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Utahns are more optimistic about their economic prospects than they were at the beginning of the year, but many remain concerned about rising prices for gasoline and other necessities, a new report by Zions Bank shows.
The monthly Utah Consumer Attitude Index , which measures how residents feel about employment and other economic conditions, fell to 70.7 in May, down 1.1 points from April. The index, released Tuesday, is still below the reading of 90 that indicates a healthy economy.
The Utah index is modeled after the U.S. Conference Board's Consumer Confidence Index, which fell to a six-month low of 60.8 in May, down from 66 in April.
"High oil prices and rising food prices are causing a lot of concern," said Randy Shumway, chief executive of The Cicero Group in Salt Lake City.
The average cost of a gallon of unleaded gasoline in Utah is $3.69, according to travel-services company AAA. That's down from $3.72 one month ago and still below the record high of $4.22 in July 2008. But gas prices remain substantially higher than the average of $3.04 per gallon last year.
Zions Bank's Consumer Attitude Index is divided into two indices measuring how people feel about current economic conditions and what they expect in the future.
The Present Situation Index, which measures current business and employment conditions, increased 4.2 points to 46.9 from April to May, Zions Bank reported. Many respondents were hopeful about Utah's declining unemployment rate, an uptick in hiring activity at some companies and a recovering stock market.
But the Expectations Index, which measures what consumers expect to see in the coming months in terms of business conditions, employment and personal income, fell 4.8 points to 86.5 from April to May.
The problem: Six of 10 people surveyed believe their household income isn't likely to keep up with the inflation rate over the next two years.
Although most Utahns believe economic conditions have improved since the beginning of the year, many remain wary of how fast and strong the state's recovery will be and how well their incomes will keep pace with inflation, according to the report.
"Everyone is guardedly optimistic," said Tony Schnurr, president of car dealership operator Larry H. Miller Automotive Group in Salt Lake City.
When it comes to home prices, though, Utahns are hopeful the worst of the downturn is over. Nearly three-quarters of Utahns believe home prices will remain the same or increase in the next year. Most economists predict housing prices along the Wasatch Front should stop falling by the end of the year, but any uptick in housing prices in 2012 will be slight.
Nationally, consumers remain worried that their incomes will not keep pace with rising prices, said Lynn Franco, director of The Conference Board Consumer Research Center. She said fears of inflation that had eased in April picked up again in May.
Part of the problem in May was that the confidence survey's cutoff of May 18 did not give consumers enough time to react to falling gas prices, which peaked early in the month, IHS Global Insight economist Chris Christopher said.
"We expect consumer confidence to pick up next month because those respondents will be able to show appreciation for falling gasoline prices," he added.
Still, gasoline isn't consumers' only worry, said Moody's chief economist, John Lonski.
"Expectations of higher prices coupled with expectations of lower income makes for a more anxious consumer," he said. "The takeaway here is employment and income are not growing rapidly enough to sustain an extended stay by rapid inflation."
The Associated Press contributed to this report.