Trade war, new tariffs and recession fears generate biggest drop in consumer sentiment in four years.
Consumer confidence plunged in Florida, reflecting broad concerns over current and future economic conditions.
The University of Florida's Consumer Sentiment Index dropped 6.7 points to 93.3 in August, the largest decline in more than four years.
All five components that make up the index fell in Thursday's report, with sharply weaker confidence among Floridians' personal financial situations today.
The Florida results track consumer confidence nationwide, which posted a strong decline in the University of Michigan's U.S. reading for August.
Floridians also felt less confident that now was a good time to spend on a big-ticket household item, further evidence that their opinions about current economic conditions have deteriorated, said Hector H. Sandoval, director of the Economic Analysis Program at UF's Bureau of Economic and Business Research.
The last time consumer confidence declined across all five components occurred in May, amid the escalating trade war with China and the new tariff threat with Mexico.
"In this month's reading, these less-favorable opinions and expectations are most likely due to the ongoing trade war with China and the new round of tariffs starting Sept. 1 and Dec. 15," Sandoval said. "The inversion of the yield curve that occurred in mid-August indicated that markets were anticipating a slow economic growth ahead and a recession in the following months.
“Although the latest movements in consumer confidence anticipate a declining economic position, economic indicators in Florida are still favorable,” he added.
Economists closely watch consumers' sentiments because their spending on goods and services is the key driving force of the U.S. economy, accounting for approximately 70% of all economic growth.
Florida's economy keeps expanding, with 227,000 added to payrolls over the year. The jobless rate in Polk County remained steady from June through July at 4.1%, according to the U.S. Bureau of Labor Statistics.
“Despite the positive economic indicators, we anticipate further declines in consumer confidence in the coming months due to the ongoing trade war with China, threats of higher tariffs and the recent signs of the beginning of a slowdown,” Sandoval said.
Consumer sentiment among Floridians hit 101.7 in April, the highest level since March 2002. The index then fell to 96.0 in May before rebounding in June and July. All of the July figures were revised.
Among the five components that make up the Florida index:
• Floridians' opinions of their current personal financial situations fell 9.2 points to 87.1, the steepest decline in the August reading.
• Their feelings on whether this is a good time to buy a major household item like an appliance decreased 5 points to 98.9.
• Expectations of personal financial situations a year from now dropped 5.5 points to 102.6.
• Their views of U.S. economic conditions over the next year plummeted 7 points to 90.4.
• Confidence in U.S. economic conditions over the next five years posted a 6.9-point decline to 87.5.
Conducted Aug. 1-29, the study reflects the responses of 403 individuals who were reached on cellphones, representing a demographic cross-section of Florida. The index is benchmarked to 1966, which means a value of 100 represents that year's same level of confidence. The lowest index possible is a 2, the highest is 150.
John Hielscher is a staff writer for the Sarasota Herald-Tribune.