Consumer index falls to new low
Published: Wednesday, January 30, 2008 at 6:01 a.m.
Last Modified: Tuesday, January 29, 2008 at 10:55 p.m.
Florida's January consumer confidence index fell to its lowest level since the recession of 1990-91 and the study's author believes the state is already in a recession.
The ongoing housing bust and subsequent credit crunch caused a four-point drop in the index to 70, a 16-year low, according to the University of Florida Survey Research Center at the Bureau of Economic and Business Research.
"Florida is almost certainly in a recession now and the country is not far behind," said Chris McCarty, center director.
A recession is defined as at least two consecutive quarters of declines in gross domestic product, or in this case, gross state product.
The index measures consumers' mood toward spending over time and is benchmarked to a 1966 level of 100.
McCarty said recessionary conditions may remain localized to some states such as Florida and California.
Both have been hard hit by the housing bust after an unsustainable run-up on prices fueled by speculative investing.
Unfortunately, such states make up a large part of the U.S. economy and may result in a national recession if it isn't already happening, he said.
The Associated Press reports that U.S. consumer confidence fell sharply in January on concerns about deteriorating business conditions and a weakening job market, according to the New York-based Conference Board. The national index was down to 87.9 from a revised 90.6 in December and near November's 87.8.
The index has been declining since July, raising concerns that a pullback on consumer spending, which makes up about two-thirds of the national economy, could weaken the economy further.
McCarty said the hope is that the economic stimulus package working its way through Congress will at least temporarily get consumers back in stores until exports and business investment picks up.
The recession may be more like 2001 than the deeper decline of 1990-91, he said.
But Robert B. MacIntosh, chief economist with Boston investment management firm Eaton Vance Corp., told the AP he expects slow 1 percent growth and rising unemployment, but not outright recession.
He expressed concern that consumers were overreacting to media reports and politicians' statements warning of a severe recession.
Anthony Clark can be reached at 352-374-5094 or firstname.lastname@example.org.
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