 65 recorded in the early 1990s recession.
3. Don't get too excited about longer-term economic prospects. The May survey found that when looking at the economy five years ahead, the index of Florida consumer confidence fell five points from 85 in April to 80. Men and people under 60 reported the sharpest declines in confidence on this issue.
After such a sustained run-up in the U.S. economy, any signs of a local slowdown may feel unusually sobering.
Demand for Tampa Bay's commercial office space is slowing.
Despite all the Fed's rate-cutting, mortgage rates still rose last week. But mortgage rates are still more than 1 percentage point lower than they were last year.
Venture capital, always a lean resource in Florida, is nearly an endangered specie.
Last year, 19 Florida companies filed to do an initial public offering (although some later withdrew). This year, nobody in the state has yet tried an IPO.
What to believe? A bullish national survey, or more bearish Florida sentiments?
Remember: Economics is the only field in which two people can get a Nobel Prize for saying exactly the opposite thing.
- Robert Trigaux can be reached at firstname.lastname@example.org or (727) 893-8405.
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