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Politics

State Budget Sinks Florida Consumer Confidence, UF Says

May 30, 2011 - 6:00pm

While a national confidence index showed Americans worried about gas prices, the job market and the ongoing housing slump, University of Florida researchers say Floridians have a different concern: the state budget.

Nationally, the Conference Boards Consumer Confidence Index fell in May to 61, the lowest reading since November and down 30 points since late 2007.

Floridians' outlook has been shaken, too. In a report also announced Tuesday, UF's Bureau of Economic and Business Research's consumer confidence rating dipped to 68, the worst since September 2010. Perceptions on personal finances compared to a year ago dropped 4 points to an anemic 52.

Consumer confidence indexes, scored on a 100-point scale, are important because consumer spending accounts for about 70 percent of U.S. economic activity.

But the 2007-2009 national recession and subsequently soaring fuel and food prices have battered household budgets. With diminished discretionary income, consumer spending on big-ticket items, including homes, has eroded.

Opinion polls show majorities of American voters want Washington to share the pain by reining in government spending through a balanced federal budget and a lower national debt ceiling. But that sentiment doesn't necessarily prevail in Florida.

BEBR director Chris McCarty said Floridians are most worried about budget cuts.

It appears that the public is beginning to understand that budget cuts at the state level and deficit reduction at the national level will likely affect everyone in the U.S., young and old, rich and poor, McCarty said.

Gov. Rick Scott, in proposing a $66 billion "jobs" budget, said lower state spending, accompanied by $2 billion in corporate- and property-tax cuts, would boost economic activity in Florida.

Last week, the governor signed a $69 billion budget that scaled back the tax cuts while expanding his initial spending proposal by more than $3 billion.

But media reports focused on $615 million in line-item vetoes by Scott, and those were seized on by liberal groups that decried any reductions, while generally assailing the Republican-controlled Legislature.

Rick Scott ran on creating jobs, but instead he is running Floridas economy into the ditch, said Mark Ferrulo, executive director of Progress Florida.

Since this governor has been in office, we have seen him break his promise not to cut education funding, turn down job-creating projects such as high-speed rail, and today he signs a budget that eliminates thousands of jobs," Ferrulo said shortly before the budget-signing ceremony Thursday.

Florida Watch Action, another liberal advocacy group, has launched a website, www.PinkSlipRick.com, that purports to track job losses since Scott took office.

Though the claims of eliminating "thousands of jobs" have been denied by the Scott administration and could not be confirmed by any independent analysis, the downbeat mantra has resonated in the media echo chamber and stuck in the public's mind.

This month, there was a decline in perceptions of personal finances compared to a year ago, UF's McCarty said. We attribute most of these changes to fallout from the Florida budget.

In April, as the budget negotiations took center stage, McCarty detected a "sharp decrease" in consumer confidence among seniors who are increasingly hearing deficit-reduction plans that include Medicare, and low-income households who at the state level are anticipating cuts to Medicaid and other programs.

Noting that the fiscal 2012 budget is only 2.8 percent smaller than the current year's, other analysts suggest that consumer pessimism is driven by other concerns, notably the state's worsening housing market. See article here.

McCarty said UF's monthly consumer-confidence survey, which is timed to coincide with the Conference Board index, conducts 500 telephone interviews of Florida households via random digit dialing. Reported results are proportionate by county population, though not by party affiliation.

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Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.

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