According to a new University of Florida (UF) monthly survey, consumer sentiment among Floridians rose sharply to 93.3 in January – almost 6 points higher than December's reading. Much of the increase is attributed to the way their survey is conducted. In the past UF researches used landline telephones to contact survey respondents since the first survey in 1985.
Today, however, only 53 percent of American households still have a landline, while 89 percent now own cell phones, according to the Center for Disease Control and Prevention. To keep up with this shift, many survey organizations have switched to a cell-phone-only policy to contact respondents. A move to cell phones means "the sample of respondents more closely matches the demographics of the state," said Chris McCarty, director of UF's Survey Research Center in the Bureau of Economic and Business Research. "In addition, we weight the results of our cell phone survey by county, age, sex and minority status, so that the results match the distribution of these same variables in the state."
The overall effect, he said, is an increase in consumer sentiment, as younger respondents are more represented. Their confidence in U.S. economic conditions over the next year registered 95.5, while their trust in its performance over the next five years was 92.1. Survey takers' perception that now is a good time to buy major household items was 99.5. UF economists will also now break the index down by households making more or less than $50,000 a year, rather than using the previous figure of $30,000. The revised number more nearly matches the median income for Florida households, McCarty says.
However, a change in methodology changes only partly explains the dramatic increase in confidence this month. "Overall, the economy has improved for most consumers and lifted consumer sentiment," McCarty says. Retail sales for the holiday season, for instance, rose 4.7 percent from 2013. Job gains and a declining labor force caused Florida's unemployment rate to dip to 5.6 percent in December, matching the U.S. unemployment figure. The median price for an existing single family home rose to $185,000 in December after a two-month decline, while interest rates remain at historically low levels. The stock market is near record highs. Consumer confidence is expected to continue rising at least until the Federal Reserve considers raising short-term interest rates in June.