The economy is blossoming, particularly in the state of Utah. —Randy Shumway
COTTONWOOD HEIGHTS — Optimism regarding the Utah economy is at a record high, a new report shows.
The Zions Bank Consumer Attitude Index increased 4.3 points to 92.6 from August to September — sitting above 90 for the first time since the index began in January 2011.
A consumer attitude index reading above 90 is a solid indicator of a healthy economy, demonstrating the marked improvement of Utah’s economy since the recession, explained Zions Bank chief economic adviser Randy Shumway speaking at the Salt Lake City-based financial institution’s monthly economic news conference.
After consumer attitudes in Utah plateaued over the past few months, Utahns became more comfortable with the overall economic environment in September and pushed the index to its new all-time high, Shumway said. Comparatively, the national consumer confidence index decreased 2.1 points to 79.7 for the month.
“The economy is blossoming, particularly in the state of Utah,” he said.
The Zions Bank Expectations Index, an estimate of consumer confidence in the economy six months from now, increased 8.3 points to 92.9 from August to September. The Zions Bank Present Situation Index, an assessment of confidence in current business and employment conditions, increased 1.6 points to 92.4.
Both indexes remain well above their national counterparts, which is in line with expectations given that Utah has a much lower unemployment rate, a stronger housing market and a wide range of thriving businesses spread across several industries, Shumway said.
The most significant change in the index this month was Utahns’ assessment of general business conditions in their area, he said. In September, the percentage of Utahns who said business conditions are normal or good jumped 5 percentage points to 91 percent, topping 90 percent for the first time in the consumer attitude index’s history.
Utahns also were more positive about the labor market in September than in August.
“We’re seeing a significant increase in the number of jobs available,” Shumway said.
People who describe the available jobs in their area as plentiful increased to 22 percent from 20 percent, and those who describe the available jobs in their area as hard to get decreased from 25 percent to 23 percent.
The survey stated that more Utahns think the number of jobs will increase in the coming months. Those people who think there will be more jobs in Utah six months from now increased to 26 percent in September — up from 24 percent in August.
In addition, 91 percent of Utahns think their household income will increase or stay the same six months from now, compared with 89 percent last month, Shumway noted.
This month’s bump in local confidence corroborates the predictions of several economists who expect gross domestic product growth to continue to accelerate for the remainder of the year, he said.
Although Utah’s housing market remained strong, the percentage of Utahns expecting home prices to increase dropped to 61 percent — the lowest percentage since March 2013. Shumway said that likely is due to substantial price increases that have occurred over the past few months, and it's not a signal that consumers have less confidence in the housing market.
According to Zillow, an online home and real estate market research firm, Utah home prices are up approximately 7 percent since the beginning of 2013 and 11 percent year-over-year, led by the Provo and Salt Lake City areas, with year-over-year gains of 13.9 percent and 13.6 percent, respectively.
On a broader scale, Shumway said the fact that the Federal Reserve is implementing policy that indicates the national economy has become strong enough to sustain itself without artificial stimulus is an optimistic sign.
“(The Fed) is saying that you’ve got the fundamentals in place to succeed now independent of our assistance,” he said. “There is a real positive when the Federal Reserve is looking at all these economic indicators that is suggesting that the recovery is 'in full bloom.'"
Shumway said the Fed likely will begin easing back on its infusion of cash into the economy and “loosen the reins” on keeping interest rates especially low over the next few months.
“Within 12 to 18 months, you will see the economic stimulus completely end,” he said. “It’s a positive sign. It’s like being on a life-support system and they are finally able to remove it because your body is healthy enough to start prospering on its own.”