Florida consumer sentiment in May declined for the third consecutive month, as inflation, higher energy costs and a softening labor market weighed on household confidence, according to a University of Florida (UF) economic survey released Tuesday.
The state’s consumer sentiment index fell 1.4 points to 72.7 in May, down from a revised 74.1 in April, the University of Florida’s Bureau of Economic and Business Research said. National consumer sentiment also declined during the month.
Hector Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research, said the drop was expected given renewed inflationary pressure and weaker labor market conditions in Florida.
“The decline in consumer sentiment comes as little surprise given that inflation accelerated during the month, eroding purchasing power and placing renewed pressure on household budgets,” Sandoval said.
He also noted that April’s reading was revised downward from 74.6 to 74.1, reflecting additional inflationary pressures in energy markets toward the end of that month. Florida’s unemployment rate rose to 4.8% in April, continuing to move away from the national rate, he said.
Four of the five components that make up the index declined in May.
Floridians’ views of their personal financial situation compared with a year earlier posted the sharpest decline, falling 3 points from 69.7 to 66.7. Opinions on whether now is a good time to buy a major household item, such as furniture or appliances, slipped slightly from 62.7 to 62.3.
Expectations for future economic conditions were mixed. Expectations for personal finances one year from now fell 2.3 points, from 87.4 to 85.1. Expectations for U.S. economic conditions over the next year declined 1.2 points, from 73.8 to 72.6. However, expectations for U.S. economic conditions over the next five years edged up 0.1 point, from 76.8 to 76.9.
Sandoval said declining consumer confidence could slow Florida’s economy if households reduce discretionary spending in the months ahead. He added that inflationary pressures, particularly from volatile energy markets, remain a key risk and could keep borrowing costs elevated if the Federal Reserve is less inclined to lower interest rates.
The survey was conducted from April 1 through May 28 and included responses from 326 Floridians reached by cellphone.