Consumer confidence gains but pessimism still pervades

By Palm Beach Business.com Staff

DELRAY BEACH — Wall Street’s sudden burst of optimism seemingly spread to Florida’s consumers but had little impact nationally.

The University of Florida’s consumer confidence index gained 3 points to 65, while the Conference Board’s Consumer Confidence Index inched up 0.7 point to a March reading of 26.0 from February’s 25.3. Both indexes were released Tuesday.

“Florida consumers remained relatively pessimistic despite the three-point rise in confidence,” UF survey Director Chris MCarty said. “Housing sales and prices have increased in some parts of Florida but unemployment is at levels not seen for 30 years. The stimulus package passed, but unpopular bonuses at AIG and debate in the Florida Legislature about accepting parts of the stimulus counter that positve effect.”

Both the S&P 500 and the Dow Jones industrial average had their best month since 2002. But McCarty said it will more than a good month from Wall Street to restore full confidence among consumers.

Said the Conference Board’s Lynn Franco, Director of the Conference Board Consumer Research Center: “Apprehension about the outlook for the economy, the labor market and earnings continues to weigh heavily on consumers' attitudes. Looking ahead, consumers remain extremely pessimistic about the short-term future and do not foresee a turnaround in economic conditions over the coming six months."

Consumers' assessment of overall present-day conditions remains unfavorable. Those claiming business conditions are "bad" rose to 51.1 percent from 50.5 percent, while those claiming business conditions are "good" edged down to 6.8 percent from 7.0 percent last month.

Meanwhile, the appraisal of the labor market was somewhat more pessimistic in March. The percentage of consumers saying jobs are "hard to get" increased to 48.7 percent from 46.9 percent in February, while those claiming jobs are "plentiful" was unchanged at 4.6 percent.

Consumers' short-term outlook was moderately less negative this month. Consumers expecting business conditions will worsen over the next six months edged down to 39.1 percent from 40.7 percent, while those anticipating conditions to improve increased to 9.1 percent from 8.5 percent in February.

The employment outlook was also moderately less pessimistic. The percentage of consumers expecting fewer jobs in the months ahead decreased to 42.6 percent from 47.0 percent, while those expecting more jobs edged up to 7.1 percent from 6.8 percent. The proportion of consumers expecting an increase in their incomes declined to 7.5 percent from 7.9 percent.

“Until there is a clear message that things are changing for the better, we expect consumer confidence to move up and down as conflicting economic news trickles in,” McCarty said. “Increased home sales and a clear direction in the stock market would both send a message to Floridians that a recovery is on the way. Until then, consumers are likely to remain pessimistic and cautious about spending.”