SALT LAKE CITY — The Zions Bank Consumer Attitude Index (CAI) rose 2.8 points to 88.4 in August. The modest improvement in Utah consumer attitudes sent the CAI to another all-time high since its creation in January 2011. For comparison, this month’s national Consumer Confidence Index® (CCI) increased 0.5 points to 81.5.
Strong economic data from the labor, housing, and stock markets have buoyed attitudes in Utah over the past several months. Major stock indices continue to move upward, and the CoreLogic Home Price Index showed home values in Utah have increased 13.5 percent year-over-year. Utahns expect these trends to continue: only 30 percent see their 401Ks declining in value over the next twelve months and just 9 percent see their home values declining over the same period. In the labor market, only 7 percent of Utahns think they are likely to lose a job they wanted to keep during the next two years — a reflection of Utah’s already low unemployment rate.
While consumer attitudes are at high levels, they have plateaued since jumping substantially earlier this summer, largely due to the myriad headwinds Utahns see facing the recovering economy. Congress remains in political gridlock over the sequester and the looming budget crisis: only 10 percent of Utahns think the federal government is doing a good job in its efforts to improve the economy. Seventy-three percent of Utahns expect interest rates to increase over the next 12 months, up from 51 percent in May, due to the anticipated conclusion of the Federal Reserve’s quantitative easing program. Rising interest rates make consumers more hesitant to take out loans and purchase major household items. Consumer attitudes are beginning to reflect this as well: the percentage of Utahns who are likely to purchase a major household item in the next 60 days dropped in August to 20 percent from 26 percent in the month prior.
Moreover, gasoline prices throughout the state have jumped substantially over the summer months, and now sit well above the national average. Utahns do not expect high gasoline prices to abate anytime soon either, as 75 percent of residents think gasoline prices will continue to increase over the next year. Those who do think prices will continue to move up expect prices to increase by an average of $0.38, but in this case, Utahns may be pleasantly surprised over the next twelve months. The U.S. Energy Information Administration is actually forecasting gasoline prices to decline about $0.15 on average next year.
The Zions Bank Expectations Index — an estimate of consumer confidence in the economy six months from now — increased 4.6 points in August to 90.9, while the Zions Bank Present Situation Index — an assessment of confidence in current business and employment conditions — was relatively unchanged, up just 0.2 points to 84.6. The Expectations Index sits 2.2 points above of its national counterpart, and the Present Situation index sits 13.9 points above its counterpart. Year-over-year, the Zions Bank Present Situation Index has increased 26.7 points, while the Zions Bank Expectations Index has been relatively unchanged, increasing only 1.3 points.
“Although consumer attitudes in Utah are once again at an all-time high, Utahns still lack clarity when it comes to the direction of the federal government and the ultimate ceiling for gas prices,” said Scott Anderson, president and CEO of Zions Bank. “Once some of these headwinds subside, Utahns will have even greater reason to be confident about the state and direction of the economy.”
<strong>Northern Utah Economic Landscape: Cache and Box Elder County</strong>
The unemployment rate for Cache County increased 0.7 percentage points to 4.6 percent in June, according to the U.S. Bureau of Labor Statistics. Cache County’s unemployment rate closely resembles the state average of 4.7 percent and rests well below the national average of 7.6 percent measured in the same period. The most recent report from RealtyTrac® shows that approximately 4 in every 10,000 homes were in foreclosure in Cache County in June, an increase from 1 in every 10,000 one month prior.
The unemployment rate in Box Elder County increased 0.8 percentage points to 5.8 percent in June, according to the U.S. Bureau of Labor Statistics. In the same report by RealtyTrac®, approximately 7 in every 10,000 homes in Box Elder County were in foreclosure in June, an increase from 2 in every 10,000 one month prior.
The Utah State University (USU) Synthetic Biomanufacturing Institute has received $1.15 million in funding to pursue spider silk research. The U.S. Navy has supplied approximately $173,000 in funding, and hopes that the research conducted at the university enables the anchoring of objects in wet conditions. Randy Lewis, the leader of spider silk research at USU, works to reproduce materials already created by spiders—materials that are unmatched in their wet-condition adhesion by any manufactured substance. The new funding will support the research efforts of more than 25 graduate and undergraduate students for a two-year period while promoting the university’s research capacity—a great benefit to the Cache County economy.
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 on September 24, 2013.
Zions Bank is Utah’s oldest financial institution and is the only local bank with a statewide distribution of financial centers, operating 101 full-service centers. Zions Bank also operates 26 full-service financial centers in 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 19 consecutive years. Founded in 1873, Zions Bank has been serving the communities of Utah for 140 years. Additional information is available at www.zionsbank.com.