Consumer Sentiment twice as strong as Q1, Housing dips slightly and Automobile Index reaches 12-month high
The Greater Phoenix Chamber recently released the Q2 Arizona Business Index™ (ABI™), powered by OH Predictive Insights (OHPI). The study measures and interprets the health of the Arizona economy from the perspective of the Arizona consumer.
“It’s encouraging to see a growing consumer sentiment and economic optimism,” said Todd Sanders, president and CEO, Greater Phoenix Chamber. “Both Arizona and national future confidence share the same trajectory. With a 10.5% increase from Q1 in optimism about business conditions in the year ahead, I am confident in Arizona’s economic recovery. We believe Arizona is positioned to rebound well from the pandemic.”
Key Highlights on all categories are below:
- Growing Confidence in 2021 Q2
- ABI-CS increased by 2.81 points from 2020 Q4 to 2021 Q1 but increased by 7.40 points from Q1 to Q2 2021. This point increase was more than double in the last quarter.
- April 2021 saw the ABI-CS future index reach its 12-month high at 96.6 points.
- Consumers are more optimistic about the business condition in the next five years
- Q2 saw a 10.5 percentage point growth over Q1 in optimism about business conditions in the year ahead
- The share of people expecting good business conditions for the next 5 years increased 3.9 percentage points from Q1 to Q2
- Gen X’s confidence grew the most out of all generational groups. Though Gen X saw the largest quarterly increase, Gen Z is still the most confident generation, overall (91.3 in Q2).
- Consumers in the US as a whole are more optimistic about their current situation than they are in Arizona
- Even though the US and Arizona trended in similar directions since February 2021, they split in June 2021, with current national sentiment increasing by 1.2 points while sentiment in Arizona decreased by 2.9 points.
- Even though more consumers think it’s a bad time to purchase a home, there was an increase in consumer intent to purchase a new home.
- The housing index reached a new 6-month low in June (119.6 points).
- Changes in housing confidence varies sharply by age. The confidence of consumers under 54 years old increased over the past 12 months while confidence among consumers aged 65+ decreased by 74.2 points since October 2020.
- Urban residents are most confident in the current housing market. 42% of Urban residents consider now a good time to purchase a new home while one-third or less of residents living in suburban and rural areas thought it was a good time to buy a new home.
- The Arizona Automobile Index reached a new 12-month high in April and new quarterly high in Q2.
- Consumers who suggested they will purchase a new vehicle say price and comfort are key factors in their purchase decision. Gas mileage was important to 51% of low-income consumers and 58% of mid-income consumers.
- 5% more consumers expect interest rates to rise, compared to Q1.
- In June, 78% of consumers are expecting prices to rise and 63% are expecting interest rates to rise. This represents a new 12-month high for both measures.
- Conservatives, Silent/Boomers, and Republicans are the least optimistic about the economy. Republican economic confidence dropped to 65.2 points after November 2020 and hit a 12-month low of 59.3 points in May.
- More consumers were less satisfied with their job and felt more insecure.
Credit Card Debt Index
- Credit card debt index dropped 1.53 points in the last quarter, hitting a new 12-month low in April at 96.6 points.
- 3% more consumers were expecting their credit card debt to increase in Q2 as compared to Q1, but there was still a significant difference this quarter in those expecting debt to decrease versus increase (30% decrease-10% increase).
- Consumers in Arizona are more optimistic about COVID-19 in Q2. A net of 6% more consumers felt the situation will be better in the next 30 days.
- Going to a restaurant has become the most popular activity in Q2 with 47% of consumers feeling comfortable. Only 34% said this in Q1.
“As Arizona continues to emerge from the pandemic, leaders and decision makers in the business community would be wise to pay close attention to the movement of the perceptions, expectations, and key factors in purchasing decisions of Arizonans,” said Mike Noble, OHPI Chief of Research.
For information on how to obtain access to the Arizona Business Index, visit phoenixchamber.com/abi.