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The Zions Bank Consumer Attitude Index (CAI) increased 1.1 points to 79.9 in February, while the national Consumer Confidence Index (CCI) rose by 11.2 points to 69.6. The 1.1-point increase in the CAI is within the margin of error and does not represent a significant change. Nevertheless, the CAI has risen for three consecutive months, a sign that consumer sentiment in Utah is stabilizing after falling dramatically in November.
Utah consumer confidence has been steady in the face of sluggish fiscal policy negotiations in Washington. In late December, the so-called “fiscal cliff” threatened to increase taxes excessively for all Americans, but Congress reached a last-minute compromise that minimized the tax hikes. Now, the U.S. Government is days away from sequestration, which is a set of deep spending cuts that will dramatically decrease the budgets allocated to the departments of energy, state, defense, labor, transportation, justice and the National Institutes of Health.
Local consumers seem to be more anxious than national consumers are about the effects that looming spending cuts may have on economic growth. The Zions Bank Expectations Index — an estimate of consumer confidence in the economy six months from now — lost 1.2 points in February, while the national CCI Expectations Index gained 13.9 points. The CAI Expectations Index for Utah now sits at 82.6, which is 8.8 points higher than the national average.
Local consumers are generally frustrated with the actions of the federal government. Only five percent of Utahns indicated that the federal government is doing a “good job” implementing policies that will improve the economy. The lack of faith that consumers have in their political leaders has diminished their hope for future economic growth. Approximately one-half of Utahns think that it is unlikely that the U.S. economy will improve in the next 12 months. In contrast, only 35 percent of Utahns believed that domestic economic growth was unlikely one year ago.
The Zions Bank Present Situation Index — an assessment of confidence in current business and employment conditions — increased 4.6 points to a score of 75.8; the second highest Present Situation Index score since the inception of the CAI in January 2011. The national CCI Present Situation Index also increased month-over-month, but by an even greater 7.1 points. Utahns expressed growing positive sentiment toward the current labor market, with 17 percent of consumers stating that jobs in their area are “plentiful.” The proportion of Utah consumers who identified that jobs are plentiful in their area increased nearly 3 percent from January, and grew six percent year over year.
“While the nation struggles to get its fiscal house in order, local businesses and consumers are anticipating how national policy is going to impact their economic outlook, said Scott Anderson, President and CEO of Zions Bank. “With unemployment in Utah leveling off at So far, Utah’s economy has been extraordinarily resilient through the recession, the election, the fiscal cliff, and now the sequestration standoff. If Congress and the Administration can come to a compromise, even after the sequester deadline, we expect the Utah economy to continue to expand.”
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 local business at 10:30 a.m. on March 26, 2013.