Rising fuel prices affect Utah consumer attitudes

Rising fuel prices affect Utah consumer attitudes

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SALT LAKE CITY — After a couple of months of positive growth, Utah consumers were a bit more suspicious, economically speaking, during the month of April.

The Zions Bank Utah Consumer Attitude Index fell 8.8 points to register at 105.6 in April. However, consumers gauge the current employment outlook as strong and a high percentage of Utahns consider business conditions in their area as either good or normal, the report states.

The Utah consumer index currently sits 2.7 points higher than its level at the same time last year. Meanwhile, the national Consumer Confidence Index declined 6.2 points from March to April to register at 95.2 for the current period.

Prices at the gas pump continue to be at the forefront of consumers’ minds, with 86 percent of Utahns expecting gasoline prices to increase over the next 12 months, explained Zions Bank economic adviser Randy Shumway during the monthly news conference in Sugar House.

“The economy is moving forward. Remember that gas prices are cyclical, going up at the beginning of the year until around Memorial Day,” he said. “They remain constant throughout the summer, then they start receding after Labor Day.”

Refineries usually include additives to their fuels in the warm weather months to meet environmental requirements, which is part of the cause of the cost increase, Shumway explained.

He also noted that the U.S. is becoming increasingly oil-independent, with the country producing over 80 percent of its fuel petroleum, which should bode well in the long term as far as gasoline prices go. For now, gas costs are exhibiting their typical price cycle, he added.

The report showed that the Present Situation Index, the measure of how consumers feel about current economic conditions, registered at 109.1 points — down 6.8 points from last month. But Shumway said that optimism is still relatively high based on the overall strength of the Utah economy.

Consumer Attitude Index (Photo: Aaron Thorup)
Consumer Attitude Index (Photo: Aaron Thorup)

“We are not just the fastest growing economy, we’re (also) the fourth most diversified economy,” he said. “Diversification creates stability.”

Data for the index are compiled based on a monthly survey conducted by Cicero Group at a confidence interval of plus or minus 4.38 percent at a 95 percent confidence level using a representative sample of 500 Utah households. The monthly data are compared with both Utah and national data from previous months to identify key consumer sentiment trends.

Nationally, consumer confidence fell significantly in April, due mostly to a declining optimism on the employment front, said Chris Christopher, director of consumer economics for IHS Global Insight — a market analytics firm based in Englewood, Colorado.

“The overall confidence levels for job prospects soured considerably, indicating the consumer mood is still in a fragile state,” he said. “Since the beginning of the year, consumer confidence has been alternating in an up and down pattern. However, consumer confidence is currently more than 16 percent higher than April of last year, indicating that many households are enjoying lower gasoline prices.”

On a positive note, declines in gas prices and finance charges have lowered the cost of car ownership, a new report states.

According to AAA’s 2015 “Your Driving Costs” study, the yearly cost to own and operate a vehicle has fallen almost 2 percent from 2014 to $8,698.

“Fortunately, reduced gasoline and finance costs more than offset rising costs in other areas,” said AAA Utah spokeswoman Rolayne Fairclough. “As a result, car owners can look forward to saving approximately $178 this year.”

The study examined the annual cost of fuel, maintenance, tires, insurance, license and registration fees, taxes, depreciation, and finance charges associated with driving a typical sedan 15,000 miles a year. In the U.S., a driver can expect to spend 58 cents for each mile they drive — nearly $725 per month — to cover the fixed and variable costs associated with owning and operating a car in 2015, the report states.

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Jasen Lee

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