Consumer Sentiment Feeds Economic Dark Clouds

Tourism may be an economic engine for the Sunshine State, but Florida residents are in the driver’s seat. And the road ahead could be getting bumpy.

According to the latest consumer sentiment report from the University of Florida’s Bureau of Economic and Business Research, consumers are increasingly worried about the economy with the index falling for the third consecutive month in May.

The survey found views of current economic conditions weakened, along with views of personal financial situations, expectations of personal financial situations a year from now and expectations about economic conditions in the country over the next year. All told a pretty dismal forecast.

While the labor market has stabilized – the nation added more than 172,000 jobs last month – inflation remains a major concern for consumers especially gasoline prices as the summer vacation season moves into high gear. At a time when consumers traditionally are thinking about spending on leisure activities and family getaways, the BEBR survey indicates there may be more hesitancy on the part of Floridians to dip into that discretionary income.

The study of economics has been called the “dismal science” because its practitioners tend to present a worst-case-scenario, negative view of the financial future. While Scottish historian and writer coined the term 177 years ago in response to the pessimistic musings of economist Thomas Malthus, who claimed humanity was doomed to misery because population growth would always strain natural resources, the modern tendency of economists to see the economic glass as half-empty stems largely from the inability to fully understand consumer psychology. All the charts and graphs and mathematical formulations cannot completely account for consumer behavior. And when consumers are fed a steady diet of doom-and-gloom predictions of rising prices, falling wages and general economic stagnation, it is no surprise their confidence in the future wanes.

In a digitally enhanced world of instant connection and constant bombardment of news and opinion, the wall of noise makes it hard for people to process all that information. The dismal predictions of economists are amplified by social media influencers and information sites, creating a digital storm of bad news that can be overwhelming. But in reality, things are usually never as good or bad as it seems.

It is also important to remember that the BEBR survey, like all opinion surveys, is a snapshot of a particular point in time. By the time the results are tabulated and the report written, conditions have almost certainly changed. And those responses are fueled by personal observations and feelings as much as they are by facts and figures.

During the 2024 election cycle, much was made of the idea of the “vibe economy” as a major factor in shaping the outcome. But economic vibes are nothing new. We talk about “the economy” as if it is a unitary entity. But it isn’t. It is comprised of millions of individual economic realities and is a case where the whole is not greater than the sum of its parts. Everyone has their own feelings about the state of the economy because everyone lives in their own personal economy. While it is useful to gauge consumer sentiment and attitudes, it can often lead to skewed assumptions about the true state of the economy.

Nevertheless, given the decline in consumer confidence, we just may be heading into a summer of economic discontent.