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Consumers are gaining confidence in the local economy now that summer is underway, specifically in the retail and outdoor recreation industries.
According to the most recent results of the Zions Bank Utah Consumer Attitude Index, the index increased by two points to 98.3 from May to June. This increase comes after a 6.6 point decline from April to May. The Utah Consumer Attitude Index corresponds to the national Consumer Confidence Index, which increased three points to 85.2 from May to June.
Aaron Andersen, director of the Cicero Group, which is responsible for compiling the Consumer Attitude Index for Zions Bank, said the slight increase in Utah’s index is primarily due to increased confidence in current economic conditions.
“Utahns are recognizing things are good in the state,” he said. “The percent of Utahns who believe economic conditions are good increased from 43 to 46 percent from May to June. The positivity from a year ago is now being realized. It’s a reflection of the fact that Utahns are seeing the kind of improvement they expected in the economy.”
Andersen said the national economy appears to be on an upward trajectory as well.
When it comes to retail sales activity in the state, Utah is very invested in its outdoor brand, Andersen said.
“The recreation economy is one of six key industries that drive Utah’s overall economy, amounting to about $5.8 billion annually,” he said. “Utah’s outdoor recreation generates 122,000 direct jobs, which translates to $3.6 billion in wages and salaries and contributes to $856 million in state and local tax revenue. Per capita, Utah has more recreation-related jobs than any other state in the nation.”
Jack Kirkham, owner of Kirkham’s Outdoor Products in Salt Lake City, spoke about how the state’s index is currently affecting his business, which has been in operation for 70 years and currently employs about 60 people. It specializes in manufacturing custom springbar tents and also sells outdoor products, such as camping and hiking gear.
“The demand [for our tents and other products] is outstripping supply, so we’re always chasing that,” he said. “There was a strong demand early on for tents this year.”
While Kirkham said retail overall is “a little on the flat side,” the manufacturing the company does — making its custom springbar tents onsite — is an offset.
“We’re seeing the effects of online competition and so forth, but the manufacturing is the offset to that,” he said. “There’s a strong demand for anything we make. This is our Christmas. From about June through mid-August is a better season for us than the holidays.”
Kirkham said another interesting trend he’s seen is that a lot of customers have an increased willingness to invest in higher-end camping products, specifically those with comfort in mind.
“There’s always going to be competition on how far the price can be driven down, but we’re seeing the attitude shifting toward making an investment in products they feel will last for a longer time,” he said. “Our tents are a good example. They are $600 to $700 tents, but we’re seeing the demand outstrip the supply.”
Andersen said this trend can be attributed to the state strongly coming out of the recession.
“During a recession period, people are more price conscious, so they’ll look for something that will just get the job done,” Andersen said. “As we emerge from the recession, consumers turn to longevity and quality. They’re a little less price sensitive because they have a little more disposable income.”
Anderson also reported on the Zions Bank Wasatch Front Consumer Price Index, which increased 0.7 percent from April to May on a non-seasonally adjusted basis. During the last 12 months, prices have increased in Utah by 1.9 percent. Nationally, prices have increased 2.1 percent over the last 12 months.
“What is driving the increase is transportation cost increases of 1.9 percent from April to May,” Andersen said. “That’s no surprise; this is [when we see a] seasonal increase in gasoline prices. We expect prices to remain steady over the next few months before declining as we head into fall and winter, pending any major geopolitical concerns.”
On average, Utahns paid $3.59 a gallon in May, up from $3.37 in April. The average in Utah is 3 cents lower than the national average.
Food-at-home prices also increased, up 1 percent from April to May due to dairy and produce prices. Andersen said produce prices grew substantially higher over the last few months due to difficult and adverse weather around the globe, particularly the drought in California.
“We can expect an increase of as much as 30 percent in water-dependent produce items, like lettuce and avocados,” he said.
The Utah Consumer Attitude Index compares to the national Consumer Confidence Index released the same day by the Conference Board. The indices gauge the degree of optimism for the economy that consumers are expressing through their activities of savings and spending. National comparison enables consumers, businesses and policymakers to identify key economic trends unique to Utah.