SALT LAKE CITY – The Zions Bank Consumer Attitude Index (CAI) decreased 2.4 points to 76.5 in April, while the national Consumer Confidence Index® (CCI) rose by 6.2 points to 68.1. Although the CAI decrease is within the margin of error, some indicators suggest increased optimism: the proportion of Utahns who now believe their home prices will rise in the coming year hit a two-year high at over 61 percent.
Overall consumer attitudes in Utah remain largely unchanged since the end of 2012 as the CAI has decreased only 0.8 points, with no monthly fluctuation greater than 2.5 points in either direction. Utahns continue to demonstrate they are more positive about the state of the economy than national consumers, but they are hesitant to embrace the recent economic recovery. This is likely due to uncertainty surrounding the ongoing debate in Washington about the budget, the impact of the Sequester, and rising gasoline prices.
In spite of the causes of economic uncertainty, indicators suggest increased optimism among Utahns. The majority of Utahns now recognize that the housing market is improving. More than 61 percent of Utahns now think their home price will increase over the next 12 months, up from 43 percent at the end of 2012. This represents the largest proportion in over two years. In addition, twice as many respondents (28 percent) now believe business conditions will be better in six months than those who think conditions will be worse (14 percent), up substantially from previous months.
Local consumers are more anxious about their present situations than they are about their expected situations six months from now. The Zions Bank Expectations Index — an estimate of consumer confidence in the economy six months from now — declined only 0.8 points in April. But the Zions Bank Present Situation Index — an assessment of confidence in current business and employment conditions — declined 4.8 points. Nevertheless, the Zions Bank CAI Present Situations Index still sits 11.2 points ahead of the CCI Present Situation Index, and the CAI Expectations Index is 6.6 points ahead of its national equivalent, demonstrating the higher level of confidence among Utahns than their counterparts across the country.
The ambiguity surrounding the immediate impact of the Sequester may partially explain the negative reading in the Zions Bank Present Situation Index relative to the Expectations Index. For example, according to the White House, starting on April 1 approximately 15,000 civilian Department of Defense employees were to be furloughed for a total of 22 days, reducing aggregate gross pay by approximately $83.5 million. However, the Department of Defense has since announced that planned furlough days at Hill Air Force base have been reduced from 22 to 14 days. Instead of beginning on April 1, the furloughs will now begin in mid-June. Utahns likely hope that the government will be able to replace or amend the Sequester in the future, or, at a minimum, that they will eventually better understand the ultimate impact of the forced spending cuts.
A majority of Utahns expressed frustration with the federal government in April. When considering the steps being taken to improve the overall U.S. economy, only 7 percent of Utahns believe the federal government is doing a good job, whereas 64 percent believe it is doing a poor job. This is in stark contrast to Utahns’ view of the state government. Thirty-six percent of Utahns believe the state government is doing a good job in taking steps to improve the local economy, as opposed to only 16 percent, who believe the state is doing a poor job.
“This month’s data demonstrate that Utahns remain resilient,” said Scott Anderson, President and CEO of Zions Bank. “Consumer attitudes in Utah are still tracking well ahead of their national counterparts, as they should be, given our lower unemployment rate, strengthening housing market, and abundance of new companies expanding into our state.”
<strong>Northern Utah Economic Landscape: Cache and Box Elder Counties</strong>
The unemployment rate for Cache County decreased 0.1 percentage points to 4.3 percent in February according to the Bureau of Labor Statistics. Cache County’s unemployment rate continues to remain well below the state average of 5.2 percent and the national average of 7.7 percent measured in the same period. The most recent report from RealtyTrac® shows that approximately 5 in every 10,000 homes were in foreclosure in Cache County in March, a decrease from 6 in every 10,000 one month prior.
The unemployment rate in Box Elder County decreased by 0.5 percentage points to 6.6 percent in February according to the Bureau of Labor Statistics. In the same report by RealtyTrac®, approximately 11 in every 10,000 homes in Box Elder County were in foreclosure in March, a decrease from 15 in every 10,000 one month prior.
In an effort to provide Cache County with safe and reliable water delivery, a new canal system created through the Cache Water Restoration Project will become operational in May 2013. The project was initiated in response to a 2009 landslide which triggered a canal collapse in Logan that resulted in the deaths of several residents and the canal’s closure. The closure has had a considerable impact on the county’s agriculture economy, one of Utah’s largest agricultural producers, as many farmers have had limited or no access to irrigation water. Funding for the majority of the $27.2 million project came through the federal Natural Resource Conservation Service, while local entities shared the cost of the remainder. The endeavor is currently under budget and ahead of schedule. As the new system becomes operational, Cache County’s residents, municipalities and agriculture economy will benefit from safe and consistent access to water.
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 May CAI will be released during a press conference at 10:30 a.m. on May 28, 2013.