Consumer confidence shoots up

Consumer confidence rose significantly this month relative to December 2010, according to the most recent version of a regular study conducted by the University of Florida. According to the University's index, consumer confidence is at 77 this month, up from 70 a month ago.

Considering the state's persistently high level of unemployment, plus the continued decline of home values, research director Chris McCarty says the confidence boost was unexpected. But McCarty speculates that a resurgent stock market may be contributing to the improved outlook.

Indeed, over the past six months, the Dow Jones Industrial, S&P 500, and Nasdaq Composite are up roughly 15%, 17%, and 20% respectively.

But those gains don't explain everything. Even more confusing is the fact that a preliminary report from the University of Michigan suggests nationwide confidence fell in January, while Florida is facing some of the toughest economic challenges in the nation.

Going forward, McCarty suggests spending cuts to federal and state government budgets might push confidence back down over the next several months. Inflation might also soon become an issue, McCarty said.

The University of Florida's January index is based on 418 responses to a telephone survey conducted randomly throughout the state.