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Show Consumer spending in Utah slowed The July 1990 Utah Index of Consumer Sentiment (ICS) dipped for the second quarter in a row, indicating in-dicating possible slowing of future consumer spending, the State Tax Commission said today. Utah's ICSreflecting local sentiments sen-timents toward the U.S. economy as a wholepeaked at 89.1 during the first quarter of 1990, fell to 87.9 in the second quarter, and then slid to 86.1 in the third quarter. The report said the downward trend is in line with the U.S. downturn. That may portend slower consumer spending in future months, as recent statistical work by tax commission economists indicates in-dicates a significant correlation between be-tween Utah durable goods retail sales and the Index of Consumer Sentiment two quarters prior. Despite the index's decline, the index level still reflects moderate optimism. To put the downturn in perspective, perspec-tive, the third-quarter 86.1 reading was still higher than any reading in the third quarter between 1986 and 1988. The index continues to be about four points higher than last year and almost eight points above 1987 levels. Consistent with the Utah dip in consumer sentiment, the U.S. Index of Consumer Sentiment, a national survey by the University of Michigan employing the same questions, ques-tions, fell from 93.9 to 88.2 in July. Thus, the gap between the U.S. and Utah indices has narrowed to within two points for the first time in more than four years. The quarterly telephone poll by the University of Utah Survey Research Re-search Center questioned 411 randomly ran-domly selected Utah adults in July 1990. The survey was conducted for the tax commission with assistance from the State Office of Planning and Budget. The survey has an error rate of plus or minus five percent. The Utah survey evaluates two other areas: The Index of Consumer Expectations Expecta-tions (ICE), which predicts changes in the economy; and The Index of Current Conditions (ICC), which reflects consumer attitudes at-titudes toward current economic conditions. The indices use 1 966 when consumer con-sumer confidence was highas their baseline year. When calculations are lower than 100, this indicates consumers are not as optimistic as they were in 1966. A significant change in the response to one question was probably prob-ably responsible for most of the decline in third quarter's ICS. In the second quarter of 1990, 76.1 percent per-cent of Utahns indicated it was a 4 'good" time to buy a large household appliance. This reading is the highest since the Utahns were first survived in January 1986 and has averaged about 65 over the past years. In the third quarter, the percentage of "good" responses dropped 13 points to 63.2, more indicative in-dicative of the average for the last three years. By combining three of the five questions that ask consumers about their future expectations, the Utah Index of Consumer Expectations (ICE) is formed. The Utah ICE, which rose from 73.2 in July 1989 to 79.4 in October, peaked at 80.9 in January 1990 and has receded slightly to 79.6 in July 1990. When asked if personal finances were expected to improve over the next 12 months, 36 percent of Utah consumers thought they would be better off next year, compared to 38 percent in January 1990. Those who felt Utah business conditions will improve in the next 12 months dipped back to 27.7 from the 33.7 percent from January. Results from the survey will be used in forecasting Utah's sales and use taxes, which comprise more than 87 percent of the state's General Gen-eral Fund revenues. A national variant of the ICE is used by the federal government to help drive its closely watched gauge of 'leading indicators. ' |