Florida consumer sentiment fell slightly in May

Floridians 60 and older were more optimistic about current and future economic conditions. The sentiment is expected to remain the same in the coming months.

Consumer sentiment in Florida fell two-tenths of a point to 73.1 in May from a revised 73.3 in April. This slight decrease contrasts with the national sentiment, which fell by 8.1 points.

“The decline in consumer sentiment was driven by Floridians' perception of current economic conditions. Although inflation is not far above the Fed's 2% target since it peaked at 9.1% in 2022, progress against inflation has slowed, requiring Floridians to make further adjustments to budgets and spending plans," said Hector H. Sandoval, Director of Economic Analysis. program at UF's Bureau of Economic and Business Research.

"According to the Fed's preferred index, inflation remained constant at 2.7% in April. Nevertheless, the unemployment rate remains below 4% both nationally and in Florida, indicating that a soft landing, disinflation without a recession, is still expected,” Sandoval added.

Of the five components that make up the index, two showed an increase and three decreased.

Floridians' views of current economic conditions deteriorated in May. Views on personal financial situations now compared to a year decreased by 1.3 points from 61.2 to 59.9. Similarly, opinions about whether now is a good time to buy a large household item like an appliance fell 1.6 points from 63.9 to 62.3. These opinions were split across socio-demographic lines, with people aged 60 and over expressing more positive views of both components, and people with an annual income below $50,000 expressing more positive views of the former and people with an annual income of over $50,000 the latter.

Floridians' views of future economic conditions were mixed. Personal finance expectations for the year from today increased by 2.7 points, rising from 82.6 to 85.3. However, these expectations were divided across sociodemographic groups, with people under 60 and people with annual incomes over $50,000 reporting less favorable expectations. Similarly, the forecast for economic conditions in the US over the next year saw a slight increase of a tenth of a point from 76.2 to 76.3. In contrast, the forecast for economic conditions in the US in the next five years decreased slightly by seven tenths of a point from 82.6 to 81.9. The future outlook for the national economy was also divided, with women and people under 60 expressing more pessimistic expectations for the first component, while those 60 and older and people with an annual income of over $50,000 reporting more positive expectations for the latter.

Interestingly, people aged 60 and over expressed more positive views on all five components, while those younger than 60 reported more pessimistic views in May. As a result, consumer sentiment among Floridians 60 and older was higher than their younger counterparts, with 74.6 versus 71.5 points. This is surprising because older people generally tend to report more pessimistic views, given factors such as reliance on fixed income from pensions, retirement savings and Social Security benefits, as well as higher health care spending, among others. In fact, since 1985, when records were available, we have seen this phenomenon of higher sentiment among seniors on only a few occasions, a total of 23, including this month. The most recent cases occurred in March, April and May 2020, at the start of the pandemic, when sentiment among people under 60 fell faster.

“Since the beginning of the year, sentiment among Floridians has fluctuated, with both ups and downs. Therefore, the overall sentiment has not gained significant traction so far. Looking ahead, we expect consumer sentiment to remain roughly at the same level in the coming months, especially given the slowdown in progress against inflation. Therefore, we do not anticipate significant changes in the Fed's policy regarding lowering interest rates," said Sandoval.

The UF study, conducted between April 1 and May 30, reflects the responses of 265 people reached by cellphone and 290 people reached through an online panel, for a total of 555 people, representing a cross-section of Florida's demographics. The index used by the UF researchers measures to 1966, meaning a value of 100 represents the same confidence level for that year. The lowest possible index is 2, the highest is 150.