Confidence and Coronavirus: How Consumers Feel About Florida’s Economy
Whether purchasing a car, picking up coffee, or paying a contractor, consumers play an important role in the U.S. economy, where personal consumption represents around 70 percent of the nation’s gross domestic product (GDP). It comes as no surprise, then, that consumer optimism acts as an important indicator for the overall strength of the economy. For Florida’s businesses and policymakers confronting the COVID-19 pandemic, understanding consumer confidence will be vital to any sustainable recovery as purchasing decisions will undoubtedly play a part in any economic rebound.
CONSUMER CONFIDENCE IN FLORIDA Often cited by government officials, news organizations, and research economists, “consumer confidence” refers to the degree of optimism that consumers feel about their personal financial situations and the overall state of the economy. When consumers are more optimistic, they are more likely to purchase goods and services, boosting economic activity. On the other hand, when consumers are less confident about the economy, they are more likely to save money and make fewer purchases. According to the University of Florida’s Consumer Sentiment Index,2 consumer confidence in Florida plummeted 26 points from February to April, coinciding with the initial peak in COVID-19 cases across the state and the subsequent stay-at-home order (see fig. 1). After bottoming out at a low score of 76.3 in April, consumer confidence ebbed and flowed over the following few months. To put this drop in context, during the Great Recession between December 2007 and June 2009, the largest drop in confidence was around 15.1 points. In the early 2000s, the dot com bubble and 9/11 terror attacks led to a 9.1 point drop in Florida’s consumer confidence. Both past instances were associated with smaller reductions in confidence compared to the COVID-19 drop being witnessed today. As of October 2020, the confidence score was 84.4—still far below pre-pandemic levels and slightly lower than the previous month of September where confidence seemed to hit a sudden surge. With COVID-19 cases rapidly on the rise across the nation, consumers are becoming more unsettled about the state of the economy. The one month dip in overall confidence between September and October was driven in large part by Floridians’ weakened views about current economic conditions. Read the full report below. Watch the video.