Confidence in economy fading

Americans are quickly losing confidence in the hope that the economy will turn around.

February’s Florida consumer confidence index fell three points to 63, just four points above the all-time low of 59, according to a new University of Florida poll. And the mood is pretty much the same nationally. The Commerce Board's Consumer Confidence Index for February reached yet another all-time low since its inception in 1967.

"As expected, consumer confidence declined in February as the novelty of a new administration met with the sustained reality of a faltering economy," said Chris McCarty, director of the UF's Survey Research Center at the Bureau of Economic and Business Research. "Consumers are reporting severe financial strain and are bracing for the long recession that most economists have predicted."

The index, which measures five components, showed a decline in all:

* Expectations of U.S. economic conditions over the next five years fell six points to 69.
* Expectations of U.S. economic conditions over the next year fell four points to 51.
* Expectations of personal finances a year from now fell three points to 80.
* Perceptions of personal finances now compared with a year ago fell one point to 42.
* Perceptions of whether it is a good time to buy big-ticket items fell one point to 73.

The University of Florida index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year.

There was an increase in confidence in December and January, which McCarty said appears to have been related to the change to a new administration. But, he said, Americans realize that there is no quick fix.

There is a bright spot in the newly signed $787 billion stimulus package, which includes relief for troubled homeowners.

"This plan may end up being one of the big bonuses for Florida, where housing sales have been extremely weak," McCarty said. "A proposed $8,000 tax rebate for first-time homebuyers may stimulate those who are on the fence about committing to buying a house."

Nationally, the index fell to 25 from a revised reading of 37.4 in January. Consumers' appraisal of overall current conditions worsened further. Those claiming business conditions are "bad" rose to 51.1 percent from 47.9 percent, while those saying business conditions are "good" edged up to 6.8 percent from 6.5 percent last month. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.

"Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence and driven expectations to their lowest level ever," Lynn Franco, Director of The Conference Board Consumer Research Center, said in a statement.

"In addition, inflation expectations, which had been easing over the past several months, have moderately picked up. All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months."

McCarty predicts that consumer confidence will remain below 70 through 2009 as the underlying problems that led to the recession are worked out.