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Sequester talk doesn’t dampen consumer sentiment in Upstate

By Kevin Tampone

Date:

Consumer confidence among upstate New Yorkers continued to lag behind the rest of the state and nation in February, although it rose from January, according to the latest index from the Siena Research Institute (SRI).

Upstate New York’s overall consumer-sentiment index rose 1.6 points to 69.9 in February, compared to the previous month. But it still lagged behind New York state’s 77.3 reading and the metro New York City area’s 82.4. The state’s index was up 2.8 points from January and the New York City area’s rose 4.4 points.

The indexes have a break-even point of 76, at which consumers express equal levels of optimism and pessimism.

The nation’s consumer-sentiment index for the month was 77.6, according to data from the University of Michigan. SRI, located at Siena College near Albany, surveyed 808 New York residents over age 18 to develop its sentiment indexes.

SRI’s overall index combines consumers’ current feelings and thoughts about the future. Upstate New Yorkers feel better about the current environment, with an index of 73.5, but are more pessimistic about the future, with an index of 67.6.

Both readings were higher than January’s, according to SRI.

Given all the recent negative talk about rising gas prices and the automatic federal budget cuts that took effect March 1, the sentiment indexes could have been much worse, says Douglas Lonnstrom, professor of statistics and finance at Siena College and SRI founding director.

“The stock market went up,” Lonnstrom notes. “The other big factor is home prices. There are signs the home market is starting to come back. That’s making people feel better.”

In fact, SRI found in its survey that 4.8 percent of respondents plan to buy a house in the next six months, up from 3.7 percent n February 2012. Even if consumers aren’t planning to buy or sell a home, recovering property values will help people underwater on their mortgages.

Plenty of homeowners continued to make payments during the downturn and avoided foreclosure in the hope that prices would eventually recover, Lonnstrom says.

Democrats and Republicans displayed some of the biggest disparities in sentiment level.

Democrats’ overall sentiment index for the month was 93.8, up eight points from January. Their future index of 95.8 was up 5.6 points and their current index of 90.6 rose 11.8 points.

Republicans on the other hand are feeling much worse about things. Their overall sentiment index was 58.7, up 1.5 points from January. Current sentiment among Republicans fell three points from January to 61.4 while future sentiment rose 4.3 points to 56.9.

Democrats displayed the highest sentiment level of any group survey by SRI in February while Republicans registered the lowest.

With a Democratic president in power, members of the party are hearing plenty of things they want, Lonnstrom says. President Barack Obama’s State of the Union address and inauguration speech likely contributed to the positive feelings among Democrats, he adds.

The gap between the two parties probably contributed some to the gulf between upstate New York and New York City as well, Lonnstrom says. The city is a Democratic bastion.

SRI also polled the state’s consumers on the effects of gas and food prices on their finances.

It found that 68 percent said their grocery bills were having either a very serious or somewhat serious effect on their finances, down from 71 percent in January, while 58 percent said the same about gas prices, up from 54 percent in January.

Half said both gas and food prices were having a serious or somewhat serious effect, up from 47 percent.

 

Contact Tampone at ktampone@cnybj.com

 

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