Black mood rising
Published: Wednesday, January 28, 2009 at 6:01 a.m.
Last Modified: Wednesday, January 28, 2009 at 12:02 a.m.
Florida consumers are in a little bit better mood to spend this month, but don't write off the recession just yet.
The index measuring consumer confidence is up just one point to 68 since December, but still near historic lows, according to a University of Florida study.
Despite rising unemployment and dismal holiday sales, the study's author, Chris McCarty, said he is not surprised by the increase in some components since confidence was so low before.
The biggest difference was in perceptions of personal finances now compared to a year ago, up five points from last month's record low of 39 after four months of decreases.
"At some point, things cannot get much worse, or at least we hope they won't. So answers to this question have to turn the corner at some time," said McCarty, director of UF's Survey Research Center at the Bureau of Economic and Business Research.
Another question about current finances - perceptions of whether it is a good time to buy big-ticket items - was also up five points to 76. McCarty said that reflects continued deep discounting. The problem is that credit is hard to access.
Florida consumers do seem to think things can get worse. Perceptions of personal finances a year from now, national economic conditions over the next year and the next five years all fell.
McCarty said the more optimistic outlook about the national economy in December may have been more about expectations for the new presidential administration than actual events.
Martin's Family Appliance Center in Gainesville has seen how consumers' mood about spending has changed firsthand.
Owner Chris Martin said service calls are up tremendously as customers are opting for more repairs instead of buying new appliances. Customers are also buying more used appliances. Fourth-quarter sales were soft at the store, he said, and nationwide appliance sales are down 20 percent.
Customers are making decisions to save money now, even if the costs are more in the long run, he said.
"They're spending $300, $400 to fix an appliance with a $500, $700 replacement cost," Martin said. "Of course it's better for us if they sink $300 in a 10-year-old washing machine and next year it breaks anyway."
He has also seen more people bringing large appliances to the store for repairs just to save the $40 on a house call - "even a dishwasher, which is really a hassle to pull out."
McCarty said there is no reason to believe the economy will improve dramatically for the next two quarters, and retail sales likely will continue to be weak as consumers cut back in response to the recession.
"Eventually this recession will turn around and pent-up consumer demand and reorganized businesses will lead to economic growth," he said. "Unfortunately, that will probably not begin to occur until the fourth quarter of 2009 or the first quarter of 2010 when bank balance sheets have fully processed the extent of the bad loans."
The consumer confidence index compares changes in confidence over time, starting with a value of 100 in 1966.
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