As Utah consumers continued to digest the political gridlock in Washington that gave us the fiscal cliff drama and a shortfall in our paychecks to begin the new year, they remained skittish about their individual financial situations and their outlook for the economy.
Zions Bank's monthly Consumer Attitude Index rose to 78.8 from 77.3 in December, far short of a reading of 90, which indicates a healthy economy. The rise, like a similarly negligible move last month, was statistically insignificant, suggesting Utahns' confidence in their personal circumstances has plateaued, said Randy Shumway, CEO of The Cicero Group, which surveyed consumers for the bank at the start of January.
"We have hundreds of positive [economic] data points and one very significant anchor to our continued recovery," Shumway said Tuesday. "It's not preventing our recovery, but it is impeding the speed of the recovery. It's the fiscal intransigence of our federal government."
Nationally, the Conference Board's Consumer Confidence Index plunged 8.1 points, to 58.6 in January from 66.7 in the previous month, wiping out all of its gains since September 2011 and suggesting that Americans are in a foul mood about their finances. It was the second steep drop since November and took place against the backdrop of the bitter presidential election and fiscal battles between Congress and the White House over taxes and spending.
"Consumers are more pessimistic about the economic outlook and, in particular, their financial situation. The increase in the payroll tax [that took effect Jan. 1 and cut paychecks] has undoubtedly dampened consumers' spirits, and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock," said Lynn Franco, a Conference Board economist.
Zions CEO Scott Anderson said Utahns still felt skittish about events in Washington at the end of 2012 and remain skeptical that lawmakers will be able to come to a consensus on future fiscal issues, such as automatic spending cuts that are scheduled to begin in March if a broader budget deal isn't reached. Adding to their pessimism is a lack of trust in corporations, he said.
Despite the numbers, there is optimism in some corners of the local economy. Pam March, owner of Every Blooming Thing in Salt Lake City, said her best gauge of consumer sentiment is holiday season sales. They were up from 2011.
"We are looking to being very busy [in 2013], with a very busy wedding season and a happy, prosperous spring," March said.
The Associated Press contributed to this story