October’s partial government shutdown put both Utah and U.S. consumers in pessimistic moods going into the holiday shopping season.
Randy Shumway, chief executive officer for The Cicero Group, said at a press conference earlier this week that the drops in consumer confidence correlated with pessimism created by Washington policies.
"The government shutdown and Washington’s overall inability to come to a quick and reasonable solution clearly frustrated consumers this month," said Scott Anderson, president and CEO of Zions Bank. "Now that the government has reopened, hopefully we will see confidence increase and there will not be a long-term impact on our economy. However, Washington’s gridlock will likely influence consumer confidence until Congress can agree upon a smart, long-term solution to our nation’s fiscal crisis."
Zions Bank Consumer Attitude Index decreased 14.6 points to 78.1 from September’s all-time high after the shutdown, the sharpest drop recorded since the survey began in January of 2011. Nationally, the Consumer Confidence Index decreased nine points to 71.2.
The Cicero Group/Dan Jones & Associates, a market research firm, compiles the data for the Zions Bank Consumer Attitude Index , which is released each month to coincide with The Conference Board’s national report.
Zions Bank also released its Wasatch Front Consumer Price Index this week. It decreased .1 percent from August to September on a non-seasonally adjusted basis, primarily due to a decrease in transportation costs.
The report said transportation costs, mainly fueled by falling gasoline prices across the state, fell .7 percent. Utahns paid about 3 percent less on average for each gallon of gasoline than they did in August. According to the American Automobile Association, the current price of a gallon of gas in Utah is $3.46, which remains above the national average of $3.34.
On the negative side, the report said food prices increased .6 percent in the month and prices at full-service restaurants increased about 2 percent. Grocery prices, led by declines in the price of seafood, pork and produce, fell .3 percent in September, but are still up 2 percent on the year.
In other categories, the report said utility prices increased for the fourth-straight month as did clothing costs and recreation. Medical care and cell phone service decreased across the state.
"With political gridlock in Washington, falling gasoline prices are a welcome boost to the economy and consumer psyche, especially as we approach the holiday spending season," said Anderson. "Consumers now have more discretionary income to spend on food and entertainment, and cheaper gasoline also makes travel easier, helping boost tourism."
Shumway echoed that at a press conference this week.
"Spending drives 70 percent of the economy," he said. "If people are confident about their job circumstances, 401K and home appreciation, they are more likely to spend money on vacation."
The Cicero Consumer Attitude Index summary report indicated some pessimism among Utahns.
For example, 23 percent said their expectation for business conditions in the next six months are worse, up 10 points from the previous survey. Twenty-eight percent thought there would be fewer jobs in that time period, up 11 points, and 13 percent felt as though their income would decrease in the next six months, up 4 percent.
A whopping 76 percent of those surveyed said the federal government was doing a poor job with the economy, while only 13 percent thought Utah state government was doing a poor job. Sixty-one percent of those surveyed said it was unlikely or very unlikely the U.S. economy would improve over the next 12 months.
The survey said that 66 percent of Utahns thought it would be unlikely or very unlikely that their income will increase by more than the rate of inflation over the next two years. And 73 percent said they were unlikely to purchase a major household item in the next 60 days.
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