Consumer spending is directly correlated to 70 percent of all economic activity. So as retail spending goes, so goes our economy. —Randy Shumway
SALT LAKE CITY — Utah consumer confidence is as high as it's ever been, a new report indicates.
For the second straight month, the Zions Bank Consumer Attitude Index — which measures consumer feelings regarding the local economy — reached another all-time high in December climbing to 96.1, up 2.3 points from the previous month.
The modest increase comes on the heels of the last month’s record-setting jump of 15.7 points. Nationally, the U.S. Consumer Confidence Index jumped 6.1 points to 78.1.
With 20 percent of all consumer spending taking place during the holiday season, how consumers feel about the year-end economy can have a significant impact on the state economically, said Randy Shumway, Zions Bank economic adviser and CEO of the Cicero Group.
"Consumer spending is directly correlated to 70 percent of all economic activity," Shumway said. "So as retail spending goes, so goes our economy."
He added that as the economy flourishes, unemployment will shrink and other leading economic indicators, such as the stock market, will also improve.
In addition, residential real estate values are expected to increase in the coming year, Shumway said, with Salt Lake City forecasted to be among the top 10 growth markets in the nation in 2014.
"Utahns have a lot for which they should be optimistic," he said.
He noted that the percentage of Utahns expecting their household income to increase over the next six months rose to 26 percent from 23 percent, while the percentage of those who expect their household income to be lower decreased from 11 percent in November to 8 percent in December.
Another promising indicator with potential implications for holiday spending, Shumway said, is that Utahns are increasingly optimistic about their household wealth.
Utahns have become less concerned about potential losses in their 401(k) plans, he said. The report showed that only 29 percent of respondents think it is unlikely $1,000 invested into their retirement will not be worth more than $1,000 a year from now, down from 33 percent in November.
Meanwhile, the Zions Bank Present Situation Index — an assessment of confidence in current business and employment conditions — rose 5.3 points to 95.3, compared to the national Present Situation Index, which increased 2.7 points to 76.2. The Zions Bank Expectations Index — an estimate of consumer confidence in the economy six months from now — increased by 0.3 points to 96.6, compared the national Expectations Index, which increased 8.3 points to 79.4.
The Zions Bank Consumer Attitude Index is based on a representative sample of 500 Utah households. The monthly survey is conducted by the Cicero Group/Dan Jones & Associates with a confidence interval of plus or minus 4.38 percent at a 95 percent confidence level.
Transportation costs — down 2.1 percent in November — have fallen for five straight months as gasoline prices in Utah continue to decline keeping inflation levels moderate. According to AAA Utah, gasoline prices in Utah have continued to fall in December as well, with a current average price of $3.04 per gallon, compared to the national average of $3.22 per gallon.
As the New Year begins, Utahns could see gasoline prices continue to fall, given that prices historically trough in January, Shumway said. To start 2013, prices dropped to a low of about $2.95 in January before increasing for five consecutive months and peaking at about $3.75 in June, he said.
Fortunately for the state, he commented, Utah is more economically sound than most states, making an upward trend in 2014 a strong probability.
"Not only is (Utah) the third fastest growing economy in the United States, but we're also the fourth most diversified economy," he said. "Which means that if one industry begins to struggle, the other industries that are completely different will continue to grow."