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Arizona Consumer Confidence Rising

In January, consumer confidence in Arizona rose to its highest level (62.8) since May 2008 (73.4) and planned consumer spending is up in three of five consumer durable goods categories.  The latest poll by the Behavior Research Center, Inc., found renewed confidence regarding consumer assessment of the current economic situation.  More consumers seem to believer the economy will grow in the coming six months. Thus the Expectations Index rose to 85.5 in January from 77.0 in October and only 65.8 last July.

Consumers under 35 years of age appear to be leading the charge both in regard to confidence in the economy and planned purchasing. Consumers over 54 years of age remain pessimistic. This is the second quarter in a row where the Confidence Index has risen in Arizona and may reflect a stronger level of optimism here than is being seen nationally where the Index fell to 53.3 in December but has now started to rise to its current level of 60.6, only 2.8 points behind Arizona.

The rise in the Arizona Consumer Confidence Index to 62.8 in January compares to only 56.3 in October of 2010 and 49.1 last July. Heightened optimism is concentrated in Arizona urban areas but is not yet evident in the rural counties where strong concerns about the job market remain. Optimism is particularly strong in Pima county where the Index spiked to 74.0 in January from 54.1 in October.

The rise in consumer confidence also reflects itself in more robust levels of planned buying of durable consumer goods in three of the five categories tested: new car and truck buying, purchase of new household furnishings and new electronic entertainment or computer equipment. Plans for home remodeling and purchase of major kitchen appliances, both of which rose in October, are now softer, indicating a lower probability of planned buying in those categories.

Most noticeable in this survey is a decrease in the proportion of consumers who define current economic and job environment in negative terms. For example, the proportion who call current business conditions as “bad” softened from 43 percent in October to 38 percent today. Similarly, those saying that “jobs are hard to get” softened to 55 percent from 62 percent in October.

Looking forward, Arizona consumers are more optimistic than at any time in the recent past with the Expectations Index rising in January to 85.5 from 77.0 in October. This January reading is the highest since September of 2009 when it registered 87.1.

Consumers in Arizona rural counties do not show the optimism of their urban cousins. Thus, the Consumer Confidence Index in rural Arizona down-shifted to 54.6 in January compared to 59.1 in October. The major forces pulling the rural readings downward are continued deep pessimism about current business conditions and worries about a worsening job market in the coming six months.

Dr. Dennis Hoffman, Director of the L. William Seidman Research Institute at the W. P. Carey School of Business at Arizona State University, commenting on the survey results said: “The latest figures from the Rocky Mountain Poll provide real evidence that the attitudes of Arizona consumers are improving – continuing a trend that was noted in the fall release. Some economists have likened this ‘great recession’ to a trip down to the bottom of the Grand Canyon. If so, these numbers suggest that the ascent is underway. Certainly we have some climbing to do, but history suggest that ascents in Arizona can take place rapidly.

“Reinforcing the poll’s sentiment numbers is evidence from November retail sales that was released just this week. The significant uptick in consumer purchases in November, predicted in the Rocky Mountain Poll taken early last fall, was very evident in the numbers, with purchases of durables and discretionary items up nicely.

“It is increasingly clear,” Dr. Hoffman added, “that the Rocky Mountain Poll provides a clear indication of Arizona consumer sentiment and subsequent consumer behavior. So expect retail activity to ‘heat up’ along with our daily temperatures this spring.”

Source:RESEARCH IN PUBLIC OPINION, PUBLIC POLICY & CONSUMER BEHAVIOR www.brcpolls.com  p.o. box 13178 • phoenix, arizona 85002

EDITOR’S NOTE: This Rocky Mountain Poll – Arizona (2011-I-01), is based on 700 interviews with adult heads of household statewide, conducted between January 22 and 27, 2011. Interviewing was conducted in both English and Spanish by professional interviewers of the Behavior Research Center on both landlines and cell phones. Where necessary, figures for age, sex, race and political party were weighted to bring them into line with their actual proportion in the population. In a sample of this size, one can say with a 95 percent certainty that the results have a statistical precision of plus or minus 3.8 percent of what they would have been had the entire adult population been surveyed. The Rocky Mountain Poll is conducted by the Behavior Research Center of Arizona and is an independent and non-partisan research program sponsored by the Center.

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