Consumer confidence good news for Bush

Published: Wednesday, January 28, 2004 at 6:01 a.m.
Last Modified: Wednesday, January 28, 2004 at 1:23 a.m.
Declining unemployment claims, robust holiday sales and a rebounding stock market have boosted consumer confidence among Floridians to its highest level in 22 months, and this translates into good news for the Bush administration in an election year, according to University of Florida economists.
In a Tuesday report on the January consumer confidence survey, the preliminary index rose to 98, up two points from December.
"Over the past year things have definitely improved," said Chris McCarty, director of the survey research center at UF's Bureau of Economic and Business Research. "There are still some lingering problems, but consumer confidence seems to be going well for the Bush administration right now."
McCarty said he suspects that, given the way the electoral votes went in the 2000 election, Florida is still going to end up being a key state in the presidential election this year.
"If it comes down to Florida, consumer opinion of the economy is going to be important," he said.
McCarty's survey in January also found that confidence among Floridians age 60 and older declined, while it rose among younger residents.
"Given that seniors vote in higher proportions than their younger counterparts, this will also be an issue," McCarty said.
Nationally, the consumer confidence index reached its highest level since July 2002, rising to 96.8 from 91.7 in December, according to The Conference Board's Consumer Research Center.
Growing optimism about the overall health of the economy continues to bolster consumers' short-term outlook in the January survey, said Lynn Franco, director of The Conference Board's Research Center.
"Consumers' assessment of the present situation of business conditions and employment is at 80 on the index, while their expectations for six months out on businesses, employment and income is 108.01," Franco said. "They are very positive in their expectations, even though their present situation index is 80. This is attributable to the fact that the labor market still remains somewhat weak. Thus, consumers are telling us that while the current job market is somewhat lackluster, they still do feel that it will gain momentum over the next six months."
Similarly in Florida, optimism about short-term economic conditions in the nation rose two points from December to reach 99, and expectations about personal finances a year from now rose two points to 103.
And like the nation, Florida's consumers have reason to be optimistic, according to McCarty.
"Interest rates are low, and more people have bought homes. There has been improvement in the labor market, jobless claims are down," he said.
But on the other hand, job creation has not improved dramatically, he said, and consumer debt and bankruptcy filings are at record highs. He added that during the recession, the economy was almost entirely fueled by consumer spending, tax cuts, low mortgage rates. Low interest rates also made refinancing a home more attractive.
"Rather than taking the money and paying things off, people spent more, which is unusual. A lot of economists are worried that the debt level is getting too high," he said.
McCarty's center conducts the Florida Consumer Attitude survey monthly, via random calls. Survey participants are 18 years old or older. The preliminary index for January was conducted from 417 responses. The error rate is plus or minus 5 percent.
Doris Chandler can be reached at (352) 374-5094 or chandld@gvillesun.com.

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