SALT LAKE CITY, Utah; May 27, 2014 — The Zions Bank Utah Consumer Attitude Index (CAI) decreased 6.6 points to 96.3 from April to May. This marks the first decrease in 2014 and the first decrease since October 2013. Although the CAI decreased this month, Utahns still have strong confidence in the state’s economy, as the CAI has improved nearly 20 points over the past 12 months. For comparison, this month’s national Consumer Confidence Index® (CCI) increased 1.3 points to 83.0.
The Zions Bank CAI fell this month primarily because of lower expectations for the trajectory of the economy. In particular, Utahns’ expectations for both business conditions and household income downgraded slightly from April to May. The percentage of Utahns who think business conditions will be better six months from now declined from 31 percent to 29 percent, while the percentage of Utahns who think business conditions will be worse six months from now increased from 6 percent to 10 percent. The percentage of Utahns who expect their household income to be lower six months from now increased to 8 percent from 4 percent, while the percentage of Utahns expecting their household income to be higher six months from now remained at 30 percent. Consumer attitudes were mixed with regard to the labor market, as those expecting more jobs in the next six months declined from 30 percent to 28 percent, but those expecting fewer jobs also declined, moving from 14 percent to 13 percent.
Utahns became less concerned about inflation this month. The percentage of Utahns who expect prices for consumer goods to increase over the next 12 months declined to 77 percent from 84 percent. Very few consumers expect prices to go down; the percentage of Utahns expecting prices to decline was 0.2 percent. But the percentage of Utahns who think prices will stay the same now stands at 22 percent, up from 15 percent. This is likely why Utahns are also less worried about inflation deteriorating their household income. The percentage of Utahns who think their household income is likely to increase by more than the rate of inflation during the next two years increased to 26 percent from 22 percent last month.
Similarly, fewer Utahns think interest rates will continue to move higher in the coming months. Those expecting rates for borrowing money to go up over the next 12 months declined to 61 percent from 66 percent, and those expecting interest rates to stay the same increased from 26 percent to 32 percent. This expectation likely reflects current interest rate trends. The average 30-year fixed rate mortgage decreased to 4.33 percent last week, which is the lowest rate since November 2013, according to the Mortgage Bankers Association. Decreasing, or, at a minimum stabilizing interest rates, could help the economy continue to improve, as last month retail sales edged up only 0.1 percent. Retail sales were weaker than expected in April because of a decline in receipts at furniture, electronic, and appliance stores. These large-ticket items are often purchased with credit, and declining interest rates will make these items more affordable for consumers. This principle was reflected in Utahns’ attitudes this month, as the percentage of Utahns likely to purchase a major item (e.g. furniture, appliances) increased to 29 percent from 25 percent.
“Consumer attitudes dipped slightly this month as Utahns tempered their enthusiasm about the state’s economic trajectory,” said Scott Anderson, president and CEO of Zions Bank. “Before we become too concerned, though, let’s remember that consumer attitudes are still near historic levels. We have a remarkably low unemployment rate, and our housing market is thriving. This is merely a bump in the road, and we expect attitudes, and subsequently the state’s economy, to continue to march higher in the coming months. ”
<span style=”text-decoration: underline;”><strong>Northern Utah Economic Landscape: Cache and Box Elder County</strong></span>
The unemployment rate for Cache County remained at a steady 2.9 percent in April, according to the Utah Department of Workforce Services. Cache County’s unemployment rate rests below the state average of 3.8 percent and well below the national average of 6.3 percent measured in the same period. The most recent report from RealtyTrac® shows that approximately 2 in every 10,000 homes were in foreclosure in Cache County in April, a decrease from 4 in every 10,000 one month prior.
The unemployment rate in Box Elder County remained constant at 4.6 percent in April, according to the Utah Department of Workforce Services. In the same report by RealtyTrac®, approximately 3 in every 10,000 homes in Box Elder County were in foreclosure in April, a decrease from 6 in every 10,000 one month prior.
Logan is vying for increased exposure as the Tour of Utah bicycle race comes to town in August 2015. The Cache County Council has given preliminary approval for funding to support Logan as a host of the 2015 bicycle race. Total funds needed to host the event will range from $80,000 to $100,000. Cache County has said it will contribute $25,000 if Logan can raise the rest of the funds. The Tour of Utah is one of only five UCI-sanctioned, multi-stage, North American pro cycling events this year. The stage race takes place over seven days in August and attracts worldwide attention. The 2014 race will begin in Cedar City. If Logan can raise the necessary funds to host the event next year, Stage 1 will begin in Logan. The Tour would bring in spectators and athletes a week before the event begins, benefiting the local economy and bringing worldwide exposure to Logan.
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, a premier market research firm based in Salt Lake City. The June CAI will be released on June 24, 2014.