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The Zions Bank Consumer Attitude Index (CAI) decreased 6.3 points to 79.0 in May. The U.S. Consumer Confidence Index (CCI) decreased 3.8 points to 64.9, resulting in a 14.1 point difference between the two indexes.
Utahns’ confidence in the economy came down from a 16-month high in April. No doubt, the high price of gasoline, the impending presidential election, and the European debt crisis are taking their toll on consumer confidence. Still, Utahns are more optimistic than the national average, and far more optimistic than they were six months ago; the Zions Bank Consumer Attitude Index is 11 points higher than it was in November of last year. Consumer sentiments toward housing prices, fuel prices, and general inflation are stabilizing.
Trepidation about future economic conditions, particularly the employment outlook, affected the CAI considerably in May. The Zions Bank Expectations Index — a gauge of consumer confidence in the economy six months from now — decreased 6.7 points to 91.7, while the national CCI Expectations Index decreased 2.8 points to 77.6. The Zions Bank Present Situation Index — a measurement of confidence in current business and employment conditions — decreased 5.7 points to 60.1, while the national CCI Present Situation Index decreased 5.7 points to 45.9.
Recent economic indicators suggest that the economy continues to gather momentum, despite Utahns’ having a difficult time fully regaining their confidence. Consumer attitudes toward the housing market remained optimistic in May. Seventy-nine percent of consumers believed that the price of homes similar to theirs would stay the same or increase over the next 12-months, that is 10 percentage points higher than six months ago. In April, the price of housing along the Wasatch Front increased by 1.0 percent as more consumers entered the market. Confidence in the local housing market reflects national trends, and indicates a rebound in U.S. home sales and prices.
The percent of Utahns who believe gasoline prices will increase over the next 12 months is down 8 percentage points from April. Nationally, gas prices in May fell approximately 5 percent. Utah tends to lag behind the rest of the nation in gas price fluctuations, but prices have stabilized in recent weeks. Anxiety over fuel costs negatively influences consumer confidence, so as prices come down from their peak, consumer angst will likely subside.
Inflationary concerns for Utah consumers decreased considerably from April to May. The percent of consumers who think interest rates will increase over the next 12-months fell by 5 percentage points to 45 percent. The percent of Utahns who think prices for consumer goods will increase over the next 12-months fell by 7 percentage points to 69 percent, its lowest point since January 2011.
“May has been a perfect example of the strengths and challenges that exist for the Utah economy,” said Zions Bank President and CEO Scott Anderson. “Consumer confidence in the state is higher than the national average, yet Utahns are still hesitant to embrace the recovery fully. It is important that we recognize the considerable amount of good news we received in May: the housing market is showing signs of recovery, the labor market is stable, and gasoline prices have likely peaked. Economic recovery continues in Utah, and at a much faster pace than the rest of the nation.”
The full report is 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.