Although the Zions Bank CAI remained flat, substantial change in the two indices that compose the CAI indicate consumers are more optimistic about the future. The Zions Bank Present Situation Index — an assessment of confidence in current business and employment conditions — decreased 6.6 points to 88.7, while the Zions Bank Expectations Index — an estimate of consumer confidence in the economy six months from now — increased 4.6 points from December to January and now sits at 101.2. When the Expectations Index moves substantially higher than the Present Situation Index, consumers are planning to spend more in the coming months and likewise expect the economy to improve. The 12.4-point difference between the two indices is the largest difference since June 2013.
For each of the past three years, the Present Situation Index has moved lower and the Expectations Index has moved higher or been unchanged following the holiday spending season. This is likely because consumer spending is highest in the holiday season, causing some consumers spending fatigue and making them hesitant to say current economic conditions are extremely positive. Concurrently, consumers are less apt to make major purchases following the holiday spending season: the percentage of Utahns likely to make a major purchase such as a stove or refrigerator in the next six months declined from 26 percent in December to 23 percent in January.
In the coming months, consumers in Utah most expect to see improvement in the labor market and with regard to personal earnings. Thirty-four percent of Utahns expect more jobs to be available six months from now, up nearly 10 percentage points month-over-month, and 31 percent expect their household income to be higher six months from now than it currently is, up from 26 percent in December. In addition, more Utahns are expecting improvement in their 401(k)s. Thirty-eight percent, up from 35 percent in December, believe $1,000 invested in their 401k is likely to be worth more than $1,000 in one year.
Gasoline prices have started to creep higher over the past few weeks, and this likely prevented the CAI from moving higher this month as gasoline prices and consumer attitudes tend to be inversely related. The percentage of Utahns expecting gasoline prices to move higher over the next year remained above 70 percent in January, and the percentage of Utahns expecting gasoline prices to drop decreased from eight percent in December to six percent in January. Those who expect gasoline prices to move higher believe prices will rise about $0.44 per gallon.
“Consumer attitudes remained high this month following a strong holiday spending season,” said Scott Anderson, president and CEO of Zions Bank. “While the Present Situation Index showed us that some consumers became slightly less optimistic about the current economic situation, the Expectations Index shows that consumers still have confidence in the trajectory of our economy.”
The unemployment rate for Washington County decreased 0.6 percentage points to 4.1 percent in November, according to the U.S. Bureau of Labor Statistics. Washington County’s unemployment rate rests below the state average of 4.3 percent and well below the national average of seven percent measured in the same period. The most recent report from RealtyTrac® shows that approximately 16 in every 10,000 homes were in foreclosure in Washington County in December, an increase from five out of every 10,000 homes one month prior.
The unemployment rate in Iron County fell one percentage point to 4.3 in November, according to the Bureau of Labor Statistics. In the same report by RealtyTrac®, approximately eight in every 10,000 homes were in foreclosure in Iron County in December, an increase from seven in every 10,000 one month prior.
Speakers at the 2014 Washington County Economic Summit revealed the region’s strong growth over the past year and made promising forecasts about economic growth in 2014. Lecia Langston, a regional economist with the Utah Department of Workforce Services, stated that the Washington County has experienced job growth between five and six percent over the last two years—significantly higher than the average growth experienced across the state in the same time period. St. George Mayor Jon Pike believes that the city will experience strong growth in the future as new businesses build on the available land close to the Southern Parkway and I-15. Pike referred to thousands of acres that could support residential, commercial and industrial developments, and suggested that these developments could potentially double St. George’s current size.