Banking sector chaos and a see-sawing stock market didn’t deeply impact Floridians. UF’s sentiment index for March rose 2 points, surprising UF economists.
GAINESVILLE, Fla. – Consumer sentiment in Florida increased for a third month in a row in March to 69.7, up 2 points from a revised figure of 67.7 in February. On the contrary, a similar national sentiment study found a 5-point drop.
“Considering the chaos in the banking sector in mid-March – which saw the largest bank failure since the 2008 financial crisis – the positive change in consumer attitudes among Floridians in March comes as a surprise,” says Hector H. Sandoval, director of the Economic Analysis Program at the University of Florida’s (UF) Bureau of Economic and Business Research.
“Despite some speculation that the Federal Reserve would halt rate hikes in response to the recent string of bank failures, the Fed officials decided to continue raising interest rates in their latest meeting as inflation remains high and the labor market is still tight,” he added.
Among the five components that make up the index, four increased and one decreased.
Current economic conditions: Views of personal financial situations now compared with a year ago increased 2.1 points, from 58.6 to 60.7 – and those views were shared by Floridians across all sociodemographic groups, despite still-present inflation.
However, opinions on whether it’s a good time to purchase a major household item like an appliance fell slightly by three-tenths of a point, from 57.9 to 57.6.
Future economic expectations: Personal financial expectations a year from now went up 2.3 points, from 81.5 to 83.8. Expectations about U.S. economic conditions over the next year also rose, going up 2.1 points from 67.6 to 69.7.
But the outlook for U.S. economic conditions over the next five years showed the greatest increase in March, up 3.7 points from 73 to 76.7. It was a positive view shared by all Floridians except those with an annual income under $50,000.
February job gains remained solid. The unemployment rate in Florida held steady at 2.6%, while the national increased slightly to 3.6%. First-time unemployment claims in Florida continued to decline, reaching their lowest level since December. Over the year, the state gained 427,400 non-agricultural jobs, with all 10 major industries experiencing positive gains. The leisure and hospitality industry saw the largest increase in employment.
“The latest data clearly indicates that the labor market remains unusually tight. When combined with the persistently high inflation rate, it strongly suggests that the Federal Reserve will continue to raise interest rates in the coming months,” says Sandoval.
However, Sandoval predicts a future decline in Floridian consumer sentiment.
“Over the past 12 months, the Fed has increased interest rates more than at any time since the early 1980s,” he says. “Moreover, the recent turmoil in the banking sector might have dented economic growth and increased the risk of a recession as financial institutions are likely to become more cautious in their lending. As a result, we anticipate that consumer sentiment in Florida will remain at its low levels for some time to come.”
The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2, the highest is 150.
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