Arizona consumer confidence fell as virus surged at end of 2020

PHOENIX – Consumer confidence in Arizona’s economy was down toward the end of 2020 as the COVID-19 pandemic surged, according to the Greater Phoenix Chamber’s Arizona Business Index.

The ABI, run by Phoenix-based research firm OH Predictive Insights, is designed to measure the state’s economic health based on consumer perception.

“The fourth-quarter ABI data shows that consumers were less optimistic about the pandemic, and we will be closely monitoring that sentiment as we continue the vaccine rollout over the coming months,” Todd Sanders, president and CEO of the Greater Phoenix Chamber, said in a press release Monday.

The Arizona Business Index, which was launched in March 2020 and gets updated quarterly, was modeled after the University of Michigan Consumer Sentiment Index, which measures national consumer confidence.

The ABI and MCSI both trended downward in October and November. The national index, however, showed confidence improving in December, but it kept going down in Arizona as the state became a coronavirus hot spot.

“We will be closely monitoring the split we saw between the ABI-CS and the MCSI in December over the next quarter to determine if this is a trend, or an outlier based on the number of COVID-19 cases in Arizona,” Mike Noble, chief of research and managing partner for OH Predictive Insights, said in the release.

Here is how the fourth-quarter Arizona index compared to the Q3 report in certain areas:

• The percentage of people who thought their financial condition was worse now than it was a year ago dropped from 28% to 18%.
• The percentage who thought future business conditions would improve in the next 12 months fell from 30% to 23%.
• Job satisfaction dropped from 40% to 34%, although job security remained the same.
• A larger percentage of people expected the COVID-19 pandemic to get worse over the next 30 days (from 38% to 53%), and a smaller percentage expected it to get better (31% to 21%).

Despite the negative confidence trends, people were actually more willing to take part in activities associated with an elevated risk of contracting and spreading the virus.

The percentages of people who were avoiding public gatherings (from 87% to 83%) and restaurants (from 72% to 66%) and canceling travel plans (75% to 72%) all dropped during the fourth quarter.

“Assuming that people are following recommended safety precautions, this is positive news for the local economy,” Sanders said.

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