June is the fourth consecutive month to show a rise in the sentiment of Floridians.
Four of the five components measured in the survey went up, while one remained the same. Respondents’ overall opinion that they’re better off financially now than a year ago rose three points to 70, while their belief that their personal finances will improve a year from now remained at 82.
Their outlook for U.S. economic conditions over the coming year rose two points to 83. The survey-takers’ long-term view for the nation’s economic health over the next five years rose one point to 83.
Finally, the survey shows that consensus of whether now is a good time to buy a big-ticket item such as a television went up two points to a post-recession high of 93.
“The last time perception of current buying conditions reached this level was April of 2007,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “That was the beginning of the collapse in the housing market.”
Several things help explain Floridians’ current optimism. The stock market reached record highs by early June. In addition, the state’s May unemployment rate was 7.1 percent compared with the national 7.6 percent figure.
This decline from April’s 7.2 percent jobless figure occurred as Florida’s labor force was increasing, which meant it was due to an increase in jobs, McCarty said. Home prices have also kept rising. The median price for an existing single-family home is $171,000; the last time it was that high in Florida was September 2008.
Most consumers still aren’t registering any fears about the effects of sequestration, McCarty said. They’re more concerned that interest rates may rise now that the Federal Reserve has said it may reduce the amount of Treasury bonds and mortgage-backed securities it’s been purchasing to spur the economy, a fear McCarty considers “overstated” because changes, if any, will occur very gradually.
“It’s also worth noting that conditions are not the same as they were in 2008 when the Fed began making these purchases,” McCarty added. Though the current housing market is being helped by lower interest rates, there has also been a low rate of new construction and an increase in population. These two factors led to pent-up demand.
Even if current home sale prices decline a bit, McCarty thinks there’s little to worry about. “The underlying quality of loans is now very different from 2008,” he said. Current home buyers typically have good credit scores and put 20 percent down on their homes, both of which reduce the likelihood of another massive number of foreclosures like the ones that led to the last recession. “The Fed has seen the economy through dangerous economic times,” McCarty said, “but the economy is now operating normally. There was nothing normal about 2008.”
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