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The Zions Bank Consumer Attitude Index (CAI) increased 1.4 points from November to December. Today, the index sits at 77.3, just below its six-month moving average of 79.8. The national Consumer Confidence Index (CCI), as reported by The Conference Board, decreased 6.4 points to 65.1, creating a 14.7-point difference between the two indexes.
While overall consumer confidence in Utah is relatively unchanged from November to December, the two indices that make up the CAI the Present Situation Index and the Expectations Index tell a livelier story. The culmination of a presidential election, a looming fiscal cliff, and improvement in key economic indicators has left many consumers with mixed economic attitudes.
The Zions Bank Present Situation Index an assessment of confidence in current business and employment conditions jumped 17.2 points to 76.1, the largest single-month increase ever recorded by the Index. The national Present Situation Index increased 5.4 points to 62.8, creating a 13.3-point difference between the two indexes. Continued improvements in Utah’s economy particularly in employment and most recently in the housing market have amplified consumer confidence. This month, 34 percent of consumers cited that current business conditions in their area are good, up thirteen percentage points from the month prior. Additionally, 18 percent of consumers, compared to 11 percent last month, believe jobs in their area are plentiful.
The Zions Bank Expectations Index an estimate of consumer confidence in the economy six months from now dropped in December. The Expectations Index dropped 9.1 points to 78.2, while the national index dropped 14.4 points to 66.5. The Expectations Index continued to decrease this month as stalled negotiations surrounding the fiscal cliff have many consumers worried about the future implications for the country, as well as for their household. When Utah consumers were asked if the U.S. economy would improve during the next 12 months, 52 percent indicated that it was unlikely, compared to 32 percent just two months ago.
Uncertainty about the economy has caused holiday shoppers to be more cautious of their spending this season, despite record turnouts and discounted prices. According to the MasterCard Advisor SpendingPulse report, sales of electronics, clothing, jewelry, and home goods in November and December increased 0.7 percent from the same period last year far below the 3 to 4 percent growth that was expected. However, retailers still have time to make up lost ground. The final week of December accounts for approximately 15 percent of the months total sales.
Over the past 12 months, the Zions Bank Present Situation Index has climbed 21.4 points as business conditions and job opportunities in the state improve. However, during that same time, economic optimism has declined. Since December 2011, the Expectations Index has fallen 21.8 points. As Scott Anderson, president and CEO of Zions Bank, explained, Since the Great Recession, our state economy has made, and will continue to make, great strides toward a full recovery. It has been our states resiliency, business-centric policies, and educated work force that has propelled our economic recovery ahead of many other states. However, a number of macro-economic factors over the last 12 months have swayed consumers long-term confidence, specifically the U.S. debt crisis, Europes recession, and Chinas economic slowdown.
Despite the looming uncertainty in the market, Utahs economic fundamentals remain strong. Because of this, and the states historic track record, many economists are bullish that Utah’s recovery will continue to outpace the overall U.S. recovery in 2013.
Zions Bank provides the CAI as a free resource to the communities of Utah. The monthly CAI summary reports are released at a monthly press conference, coinciding with The Conference Boards national CCI release date. The reports are available online at www.zionsbank.com/cai. Analysis and data collection for the CAI are done by The Cicero Group/Dan Jones & Associates, a premier market research firm based in Salt Lake City. The January CAI will be released during a press conference at a local business at 10:30 a.m. on January 29, 2013.