Utah consumer confidence reaches record, but worries are plentiful
The confidence of Utahns in the economy reached a new high in August, but the upward move was modest, suggesting that consumer optimism had reached a plateau.
Zions Bank's Consumer Attitude Index hasn't changed much since May, and this month it rose just 2.8 points to 88.4 from a revised 85.6 in July even though there's been solid job creation, a broad-based recovery in housing and advances in stocks.
"Housing is improving, the unemployment rate has again dropped slightly to 4.6 percent, but we are again seeing the political intransigence [in Washington] surrounding our debt crisis," said Randy Shumway, CEO of The Cicero Group, which prepares Zions' monthly survey of consumer attitudes.
"Until we are willing to wisely, and in a mathematically honest manner, discuss the problem, we are going to continue to impede what would otherwise be a blossoming [Utah and U.S.] economy," Shumway said.
Nationally, confidence in the economy inched closer to a 5Â½-year high on growing optimism that hiring and wages could pick up in coming months.
The Conference Board, a New York-based private research group, said its consumer confidence index rose to 81.5 in August. That's up from a revised reading of 81 in July. And it's just below the 82.1 reading in June, which was the highest since January 2008.
Consumers' confidence in the economy is watched closely because their spending accounts for about 70 percent of U.S. economic activity. The Zions and Conference Board indexes are still short of a reading of 90, which indicates a healthy economy.
The Zions index was propelled higher this month by stock prices, which were still rising when The Cicero Group conducted its survey of Utah consumers. Housing values helped, too. They are up 13.5 percent in the last 12 months. And just 7 percent of Utahns think they are likely to lose their jobs during the next two years, the bank said.
But while consumer attitudes are high, many Utahns are still uncertain about the future. They wonder if Congress and the White House will resolve the budget crisis and whether the phase-in of the Affordable Care Act will hurt the job market. What's more, 73 percent of Utahns expect interest rates to increase over the next year.
Gasoline prices are also bothering Utahns after having jumped substantially over the summer. Prices across the state sit at about $3.70 a gallon, well above the U.S. average.
"Although consumer attitudes in Utah are once again at an all-time high, Utahns still lack clarity when it comes to the direction of the federal government and the ultimate ceiling for gas prices," Zions CEO Scott Anderson said.
Michael Priddis, general manager of Utah Idaho Supply Map World's five stores along the Wasatch Front, has noticed some hand-wringing by teachers getting reading for the new school year. With the state-mandated Common Core standards in effect, many K-12 teachers have been in Priddis's stores spending their own money for materials that aren't provided by the state or their districts, he said. That's driven his sales up about 5 percent this year.
"We've brought in a number of common core materials for teacher to buy," Priddis said. "It does help us that teachers are buying a little bit more."