Explaining the workings of Florida's consumer confidence survey [Orlando Sentinel]
(Orlando Sentinel (FL) Via Acquire Media NewsEdge) Sept. 29--Chris McCarty runs the University of Florida's Survey Research Center where he oversees the monthly consumer confidence report produced by UF's Bureau of Economic Business Research. He spoke with staff writer Jim Stratton about how people are feeling about the economy.
CFB: First, tell me how you do the consumer confidence survey.
We follow the methodology the University of Michigan has followed for decades. It's about 500 surveys every month. We break it into two groups of 250 spread out over the month, so if something comes up in the news, we can insert questions about it.
It's a landline survey -- about 65 percent of households still have landlines -- and the data is weighted by county, so in the end we have a snapshot of what Florida looks like. All the questions take about 13 or 14 minutes.
CFB: This is an index, so what's a good number?
It's benchmarked to 1966, so anything over 100 is better, meaning people have more confidence, than in 1966. Anything under 100, is worse than 1966.
Before the recession, a good number would certainly be in the 90s. The upper 80s, we wouldn't worry about. But since the recession, it's declined, like a lot of indicators. Excuse me for using an overplayed expression, but there's sort of a new normal. Since the recession, we've been struggling to get over 80, so today, that's actually a pretty good number.
CFB: What trends have you seen recently?
In July and August it was down to 77 -- it had been at 81 in May and June. This month it's down to 76. So there's something going on where confidence is on the decline, and September's surveys were done before the media really started reporting much about the debt ceiling or possible government shutdown. The downturn was very concentrated among younger households and lower income households.
CFB: Any ideas about what's going on?
It's not declining rapidly because there hasn't been terrible news, but in the last month there's been some softness in the housing market. The employment picture is mixed.
In Florida, unemployment is down to 7 percent, but a big part of that decline was because the size of the labor force declined. So if you're out of work and looking, you're not going to be very optimistic. And Florida's incomes aren't keeping up.
CFB: How does Florida compare to the rest of the country?
They're moving in the same direction, which is down, but not hugely so.
CFB: How susceptible is the index to bad news, even if the news is only tangentially related to people's immediate financial situation?
Very. For example, when the earthquake hit Japan, you could clearly see the decline in the index. That was a big deal for many Floridians even though it didn't directly affect them. With presidential elections, you know it's going to go down because about half of the state is going to be disappointed with the outcome.
CFB: Looking ahead, what issues do you see that could affect confidence one way or the other?
There's the issue of the Affordable Care Act. That's getting a lot of attention. There are a lot of people who don't like parts of it and others who worry what will happen if it's not implemented.
Anything that would undo gains people have seen in the housing market would have a big effect because, for most people, their house is still their biggest asset.
That's why the federal reserve is being somewhat cautious. Any policy that would result in a spike in interest rates, or make it so people couldn't afford a home would be a mistake.
And we're going to have to see what happens with sequestration. It's a 10-year deal, so we have another nine to go.
email@example.com or 407-420-5379.
(c)2013 The Orlando Sentinel (Orlando, Fla.)
Visit The Orlando Sentinel (Orlando, Fla.) at www.OrlandoSentinel.com
Distributed by MCT Information Services
[ Back To Technology News's Homepage ]