Consumer Attitudes Increase as the Local Economy Outperforms the National Economy
SALT LAKE CITY, Utah; July 26, 2011 — In July, on a seasonally adjusted basis, the Zions Bank Utah Consumer Attitude Index (CAI) rose to 69.3, an increase of 3.0 points compared to June 2011. The national Consumer Confidence Index® (CCI), as reported by The Conference Board, increased 1.9 points to 59.5. An index of 70 or below is indicative of slow economic growth.
Consumer optimism in July rose for the first time in four months as Utahns begin to feel more confident about the local economy. The CAI’s Present Situation Index, a snapshot of current business conditions and employment, rose (2.0 points) to 41.9. The national CCI Present Situation Index decreased 0.9 points to 35.7. The Expectations Index for six months from now, which more closely projects the direction of consumer spending, rose (3.6 points) to 87.5 in Utah. The national CCI Expectations Index increased 3.8 points to 75.4.
For the past three months, economic uncertainty has driven consumer attitudes lower in the state. However, falling fuel prices, greater confidence in job security, and an unemployment rate far below the national average has led Utahns to be cautiously optimistic about the economy. June’s unemployment rate in Utah was 7.4 percent, compared to the national unemployment rate of 9.2 percent. Higher state government approval has also attributed to this month’s rise in confidence. In July, 80 percent of Utahns indicated the state is taking the right steps to improve the economy, compared to 77 percent last month.
Consumer outlook toward both current and future business condition rose this month. Twenty-four percent of Utahns rated current business conditions in their area as “good,” compared to 21 percent in June. Utahns showed the same optimism for six months from now as 29 percent rated future business conditions to be “better,” compared to 24 percent in June. As the economy continues to recover, job security plays a critical role. This month, Utahns were more confident in the stability of their job than in June. Sixty-five present of consumers indicated that they were unlikely to lose their job in the next two years, compared to 62 percent last month.
In July, gasoline prices continued to fall, leading to the state’s first inflationary drop in five months. However, inflationary concerns are still present for many Utahns. This month, 77 percent of Utahns indicated they see consumer good prices increasing over the next 12 months. As a response, 56 percent of consumers believe their household income unlikely to keep up with the rate of inflation during the next two years. As for gas prices, 63 percent of consumers foresee the price of gas going up during the next 12-month period, down from 68 percent last month and 80 percent in May.
The national housing data have shown to be somewhat more positive over the past few months. In June, housing starts (the number of new homes being built) increased 15 percent and existing home sales rose 1.9. In response, consumer optimism for home prices rose in July. Seventy percent of Utahns indicated they see home prices remaining the same or increasing over the next 12 months, compared to 68 percent in June.
Zions Bank provides the CAI as a free resource to the communities of Utah. The monthly CAI summary reports are released at a monthly press conference, coinciding with The Conference Board’s national CCI release date. The reports are available online at www.zionsbank.com/cai. Analysis and data collection for the CAI are done by The Cicero Group/Dan Jones & Associates, a premier market research firm based in Salt Lake City. The August CAI will be released at a press conference at a Salt Lake-area business at 10:30 a.m. on August 30, 2011.
Zions Bank is Utah’s oldest financial institution and is the only local bank with a statewide distribution of financial centers, Zions Bank operates locations in communities throughout Utah and Idaho. In addition to offering a wide range of traditional banking services, Zions Bank is also a leader in small business lending and has ranked as the No. 1 lender of U.S. Small Business Administration 7(a) loans in Utah for the past 17 consecutive years. Founded in 1873, Zions Bank has been serving the communities of Utah for more than 135 years. Additional information is available at www.zionsbank.com.