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Low consumer confidence dims holiday outlook for retailers

By Palm Beach Business.com

DELRAY BEACH — Consumer confidence slipped slightly in Florida this month but dropped dramatically nationwide. In fact, consumer confidence nationally hasn’t been this low since March 2009.

The University of Florida’s consumer confidence index dropped one point to 63 — a scant four points above it’s all-time low set in June 2008.

Meanwhile, the Conference Board’s national consumer confidence index dropped to 39.8 from 46.4 in September — the lowest since March 2009 — as consumer’s perception of the economy plunged.

“Consumer confidence continues to be in the doldrums uncomfortably near record low levels here in Florida,” said Chris McCarty the Survey Director.  “There have been no consistent economic developments over the past couple of months to push confidence lower or raise it from its historically low levels.  With confidence low, consumer spending in Florida had been down for the past couple of months, although a recent increase in retail sales at the national level may bode well for Florida, at least temporarily.”

Said Lynn Franco, director of the Conference Board Consumer Research Center: "Consumer confidence is now back to levels last seen during the 2008-2009 recession. Consumer expectations, which had improved in September, gave back all of the gain and then some, as concerns about business conditions, the labor market and income prospects increased. Consumers' assessment of present-day conditions did not fare any better. The present situation index posted its sixth consecutive monthly decline, as pessimism about the current economic environment continues to grow."

McCarty cited the latest employment statistics for Florida, which showed a slight drop in the jobless rate. But even that came with a negative connotation, as at least part of the drop came from discouraged workers dropping out of the jobs market.

The housing market remains weak, and the stock market has been whipsawing between big gains and big losses.

All of this bodes poorly for the state’s retailers as the holiday shopping season approaches.

“With consumer confidence low, most retailers are not expecting a strong holiday season in comparison to 2010 which was much better than 2009,” McCarty said.  “The National Retail Federation predicts a 2.8 percent increase this holiday season and relatively flat holiday seasonal hiring.  Given the current economy sales in Florida will probably not exceed that. ”