Utah consumers more confident about economy

Utah consumers are feeling better about both their present situation and their outlook for the future. The Zions Bank Utah Consumer Attitude Index (CAI) took a significant jump of 7.3 points to 111.5 in June. Increased confidence in both present and future economic situations drove the increase. 

The overall CAI still sits 0.3 points lower than its level 12 months ago. By comparison, the national Consumer Confidence Index (CCI) increased 5.6 points from May to June and now sits at 98.0.

Expectations for the next six months increased 6.9 points in June due to a more positive outlook on future business conditions and employment opportunities. Compared to May, more Utahns think business conditions in their area will be better in six months, rising from 24 percent to 27 percent in June. The outlook for the labor market is also slightly more positive, as 27 percent of Utahns think there will be more jobs available in their area six months from now — a three-point increase over May. Income expectations have increased slightly as well, with 33 percent of Utahns expecting their household income to be greater six months from now, representing a 1 percent increase over May.

The Present Situation Index, a sub-index of the CAI that measures how consumers feel about current economic conditions, rose 7.9 points over May and is 1.3 points higher than it was this time last year. Utahns believe the general business environment is more favorable compared to May, with 57 percent of Utahns rating general business conditions in their area as good — a 4 percent increase over May. Fifty percent of Utahns describe available jobs in their area as plentiful, marking a 2 percent increase over May, and a 5 percent increase since last year. Although unemployment in Utah increased from 3.7 percent in April to 3.8 percent in May, the increase stems largely from increasing wages, which have drawn more people into the labor force to look for work.

“Weak national employment gains have spurred concerns regarding the labor market,” said Scott Anderson, president and CEO of Zions Bank. “But wages and consumer confidence are on the rise here in Utah, where a growing number of optimistic job-seekers are jumping into a thriving workforce.”

Increasing confidence in the economy is also reflected by opinions regarding the future value of personal retirement savings, with 42 percent of consumers believing $1,000 invested in their 401(k) is likely to be worth more than $1,000 a year from now — a 23 percent increase over May. Utahns are also slightly more confident in their housing investments compared to May, as 68 percent of Utahns believe the price of homes in their communities will increase, up from 64 percent in May. The housing market, which has enjoyed 51 consecutive months of year-over-year increases nationally, is particularly strong in Utah, where home prices have grown 8 percent in the last year.

Gas prices have fallen slightly in the past month, potentially marking a relatively early decline from seasonal highs, or at least providing a short reprieve, and remaining significantly lower than they have been at this time of year compared to the previous three years. The average gasoline price in Utah was $2.37 last week, while the national average stood at $2.30 per gallon. Most Utah consumers expect gasoline prices to rise over the next 12 months as 78 percent say gasoline prices will increase. Only 5 percent of Utahns expect gasoline prices to go down over the next year. Oil prices have experienced significant volatility lately in the face of concerns regarding Britain’s vote to leave the European Union and politically fueled production instability in Nigeria.

Fewer consumers predict they will make major expenditures in the future, as 26 percent of Utahns are likely to purchase a major household item in the next 60 days, a 5 percent decline from May. Additionally, 35 percent of Utahns believe it is likely they will be able to retire and maintain their living standards, a 2 percent decline since May.

As the contentious presidential primaries come to a close and both parties’ national conventions near, satisfaction with the steps taken by the federal government to improve the overall economy of the U.S. increased slightly, with 13 percent of Utahns indicating belief that the federal government is doing a good job compared to 11 percent in May. Approval of the state government is relatively higher, with 39 percent of Utahns saying the state is doing a good job improving the overall state economy, representing a 3 percent decrease from May.

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. Analysis and data collection for the CAI are done by the Cicero Group, a market research firm based in Salt Lake City.