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Consumer confidence dips in Florida, surges nationally

By Palm Beach Business.com

DELRAY BEACH — Whatever it was that caused consumer confidence to surge nationally over the past month didn’t quite make it to Florida.

The University of Florida’s statewide consumer confidence index fell a point to 74 in February, while the Conference Board’s national index rose 11.2 points to a February reading of 69.6, according to separate reports released Tuesday.

The difference, in a word, is sequestration.

“Interestingly, most consumers, and particularly seniors, are more positive than they were last month about their personal finances,” UF Survey Director Chris McCarty said. “They are more negative about the future.  This may mean that consumers are less bothered by the expiration of the payroll tax and more concerned about the effects of sequestration that are due to go into effect March 1.  They are probably right to be concerned.”

Said the Conference Board’s Lynn Franco: “Consumer Confidence rebounded in February as the shock effect caused by the fiscal cliff uncertainty and payroll tax cuts appears to have abated. Consumers’ assessment of current business and labor market conditions is more positive than last month. Looking ahead, consumers are cautiously optimistic about the outlook for business and labor market conditions. Income expectations, which had turned rather negative last month, have improved modestly.”  

Sequestration refers to automatic spending cuts that were built into a deal 18 months ago to resolve the debt ceiling impasse in Congress. Social Security and Medicare are largely exempt from the cuts but the Defense Department and other agencies could see significant budget reductions that likely will be felt in Florida especially by those employed by or do business with the federal government.

What is worse, there is no sign of a deal to avert the cuts.

“Next month it’s all about sequestration,”  McCarty said. “Consumers are telling us that they are not feeling good about the potential effects.”