Q3 Arizona Business Index Released, Consumer Confidence Drops

The Greater Phoenix Chamber recently released the Q3 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.

“We are pleased to see job satisfaction improving as Arizona continues to rebound from the pandemic,” said Todd Sanders, president and CEO, Greater Phoenix Chamber. “However, we are also seeing a decrease in consumer confidence as COVID cases spike, showcasing a correlation between the two. Both the housing and automobile indices are seeing consecutive drops in consumer confidence with growing uncertainty in the market. We will be monitoring these trends to see how reported perception matches with economists’ predictions that the housing market will continue to thrive.”

Key Highlights on all categories are below:

Consumer Confidence

• Arizonans’ confidence continued its steady decrease after its Q2 2021 peak. Despite the decrease, Arizonans are considerably more confident now than they were at this point last year.
• Arizona current consumer sentiment remains lower than the nation as a whole.
• There is a strong relationship between consumer confidence in Arizona and the spike in COVID-19 cases. Despite the surge in cases due to the Delta variant, consumer confidence did not return to its early pandemic levels.

Housing Index

• Housing Index dropped more than 20 points in September – the third 20-plus-point drop in the past 12 months – leading to a new monthly low.
• Compared to September 2020, September 2021’s Housing Index decreased by 49.5 points.
• Only 31% believe now is a good time to buy a new home, compared to 49% who think it’s a bad time.

Automobile Index

• The Arizona Automobile Index in Q3 was 136.4, a 5.43-point decrease from last quarter. September’s value of 124.6 was the index’s lowest month since January 2021.
• After two consecutive months of positive growth, the Automobile Index fell more than 20 points in September, wiping out the gains from July and August.
• 34% believe now is a good time to buy a car.

Economic Optimism

• The Economic Optimism Index decreased by almost 5 points between Q2 and Q3, resulting in new quarterly and monthly lows.
• 83% believe prices will rise and 67% expect interest rates to rise.
• Through 2020 and 2021, pluralities of Arizonans have been reluctant to predict that the stock market will rise.
• However, since the beginning of the pandemic, Arizonans have become less pessimistic. The decrease in pessimism hasn’t been paired with an increase in optimism – rather an increase in the share of Arizonans expecting the stock market to remain the same.

Job Satisfaction

• Job satisfaction increased by 12.19 points compared to last quarter.
• 81% of consumers were satisfied with their job and 84% felt more secure.

COVID-19/Vaccine Concerns

• After a spring and summer of optimism regarding the pandemic, pessimism has returned to the state as it experienced a new wave of COVID-19, driven by the Delta Variant.
• As cases began to decline in September 2021, pessimism gradually decreased.

“In the steady decline of consumer confidence throughout Q3, the ABI™ found that current and future confidence go hand-in-hand – very few people are optimistic about one but pessimistic about the other,” said Mike Noble, OHPI Chief of Research. “We were interested in understanding which groups are driving above/below average current and future confidence, and learned that postgraduates, Democrats, and consumers with a household income over $100k are leading above average future and current confidence; meanwhile, 55-64-year-olds, Rural dwellers, and consumers with a household income less than $50k are driving below average confidence.”

Methodology: The survey was completed by OH Predictive Insights from July 7 to September 26, 2021, from an Arizona general population. The data applied post-stratification on age, gender, region, ethnicity and education level that reflects latest Census data. The sample size was 1,800 completed surveys, with a MOE of ± 2.31%.