Florida TaxWatch’s (FTW) analysis of the Impact of COVID-19 on consumer confidence paints a somewhat gloomy picture, but a dive into the numbers shows room for optimism.
According the University of Florida’s Consumer Sentiment Index, consumer confidence took a huge hit between February 2020 and April, down 26 points to 76.3, a record decline. However, consumer confidence in October, though slightly less than September, has rebounded to a score of 84.4.
Consumer spending in Florida, another important economic indicator, was stronger in September 2020 than in January 2020, before the economic shutdown.
Taking a cup half empty viewpoint in a press release about FTW’s Confidence and Coronavirus: How Consumers Feel About Florida’s Economy, FTW President and CEO Dominic M. Calabro said, “Throughout this tumultuous year, consumer confidence in Florida has seen significant declines, showing that buyers are increasingly weary and less optimistic on the state of our economy and its recovery. FTW’s analysis of data from the University of Florida’s Bureau of Economic and Business Research shows a striking disparity between the confidence levels of Floridians who make less than $50,000 versus those whose income rises above that level. As we continue to follow the recovery of our state and look to the holiday season, it will be important to monitor this trend as it is a strong indicator for consumer spending and economic activity.”
Calabro emphasizes data within the report which shows consumer confidence levels vary greatly based on income. According to the report, those making less than $50,000 show a consumer confidence score around 75 points, compared to those making more than $50,000 showing a score well above 90 points, nearing pre-pandemic levels.
According to the authors of the report, “Despite its elusiveness and complexity, consumer confidence remains an important economic indicator for the strength of the economy, especially during a pandemic. Yet as this commentary has shown, what may oftentimes be overlooked is the variation among income groups when it comes to analyzing confidence and spending patterns. For any economic recovery to be robust, these differences must be taken into account and adequately addressed. As Florida approaches an uncertain holiday season, expect greater conversation about confidence and consumption as the state’s economy continues to recover.”
So how is consumer spending in Florida?
According to the report, “Here in Florida, consumer spending dropped nearly 30 percent compared to January 1, 2020 during the state’s worst month in April. Between May and August, consumer spending, as a percent change from January 1, varied from -14.1 percent in early May to -2.7 percent by the end of August. Paralleling the surge in consumer optimism during September, consumer spending likewise increased in the Florida economy, hitting a high of +7.3 percent compared to January 1.”
So, according to their own numbers, consumer spending in September was more than seven percent better than pre-pandemic levels in January 2020.