Optimism Drops as Consumers Fear a Decline in Economic Growth
SALT LAKE CITY, Utah; August 30, 2011 — In August, on a seasonally adjusted basis, the Zions Bank Utah Consumer Attitude Index (CAI) decreased to 59.8, a decrease of 9.5 points compared to July 2011. The national Consumer Confidence Index® (CCI) decreased 14.7 points to 44.5. An index of 70 or below is indicative of slow economic growth.
Consumer optimism in Utah has sharply dropped after weeks of intensified economic concerns and increasing stock market volatility. The CAI’s Present Situation Index, a snapshot of current business conditions and employment, rose (2.4 points) to 44.3. The national CCI Present Situation Index decreased -2.4 points to 33.3. The Expectations Index for six months from now, which more closely projects the direction of consumer spending, decreased 17.5 points to 70.1 in Utah, while the national CCI Expectations Index decreased 23 points to 51.9.
For the past several weeks, recession concerns have intensified; leading to mass sell-offs in the market and increased uncertainty. Another recession is not certain; however, after this month’s run of bad economic news the possibility appears to be more present among many Utahns. Fifty-two percent of Utahs believe it is unlikely that the U.S. economy will improve over the next 12 months, compared to 45 percent in July.
Despite future economic concerns, Utah residents are more satisfied with their present situation than the month prior. Twenty-five percent of Utahns rated current business conditions in their area as “good,” compared to 24 percent in July and 20 percent in May. Utah is known to be one of the least pessimistic states in the nation, and for very good reason. Despite a series of economic setbacks (nationally), the state’s unemployment rate has held strong, sitting well below the national average. Consumer prices for goods in Utah (e.g. gasoline, food, basic household items, etc.) have been on the decline for the past several months. Furthermore, state exports are on the rise and projected to exceed 16 billion for the year 2011, compared 13.57 billion for the year 2010; signaling that state business condition are still strong.
However, despite strong economic data in the state, consumers still express fears about overall economic conditions – and these fears are prevalent in this month’s gauge of consumer attitudes. In August, Utahns were less confident in the stability of their job than in July. Fourteen percent of consumers indicated that they were likely to lose their job in the next two years, compared to 7 percent last month.
This month, 78 percent of Utahns indicated they see consumer good prices increasing over the next 12 months, compared to 77 percent in July. In conjunction, 58 percent of consumers believe their household income is unlikely to keep up with the rate of inflation during the next two years. As for retirement, only 20 percent of Utahns believe they are likely to be able to retire and maintain their current living standards, as opposed to 22 percent last month.
With the possibility of a recession on the horizon, Utahns have become less optimistic about the value of their home. In August, 56 percent of consumers believe their home price will either stay the same or increase over the next 12 months, compared to 67 percent in July.
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 September CAI will be released at a press conference at a Salt Lake-area business at 10:30 a.m. on September 27, 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.