Surveys: Political rancor raises consumer doubts
Utahns were unsure about the economy in July, and they don't feel much more certain this month, Zions Bank said Tuesday.
The bank's Consumer Attitude Index increased a "negligible" 0.3 points, to 76.9 from 76.6 July, suggesting that consumer attitudes toward the economy have been "neutralized" by" negative noise" emanating from the presidential campaigns that is drowning out "positive data about the economy," said Randy Shumway, CEO of The Cicero Group/Dan Jones and Associates, which constructs the monthly confidence measure for Zions.
Uncertainty is widespread. Like the Zions index, the Conference Board's Consumer Confidence Index is showing that Americans are feeling worse about the economy than they have in a long time.
On Tuesday, the New York-based board said its gauge fell to 60.6, down from a revised 65.4 in July, confounding economists who had expected a reading of 66. Like the Utah index, the barometer of U.S. consumer attitudes is at its lowest point since November 2011, when the reading was at 55.2. Nine months ago, the Utah index was 67.7.
"Consumers were more apprehensive about business and employment prospects," said Lynn Franco, the Conference Board's director of economic indicators, said in a statement.
Both indexes are based on surveys conducted in the first two weeks of August, with about 500 randomly selected people nationwide and in Utah.
"I think people are unsure," Shumway said. "I think people feel like they are getting their sea legs underneath them, but their confidence has not completely returned. ... Their confidence has been neutralized."
The Conference Board and Zions indexes are watched because consumer spending drives 70 percent of economic activity in the country. Both gauges of confidence have remained below the 90 reading that indicates a healthy economy. The national number hasn't been near that level since the Great Recession began in December 2007. Zions launched its index in January 2011. That month's reading was 76.2, not much different from the soft August number.
Although pessimism is mounting, the level of faith in the economy is considerably higher in Utah than elsewhere in the country. Zions said expectations about the economy six months from now increased a half-point, to 89.6. Although the number was up, it didn't match February's reading a 16-month high and Zions said consumer attitudes about the future have soured over the past six months.
"Economic and political uncertainty has defined the second and third quarters of 2012. Until there is more clarity around national economic policy, local consumers are unlikely to abandon their apprehension about the future," the bank said in a statement.
There was enough difference between the national and Utah confidence numbers to support rising sales at Caputo's Gourmet Market and Deli, a specialty food products retailer in downtown Salt Lake City, marketing director Matt Caputo said. Instead of choosing a low-priced type of prosciutto, for example, a growing number of customers are splurging on high-end varieties. The same goes for Caputo's cheeses and chocolates.
"People are certainly getting back into treating themselves even more than they did three months ago," Caputo said, adding that sales of specialty foods are on track to rise as much as 15 percent this year over 2011.
"It definitely feels like the worst is behind us and people aren't as paralyzed as they used to be," Caputo said.