UF economist blames the omicron variant that “undermined economic activity, pushed prices higher and inflation to its highest level in nearly four decades.”
Consumer sentiment among Floridians dropped 2.3 points in January to 70.0 from December’s revised figure of 72.3. It’s now down 12.6 points from a year ago.
“The decline in January is not unexpected considering the ongoing supply disruptions caused by the fast-spreading omicron variant that have undermined economic activity, pushed prices higher, and caused inflation to reach its highest level in nearly four decades,” says Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.
Current conditions: Among the five components that make up the index, four decreased and one increased – views of personal financial situations now compared with a year ago rose 1.2 points from 64.6 to 65.8. While views varied among demographic groups in the study, researchers say people over 60 years old had “particularly strong” favorable opinions.
Opinions on whether it’s a good time to buy a major household item, such as an appliance, decreased 3.4 points from 61.2 to 57.8.
Future expectations: All three components that gauge Floridians’ expectations for the future declined in January. The index measuring expected personal finances one year from now dropped 4.1 points, from 87.4 to 83.3.
When asked about broader U.S. economic conditions one year from now, that index dropped 4.2 points, from 73.5 to 69.3.
Finally, outlooks for U.S. economic conditions over the next five years decreased 1.1 points from 75.0 to 73.9. However, people 60 or older and those with annual incomes greater than $50,000 had more positive views.
“The decline in consumer confidence has been fueled by a growing pessimism in Floridians’ expectations about their personal financial situation and national economic conditions over the next year,” says Sandoval. “Both components are well below their pre-pandemic and post-pandemic averages.”
Sandoval says those drops are a “worrying sign for the economy” because they mean Floridians “anticipate reduced economic prospects for the year ahead.”
Still, Sandoval expects Floridians’ attitudes to improve over the next few months as the latest surge in coronavirus cases fades along with the associated economic conditions, “along with the Federal Reserve’s decision to begin raising interest rates in the short-run to combat inflation.”
The UF study was conducted Dec. 1 through Jan. 27. The index is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2, the highest is 150.