Arizona survey reports improved consumer confidence - East Valley Tribune: Business

Arizona survey reports improved consumer confidence

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Posted: Thursday, October 14, 2010 3:45 pm | Updated: 7:51 pm, Fri Oct 15, 2010.

It's been a long time coming.

But Arizonans are starting to feel better about the economy, according to the latest state consumer confidence index.

The uptick in the numbers, the first all year, is more than just an abstract set of statistics. It also reflects that an increasing number of Arizonans say they're definitely or likely to make a major purchase in the next six months.

And if that holds, the index becomes a self-fulfilling prophecy: The more people buy, the more people that retailers and manufacturers hire. And the more people hired - and spending money - further improves the economy.

The only question that remains is whether this is just a bubble or a real sign.

Pollster Earl de Berge noted that consumer confidence was up in September 2009 before sinking back again.

But this time, he thinks it's different. And that, de Berge said, is based on the fact that indicators across the board all are up, not just a few.

More of the 800 Arizona heads of household questioned for the survey think their current situation is better now than they did earlier this year.

And the number who believe things will be better for them six months from now is up sharply. That includes the fact that more people believe there will be more jobs available by next April than those who think the unemployment situation will get worse.

Dennis Hoffman of the W.P. Carey School of Business at Arizona State University, agreed that the latest numbers show things are going to get better. And he said the apparent optimism of Arizona consumers is going to lead the way.

"People aren't hiring now because they can't see orders coming in, they can't see people walking in their doors," Hoffman said. "I think it's very much psychological and very much confidence driven."

Hoffman figures there is "abundant cash and liquidity, at least for those gainfully employed," to spend. In fact, he estimated there is close to $10 billion of spending per year that could be taking place right now, based upon current employment and income.

"It's simply not taking place," he said.

He said people are hanging on to their money out of fear, whether of losing their jobs or the fact that their retirement accounts have taken a hit in the stock market.

Any improvement in confidence, he said, is key to recovery.

"I'm not saying we're going to go straight to the moon or anything like that," Hoffman said. "What we need is just a few months of positive news. And then it will begin to feed on itself a little bit."

One good sign in the latest survey, de Berge said, comes from a question he asked only those working in the private sector about what they hear or know about the plans of their own employer.

He said 36 percent said their companies appear to be growing strongly, with another 26 percent saying their firms are growing somewhat. Only 34 percent put their employers in the position of being either stagnant or struggling.

But de Berge said there's another side to that: Older Arizonans - those who are retired and not in personal touch with what is happening in the employment marketplace - are less confident about the future than the population in general. He said these retirees are "more dependent on what they hear in the media, which has been decidedly negative about the economy for quite some time."

That filtering of economic news, de Berge said, creates a disconnect.

"We've always felt that consumers were a better judge of what's happening in their own pocketbooks than economists or business editors," he said.

The survey of 800 adult heads of households, conducted earlier this month, has a 3.5 percentage point margin of error.

Consumer confidence index:

(1985 base = 100)

         
         
Date Statewide Maricopa Pima Rural
Jan-00 116.1 118.1 108.5 NA
Apr-00 116.3 117.5 111.2 NA
Jul-00 110.4 110.5 109.2 NA
Oct-00 114.5 115 112.7 NA
         
1-Jan 107.6 109.5 99.5 NA
1-Apr 101.4 101.5 100.9 NA
1-Jul 106.8 110.3 93.6 NA
1-Oct 95.1 96 91.2 NA
         
2-Jan 96.2 97.4 91.5 NA
2-Apr 100.4 102.3 93.8 NA
2-Jul 96.1 96.6 92.7 NA
2-Oct 82.3 85.5 76.2 NA
         
3-Jan 83.3 84.6 82.3 NA
1-Apr 86.5 86.6 83.1 NA
3-Jul 84.1 87.9 72 NA
3-Oct 91.8 93.9 88.5 NA
         
4-Jan 92.2 94.3 84.5 NA
4-Apr 90.1 89.3 91.7 NA
4-Jul 101.3 102.5 96.4 NA
4-Oct 96.5 103.2 93.5 79.7
         
5-Jan 100.6 107.9 91 89.4
5-Apr 93.1 99.9 87.8 80.8
5-Jul 100.3 106.5 88.1 94.1
5-Oct 98.1 101.5 94.2 91.3
         
6-Jan 110.4 117.8 102.5 94.8
6-May 102.4 108 92 94.1
6-Jul 102.7 109.3 101 86.5
6-Sep 105.3 109.2 104 96.4
         
7-Jan 106.3 111.5 102.7 91.5
7-Jul 101.9 106.6 96.2 91.2
         
8-Jan 79.8 88.7 65 68.8
8-May 73.4 82.6 61.1 58.2
         
9-Jan 44.2 44.1 48.7 39.9
9-Sep 60.2 58 66.9 60.7
         
10-Jan 50.2 52.2 48.6 46.7
10-Apr 49.6 56 42.6 38.3
10-Jul 49.1 52.8 41.6 43.5
10-Oct 56.3 55.7 54.1 59.1
         
         
         
         

Source: Behavior Research Center

People definitely or planning a purchase in next six months:

 
         
Type of item 10-Oct 10-Jul 10-Apr 10-Jan
         
New electronic entertainment or computer equipment over $500 19.40% 16.50% 15.20% 22.30%
         
Major home remodel/repair 17.30% 14.20% 15.00% 17.30%
         
New household furniture 16.90% 13.90% 13.80% 18.10%
         
Major kitchen appliance 14.20% 7.30% 8.50% 16.10%
         
New car or truck 11.80% 10.70% 10.20% 13.80%
         
         
         

Source: Behavior Research Center

Survey based on interviews with 800 adult head of households statewide between Oct. 1 and 10, in both English and Spanish. Margin of error 3.5 percent.

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