Florida’s consumer sentiment rose for the fourth consecutive month in September, driven by easing inflation and lower interest rates, though future optimism may be tempered by the economic impact of Hurricane Helene.

Consumer sentiment in Florida increased for the fourth consecutive month in September, signaling growing optimism about the national economy, according to the latest report from the University of Florida’s Bureau of Economic and Business Research.

The Florida Consumer Sentiment Index climbed 1.6 points, reaching 78.3, up from a revised 76.7 in August, continuing its steady upward trajectory, coinciding with easing inflationary pressures. In August, the Consumer Price Index (CPI) decreased to 2.5 percent, while the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, fell to 2.2 percent. Although inflation remains elevated compared to pre-pandemic levels, its recent downward trend has contributed to improved economic sentiment, the report states.

“The decrease in interest rates should boost discretionary spending, encourage business expansion through increased investment and hiring, and further enhance confidence among Floridians,” said Hector Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.

Among the five components of the consumer sentiment index, four saw improvement in September. While Floridians’ perceptions of their current financial situations compared to a year ago declined by one point to 58.5, optimism was notably higher among men and lower-income households. Conversely, the index measuring whether it is a favorable time to make major purchases, such as household appliances, rose 1.3 points to 60.9.

Looking to the future, Floridians are increasingly confident. Expectations for personal finances a year from now increased by 1.1 points to 93.7, while expectations for U.S. economic conditions over the next year saw the largest gain, rising 4.4 points to 88.1—the highest level in four years. Confidence in the national economy over the next five years also improved, up 2.1 points to 90.4.

However, the outlook is tempered by the impact of Hurricane Helene, a Category 4 storm that struck Florida’s Big Bend region on September 27, causing significant property damage and economic disruption. While the full extent of the storm’s impact is still under evaluation, economists believe it is unlikely to have lasting effects on the state’s overall economy. Nonetheless, consumer sentiment may experience a temporary decline in the coming months due to the immediate aftermath of the storm.

“Looking ahead, we anticipate that consumer confidence will be impacted by the effects of Hurricane Helene in the coming month, likely leading to a decline among Floridians. However, as interest rate cuts begin to ripple through the economy and further reductions are announced later this year, we expect consumer sentiment to improve overall in the months ahead,” Sandoval added.

The state’s unemployment rate held steady at 3.3 percent in August, while the national rate dipped slightly to 4.2 percent. The figure, historically low, has played a key role in maintaining consumer confidence. Further bolstering optimism, the Federal Reserve’s mid-September decision to reduce interest rates by 0.5 percentage points is expected to stimulate economic activity. The rate cut, which lowers borrowing costs for consumers and businesses alike, is anticipated to drive increased spending and investment in the months ahead.