GAINESVILLE, Fla. – Nov. 26, 2008 – Consumer confidence among Floridians rose one point to 62 in November from numbers reported by the University of Florida at the end of October. (Editor’s note: UF revised last month’s index upward to 63 after issuing the report.)

“Although consumer confidence rose in November, it is still very close to historical lows,” says Chris McCarty, director of UF’s Survey Research Center at the Bureau of Economic and Business Research. “Virtually all of the economic news this past month has been bad.”

The index component measuring perceptions of personal finances now compared with a year ago dropped one point to 40, its lowest level on record, McCarty says.

“The only thing keeping the index up at this point is optimism about the future,” he says. “Consumers may have processed the bad news, which is starting to look the same day to day, and are looking forward to a change in government to provide some relief.”

In November – based on the revised October score of 63 – four of the five indexes fell. In addition to the drop in perceptions of current personal finances, the component measuring perceptions of personal finances a year from now fell five points to 81. Expectations about economic conditions over the next five years fell four points to 73, while expectations about U.S. economic conditions over the next year slipped two points to 55. The only component to show an increase was perceptions of whether it’s a good time to buy big-ticket consumer items, which rose eight points to 62.

“Looking forward, we can expect continued low levels of consumer confidence through the remainder of the year, which will result in perhaps the worst holiday season in decades,” McCarty said.

McCarty says he believes at some point the index will stop dropping as pessimism turns to optimism and consumer spending returns.

“There is some discussion in the news as to whether the American consumer has permanently changed buying behavior,” he says. “While they will certainly exercise more restraint in the short run, past recession cycles have been in part reversed by pent up demand of consumers buying at the end of the cycle.”

McCarty said he thinks such a scenario is most likely, assuming deflation does not set in where prices continue to fall and consumers refuse to buy because they are waiting for lower prices.

The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 28 or older and live in households telephoned randomly. The preliminary index for November was conducted from 504 responses. Consumer confidence is designed to help predict buying patterns by measuring the mood of consumers toward purchasing.

Although other economic indicators also predict buying patterns, consumer confidence tends to be available sooner. Based on the University of Michigan method, the index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year. The value of the index is in comparing changes over time rather than looking at an isolated month.

© 2008 FLORIDA ASSOCIATION OF REALTORS®