SALT LAKE CITY — Utah consumers have more faith in the state’s economy than most Americans have in the national economy.
The Zions Bank Consumer Attitude Index for January rose 1.4 points for the second consecutive month. The CAI began the year at 78.8 — one point less than the same time last year. Conversely, the national Consumer Confidence Index fell significantly for the second straight month, declining 8.1 points to 58.6.
Despite a brief post-election drop in local consumer confidence, Utahns remain much more optimistic than the rest of the country, the report indicated.
In 2012, consumer confidence was relatively stable both nationally and locally. Consumers were tentative to embrace the recovery, explained Zions Bank economic adviser Randy Shumway.
“Several economic indicators suggest that the economy is stronger than it has been in years, but Americans see sluggish economic growth in Europe and polarizing discourse in Washington D.C. as threats to long-term growth,” he said.
The Zions Bank CAI is based on a representative sample of 500 Utah households. The monthly survey is conducted by the Cicero Group/Dan Jones & Associates and has a confidence interval of plus or minus 4.38 percent at a 95 percent confidence level.
Meanwhile, the Zions Bank Present Situation Index — an assessment of confidence in current business and employment conditions — dropped 4.9 points to 71.2. Comparatively, even though the Present Situations Index fell slightly from December to January, it started the year 21.8 points higher than last January. Similarly, the national Present Situation Index decreased by 7.3 points to 57.3.
The Zions Bank Expectations Index — an estimate of consumer confidence in the economy six months from now — rebounded by 5.6 points from December to January. Although the Expectations Index increased to 83.8 in January, it has fallen by 16.2 points over the past 12 months.
Shumway said future expectations peaked in October 2012 before falling dramatically in November and December in reaction to the results of presidential election and the “fiscal cliff” debate.
“A decreasing proportion of Utahns believe that the economic policies of the federal government are helping to improve the economy, which illustrates the deficit of trust consumers have in their elected officials,” he said.
Only 5.7 percent of local consumers responded positively when asked if they felt that the steps taken by the U.S. government would improve the economy — the lowest percentage since November 2011, he added.
The report stated that the Federal Open Market Committee is predicting gross domestic product growth between 2.5 percent and 3.0 percent in 2013, and 3.0 percent to 3.8 percent next year. While GDP growth of approximately 3 percent will not return employment rates back to pre-recession levels, economic expansion at that pace should provide stability and inspire consumer confidence, Shumway said.Comment on this story
Leaders in Washington D.C. have to develop a compromise plan to raise revenues and make appropriate spending cuts on the four main “levers” of the fiscal budget — defense, social security, Medicare and Medicaid — if the U.S. economy is going to be able to prosper long term, he said.
“If the federal government is only willing to address one of the levers, then our economy is going to continue to struggle no matter how hard (small business owners) work in this entrepreneurial environment,” Shumway said.