Utah and U.S. consumer confidence surged this month, helped by a better outlook for jobs, record stock prices and a strengthening housing market locally and nationally, according to separate reports released Tuesday.
In Utah, Zions Bank said its Consumer Attitude Index increased to 86.9 from 76.5 in April. The May number is just shy of 90, a reading that suggests the state’s economy is at the doorstep of a full recovery.
The index is at its highest mark since October. Momentum in the housing and labor markets appears to be outweighing the uncertainty surrounding political turmoil in Washington, as well as worries stirred up by high gasoline prices earlier this year, said economist Randy Shumway, who prepared the Zions report.
“I think the fundamentals are in place,” said Shumway, CEO of the Cicero Group, a Salt Lake City market research firm. “We still need a systemic change in Washington, but the economic fundamentals suggest we are in recovery mode.’
Across the U.S., American’s confidence in the economy jumped to a five-year high as more optimism about business conditions suggested consumers may keep boosting economic growth this year.
The Conference Board said its consumer confidence index rose in May to 76.2. That’s up from a reading of 69.0 in April and the highest since February 2008.
The jump in U.S. confidence followed a separate report that showed the housing recovery is strengthening. Home prices jumped 10.9 percent in March compared with a year ago, the most since April 2006, according to the Standard & Poor’s/Case Shiller 20-city index.
In Utah, 62 percent of consumers who participated in Zions’ survey think their home price will increase over the next 12 months. That’s up from 42 percent at the end of 2012. At the same time, construction of houses along the Wasatch Front is accelerating and inventories of homes for sale are at the lowest level in 15 years.
Utah’s unemployment rate now sits at 4.7 percent, one of the lowest rates in the nation and well below the U.S. rate of 7.5 percent. Twenty-one percent think jobs are plentiful in the areas where they live — the highest since Zions rolled out its index in January 2011.
Meanwhile, 74 percent of Utahns think it’s unlikely they will lose their job during the next 10 years, and only 10 percent anticipate their household income will decrease in the next six months.
Consumers’ confidence in the economy is watched closely because their spending accounts for about 70 percent of U.S. economic activity.
Conference Board economist Lynn Franco said Americans are more optimistic after worrying earlier in the year about higher taxes and federal spending cuts.
Higher home prices and stocks gains are making Americans feel wealthier. That has offset some of the pinch from the payroll tax increase and kept consumer spending.