The mood of Florida consumers ticked lower in December as Floridians were increasingly concerned about rising inflation, according to the latest survey from the University of Florida’s Bureau of Economic and Business Research (BEBR).

The monthly index tracking the economic outlook of Floridians dropped to 64 in December, down 11% from 72.3 a year earlier (Figure 1).

Figure 1 – Source: University of Florida Bureau of Economic and Business Research

As the calendar turned to 2023, Floridians’ consumer sentiment for all of 2022 stood at its lowest level (64.3) since UF began tracking consumer confidence in 1985. The previous low was 65.6 during the Great Recession of 2008. It’s also a dramatic change since the onset of the COVID-19 pandemic more than two years ago: In February 2020 the index was 102.3 (Figure 2).

Figure 1 – Source: University of Florida Bureau of Economic and Business Research

“This is an indication that consumer attitudes have been overwhelmingly gloomy,” said Hector Sandoval, director of economic analysis at BEBR. “Persistently high inflation over the past year has prompted the Federal Reserve to aggressively raise interest rates since March to bring inflation down; a depressed consumer confidence outlook raises concern about the future of the economy and increases the fears of a potential recession in 2023.”

For the monthly study, UF asks a demographic sampling of Floridians questions about the national economy and their personal economic situation now and in the future.

The views in the latest survey were divided across sociodemographic groups but shifted in the latest survey in one category: The overall economic view of people with an annual income less than $50,000 was higher than those with higher incomes (67.5 vs. 63.4). Men and people under age 60 continued to express slightly more favorable views about overall economic conditions than women and older Floridians. People aged 60 and over and those with annual incomes of more than $50,000 were the most negative.

Surveyed Floridians said their personal financial situation right now was relatively flat in December with an index of 54.6, but it was down 10 points from 64.6 in December 2021. Opinions about whether now is a good time to buy a major household item like an appliance increased to 55.2 from 53.2 in November but fell from 61.2 in December 2021. Interestingly, people with annual incomes of less than $50,000 gauged now was a better time to buy expensive items than those with higher incomes.

Looking ahead, Floridians’ outlook for the next 12 months darkened. Asked to forecast their personal finances a year from now, expectations decreased more than 3 points to 76.5 in December, a steep fall from 87.4 a year earlier. Expectations about the overall U.S. economic conditions over the next year inched up to 62.9 in December from 62.1 a month earlier but fell from 73.5 a year ago. Asked to gauge U.S. economic conditions over the next five years, consumers’ outlook soured to 70.9 from 75 in December 2021.

Inflation worries

“As we move into 2023, the biggest economic challenge facing the U.S. remains elevated inflation,” Sandoval said. The Consumer Price Index stood at 6.5% in December with costs for rents and services accounting for some of the biggest price increases, according to the U.S. Bureau of Labor Statistics. The inflation gauge is well above the Fed’s target of 2%. “It is likely that the Fed will continue to raise interest rates in 2023, further increasing borrowing costs and the risk of a recession.”

In face of these headwinds, Sandoval indicated Florida’s economy was holding its own. “Though we have not yet seen the full impact of the Fed’s actions on the economy, the labor market has remained strong, especially in Florida, where the unemployment rate has steadily decreased and has remained below the national rate for the past two years. Despite this, we anticipate that Florida’s consumer sentiment will remain weak throughout the first months of 2023,” he said.

UF’s study reflects the responses of a demographic cross section of 604 Florida adults who were surveyed via cellphone or online Nov. 1 through Dec. 24. The index is benchmarked to 1966, which means a value of 100 equals the level of confidence that year.