October 30, 2013

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Article

Utah’s Consumer Confidence Shaken after Government Shutdown

By Rachel Madison

October 30, 2013

The impact of the federal government shutdown on local consumer confidence— specifically in the tourism sector—was detrimental to Utah during October.

According to the most recent results of the Zions Bank Utah Consumer Attitude Index, the index decreased by 14.6 points to 78.1 from September to October. This decline is the sharpest drop ever recorded since the Consumer Attitude Index’s inception in January 2011.

The Utah Consumer Attitude Index corresponds to the national Consumer Confidence Index, which dropped nine points from September to October and now sits at 71.2. Those who think business conditions in their area are bad increased from 9 percent to 14 percent, and those who think jobs in their area are plentiful decreased from 22 percent to 17 percent across the nation.

Although Utah’s Consumer Attitude Index suffered a significant drop, Randy Shumway, CEO of The Cicero Group and economic adviser to Zions Bank, said Utahns are still more confident than the rest of the country.

“We’re still confident about home appreciation and 401(k) appreciation,” he said. “We actually increased our confidence in the state government. Unemployment holds steady (4.6 percent) and we are still well below the national average.”

In September, the Utah index experienced its highest point in the history of the index, “which bodes well for what we can expect from the economy in the future,” Shumway said, adding that the precipitous drop in the index occurred solely because of the government shutdown.

One area in Utah that was drastically affected during the shutdown was the tourism industry. Utah is home to five national parks—all of which were closed during the 10-day shutdown.

“We had 10 hard days, but we were very fortunate that we got things back on track very quickly ahead of every other state [when Gov. Gary Herbert used state monies to reopen the parks],” said Vicki Varela, managing director of the Utah Office of Tourism. “That’s a silver lining. We took what could have been a major detriment to our rural economy and reduced the impact to about $30 million.”

Varela said Utah was on track to have record numbers in terms of visitors and revenue this year, but the shutdown, and loss of a potential $30 million in revenue, may have prevented the state from reaching those numbers. To help get the state back on track, the governor’s office has created a new campaign called The Mighty 5, which invites Utah residents to visit all five of Utah’s national parks and post their experiences on social media. A companion commercial has also been created and is being shown in other states and countries to get travelers to visit Utah’s parks.

Overall, Shumway said while October’s index was disappointing, Utah continues to be one of the fastest growing and most diverse economies in the country.

“This not only means we’ll continue to grow, but that we have sustainability that will allow us to grow for years to come,” he said.

Both the local and national indices gauge the degree of optimism for the economy that consumers are expressing through their spending activities. National comparison enables consumers, businesses and policymakers to identify key economic trends in Utah. The state’s index is tabulated by The Cicero Group and Dan Jones & Associates, and is released monthly by Zions Bank as a community service to Utahns.

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