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SALT LAKE CITY — Utah consumers are a little less optimistic about the economic fortunes of the state in the coming months, a new survey indicates.
After reaching an all-time high in March, the Zions Bank Utah Consumer Attitude Index lost 3.4 points to register at 110.7 in May — the lowest level since July 2016. It marked the second consecutive month of decline. Comparatively, the national Consumer Confidence Index gained 2.4 points to register at 128.0 for the month, which was 10.1 points higher than the same time last year.
Analysts attribute the decline in the overall index largely to dips in Utahns’ confidence about the future of the state's economy.
"When we asked Utah consumers what kinds of things affected their optimism for the future, they said housing and house prices were pretty high on the list," explained Chad Berbert, principal with Cicero Group.
With the cost of housing on a precipitous rise, he said consumers' concerns about housing affordability is part of what is driving their worries about the future of the economy, he said. Concerns about possible increases in interest rates are also part of the concern equation, he added.
The Utah Future Expectations index dropped 4.6 points to 103.4 from the previous month — a year-over-year decline of 2.9 points, Berbert said. Compared to three months ago, fewer Utahns feel that the job market and household incomes will continue to increase over the next six to 12 months, he said.
While Utahns’ are feeling less confident about the future economy, most feel that current conditions remain quite positive and that jobs in the state remain plentiful, he said. The positive sentiment is consistent with Utah’s unemployment rate of 3.1, which is at a 10-year low and is at or below what economists believe is typical “full employment” level, he said.
The overall index is based on a representative sample of 500 Utah households surveyed monthly by Cicero Group — with a 95 percent confidence level with a variance of plus or minus 4.38 percent. The results are compared to both Utah data and national data from previous months to identify key statewide consumer sentiment trends.
Despite the lost optimism, Berbert noted the index is still above the "magic 110.0 number" that indicates an economy that is operating at peak performance.
"If we see three straight months of (declines), then that will be an indication that we've hit an inflection point," he said. That turning point could be the signal of significantly changing consumer attitudes.
However, if attitudes improve in the next month, then the two-month decline could just be considered an aberrational period, he said. The month of June could be a key period in the state's economic future.
A couple of other factors impacting Utahns’ perception of the future are increasing gasoline prices, along with the aforementioned rising home prices, Berbert said. Even after record increases in the price of gasoline, 69 percent of Utahns still believe gas prices will increase in the next 12 months, he said. Similarly, 80 percent of Utahns believe the prices of homes will increase in the next 12 months, he added.
“Increasing prices for gas and housing impact Utahns’ expectations. The key factor that tends to counter these perceptions is wage growth. If Utahns see their wages increasing above inflation, then their perceptions will improve," said Randy Shumway, chairman and partner at Cicero Group.
"Over the past year, we have seen strong job and wage growth and this was more apparent than price increases. Now things have reversed. Housing and gas price increases are front page news and are hitting Utahns’ pocketbooks in real ways. This is starting to affect how Utahns see the overall economy.” Email: jlee@deseretnews.com Twitter: JasenLee1
