SALT LAKE CITY -- In June, on a seasonally adjusted basis, the Zions Bank Utah Consumer Attitude Index fell to 66.3, a decrease of 4.4 points compared to May 2011. The national Consumer Confidence Index, as reported by The Conference Board, showed a decrease of 3.2 points to 58.5. An index of 70 or below is indicative of slow economic growth.
Consumer optimism in Utah fell for the third straight month as higher prices consumed larger portions of household budgets. The CAI's Present Situation Index, a snapshot of current business conditions and employment, decreased 7 points to 39.9, the largest single-month drop year-to-date. The national CCI Present Situation Index decreased 1.7 points to 37.6. The Expectations Index for six months from now, which more closely projects the direction of consumer spending, fell to 83.9 in Utah, a 2.6-point decrease from May. The national CCI Expectations Index decreased 4.3 points to 72.4.
While gasoline prices have dropped from the highest levels since July 2008, consumer budgets in Utah are still facing higher costs for other goods and services. Rising prices have shaken consumer attitudes, giving further weight to economic uncertainty. In June, only 21 percent of consumers rated current business conditions in their area as "good," compared to 26 percent in May. Moreover, only 23 percent of consumers believe business conditions six months from now will be "better," compared to 31 percent in May.
In Utah, higher fuel costs are leading the state's price increases, but some consumers believe that trend may be ending. In February, as inflation began to rise, 90 percent of Utahns believed the price of fuel would go up during the next 12 months. Four months later, in June, that figure has dropped to 68 percent. If consumers receive a large enough break in the price of gasoline, consumer attitudes may begin to trend upwards.
Inflation has risen in Utah for four consecutive months, and the majority of Utahns (80 percent) foresee that trend continuing for the next 12 months. When asked, 58 percent of consumers responded that their household income would be unlikely to keep up with the rate of inflation in the next two years. Three out of five consumers (56 percent) believe interest rates will rise during the next 12 months.
Although consumer attitudes have decreased in the month of June, the state unemployment rate has fallen to 7.3 percent, 1.8 points lower than the national unemployment rate of 9.1. As a result, many Utahns feel confident in their job stability. Sixty-two percent of consumers (64 percent in May) believe it is unlikely that they will lose their job in the next two years.
Utah consumers' appraisal of both the state and federal government decreased negatively in June. Thirty-nine percent of consumers (41 percent in May) believe the federal government is doing a fair/good job, while 77 percent of consumers have the same assessment of the Utah state government.