SALT LAKE CITY, Utah; January 31, 2012 — In January, on a seasonally adjusted basis, the Zions Bank Consumer Attitude Index (CAI) fell to 79.8, a decrease of 2.1 points compared to December 2011.
The national Consumer Confidence Index® (CCI) decreased 3.7 points to 61.1. An index of 70.0 or below is indicative of slow economic growth.
Although consumer confidence was weighed down this month by lower job growth optimism, several positive indicators may prompt higher confidence in the coming months. For example, Utah has had three months of consecutive decreases in the state unemployment rate, cheaper gasoline prices, improving state business conditions and a rebounding stock market—all of which have the potential to raise consumer confidence.
In 2011, Utah added 36,000 jobs. As a result, the state’s unemployment rate has fallen from 7.6 percent in January 2011 to 6.0 percent in December 2011. Despite last year’s fall in unemployment, many Utahns are still unemployed. As the economy transitions into 2012, consumers are less optimistic toward local job growth. Only 7 percent of consumers believe there are plenty of jobs in their area right now. Looking toward the next 12 months, 16 percent of consumers believe there will be fewer jobs in their area, up from 14 percent last month. Despite January’s slight decrease in job confidence, consumers are more optimistic towards business conditions and household income.
The Zions Bank Present Situation Index, which is a snapshot of current business conditions and employment, decreased to 49.4 as confidence in the labor market fell. Nationally, the CCI Present Situation Index decreased 8.1 points to 38.4. The Expectations Index for six months from now, which is the best predictor of the direction of consumer spending, remained unchanged at 100.0 in Utah, while the national CCI Expectations Index decreased 0.8 points to 76.2.
Inflation along the Wasatch Front, as reported by the Zions Bank Consumer Price Index, was 2.8 percent for the 2011 year, which is in line with the Federal Reserve’s optimal rate of inflation. In January, inflationary concerns slightly increased among Utah residents. Seventy-five percent of consumers, compared to 73 percent last month, indicated that they believe the price for consumer goods will increase during the next 12 months.
Consumer confidence in a 401K investment decreased this month, after slightly increasing last month.Forty percent of Utahns indicated that a $1,000 investment in their 401K today would be worth less than $1,000 in 12 months. In January 2011, 32 percent of consumers had the same assessment of their 401K investment, showing an eight-percentage point fall in confidence over the last 12 months.
Confidence in future home prices increased in January, which may be a sign of optimism returning to the housing market. Thirty-one percent of Utahns, the highest portion of consumers since May 2011, indicated that they believe the value of homes in their community will increase over the next 12 months.
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 February CAI will be released during a press conference at a Salt Lake-area business at 10:30 a.m. on February 28, 2012.
About Zions Bank
Zions Bank, a division of ZB, N.A., operates 122 full-service financial centers 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 consistently ranked as the No. 1 lender of U.S. Small Business Administration 7(a) loans in Utah for the past 23 years and Idaho’s Boise District for the past 15 years. Founded in 1873, Zions Bank has been serving the communities of the Intermountain West for more than 140 years. Additional information is available at www.zionsbank.com.