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SALT LAKE CITY — The looming “fiscal cliff” has many Utah consumers unsure about where the economy is heading, according to a new report.
The Zions Bank Consumer Attitude Index for Utah increased by 1.4 points to 77.3 in December, compared with a national decrease of 6.4 points to 65.1. The overall Consumer Attitude Index remained largely unchanged from November to December, with the two indexes that make up the measurement — the Present Situation Index and the Expectations Index — varying greatly.
The Present Situation Index increased significantly, rising 17.2 points — fueled by strong continuous improvements in leading economic indicators, particularly within the housing and labor markets, the report stated. In contrast, the Expectations Index fell 9.1 points due to growing consumer uncertainty over the looming fiscal cliff.
“The elephant in the room is the fiscal crisis,” said Zions Bank economic adviser Randy Shumway. “Either we increase revenues, decrease spending or we do a little bit of both.”
Shumway said the fiscal crisis could be resolved if Congress can develop a plan to increase revenue that will not stifle economic growth.
The elephant in the room is the fiscal crisis. Either we increase revenues, decrease spending or we do a little bit of both.
–Randy Shumway, Zions Bank economic adviser
The report stated that Utahns are not enthusiastic about the federal government's ability to improve the economy. Only 9 percent think the federal government is doing a good job deciding economic policy, while 59 percent think it is doing a poor job, a news release stated.
On the positive side, Shumway said, Utah's jobless rate of 5.1 percent is at the lowest level since the start of the recession in 2007. In addition, home prices are up 11 percent year over year, he said, and foreclosures have dropped 36 percent — all of which potentially bodes well for the state's economy going forward.
“Unemployment is low, we are one of the fastest growing metropolitan areas in the world (with) a diversified economy, and inflation is consistent,” Shumway said. “Everything is pointing toward a nice recovery in 2013.”
The Zions Bank Consumer Attitude Index is based on a representative sample of 500 Utah households. The monthly survey is conducted by The Cicero Group/Dan Jones & Associates and has a confidence interval of plus or minus 4.4 percent at a 95 percent confidence level. The Utah Consumer Attitude Index data is compared with both Utah data and U.S. data from previous months to identify key consumer sentiment trends in the state.