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Positive sentiment towards the country’s future economic conditions offset by imminent inflation – News
Consumer sentiment among Floridians rose 1.3 points in April, to 73.3, compared to the revised figure for March 72. National sentiment, on the contrary, fell 2.2 points.
“The increase in consumer sentiment is attributed to Floridians’ positive views regarding the country’s economic outlook. In particular, expectations about the US economy over the next five years have reached levels not seen since July 2021. This period coincides with the escalation of inflationary pressures that began in the second quarter of 2021. However, these price increases were not initially seen as worrying. . Although average annual inflation increased from 1.9% to 4.8% between the first and second quarters of 2021, reaching 5.3% in the third quarter, it was not until 2022 that the Fed began one of the most severe tightening cycles. aggressive in decades, raising interest rates to control it,” said Hector H. Sandoval, director of the Economic Analysis Program at the UF Bureau of Economic and Business Research.
Among the five components that make up the index, four increased and one decreased.
Floridians’ views on current economic conditions improved in April. Opinions about personal financial situations now compared to last year increased by 1.4 points, from 59.8 to 61.2. However, opinions varied by demographics, with people under 60 and people with an annual income of less than $50,000 reporting less favorable opinions. Opinions on whether now is a good time to buy a big-ticket item such as fridges, cars or furniture increased by one point, from 62.9 to 63.9. Likewise, opinions were divided by demographics, but in this case women, people over 60 and people with an annual income of less than $50,000 expressed more pessimistic opinions.
Future economic expectations painted a mixed outlook in April. On the one hand, personal finance expectations for a year from now decreased 1.1 points, from 83.7 to 82.6. However, men and people over 60 reported more positive expectations. On the other hand, the outlook for the country’s economy was more optimistic. Expectations about U.S. economic conditions over the next year increased 2.9 points, from 73.3 to 76.2, while views about U.S. economic conditions over the next five years increased 2.1 points, from 80. 5 to 82.6. Notably, these expectations were shared by all Floridians, except for people with an annual income of less than $50,000, who reported less favorable views regarding the last component.
“Following a robust job market and rising levels of consumer confidence, economic growth remained positive in the first quarter of the year, driven by increases in consumer spending, at an annual rate of 1.6%. However, inflation rose during the same period despite the Fed’s efforts to control it. The most recent inflation data from the Department of Labor – Consumer Price Index (CPI) – and the Department of Commerce – Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred measure of inflation – suggest a potential reversal of the trend, with increases observed in March,” said Sandoval.
“Looking ahead, this reversal could dissuade the Fed from implementing interest rate cuts over the summer, as previously anticipated. Furthermore, it could result in a reduction in consumer confidence, further exacerbating the risk of a potential recession and damaging the expectation of a reduction in inflation without a recession”, added Sandoval.
Conducted from March 1 to April 25, the UF study reflects responses from 250 individuals who were contacted via cell phones and 293 individuals contacted via an online panel, a total of 543 individuals, representing a cross-section of Florida’s demographics. . The index used by UF researchers is referenced to 1966, which means that a value of 100 represents the same level of confidence for that year. The lowest possible index is 2, the highest is 150.
Details of this month’s survey can be found at https://www.bebr.ufl.edu/florida-consumer-sentiment/.
Elizabeth LynchApril 30, 2024