Arkansans plan to save more, spend less with conservative outlook

The majority of Arkansas consumers in the recent Arvest Consumer Sentiment poll (65%) indicated they have not made a major household purchase in the past six months. And while reported savings rates of 9.5% on average are below those in neighboring Oklahoma and Missouri, Arkansas had the highest number (23%) who wanted to save more in the back half of this year.

If that holds true retail and restaurant sales could further stagnate. Major household purchases are defined as as furniture, a television, refrigerator or other large items. In neighboring Oklahoma and Missouri those not making large purchases totaled 57% and 62%, respectively.

Arkansas is a conservative state and that sentiment was also evident in the debt levels reported in the Arvest survey completed in June and July. Mortgage debt was reported by 37% of Arkansas respondents, 30% have auto loans, 11% have student loan debt and one in three survey respondent reported no debt. None of the 392 responses listed a home equity line or credit cards.

Debt levels were in line with those reported by survey respondents in Missouri with 38% having a mortgage, followed by credit card debt at 30% and student loans and home equity debt, both reported at 8%. More than a third of respondents (35%) reported having no debt.

Among Oklahoma respondents, 37% have a mortgage, 32% have auto loans, 31% have credit card debt and 12% have student loans, while 32% reported no debt.

“What is so interesting to see in this set of data are the consistent numbers across the region and within each of the states. We’ve seen that incomes, debt loads, spending and expectations are all about the same across the region. The majority of consumers in Arkansas, Missouri and Oklahoma really do not see their economic situations changing in any significant way over the foreseeable future. That tells us that the economic recovery being reported in other areas of the country has not yet made it to our region’s working families in a measurable way,” said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas and lead economist for the survey.

The respondents across the board report saving money between 7.4% for Arkansas families earning under $75,000 to 15.2% for families with income over $75,000. This savings mentality is positive long-term, but in the short run it’s a sign of less confidence among consumers who still have concerns about stagnant wage growth and the rising cost of health care and other household expenditures.

Deck said the initial readings indicate that consumers in the region, and especially in Arkansas, are “leery” about overall economic conditions in the near future, although they reported being relatively upbeat about their current financial status.

“The consumer sentiment numbers (released in July) seem consistent with the contradictory nature of other economic data for the state, particularly the declining labor force in the face of improving payroll employment,” she added.

The first data set showed optimistic sentiment across the state was directly linked to educational and economic levels. The higher the education and income, the more optimistic the sentiment. The buying condition index reported in August also found Arkansas more conservative than their neighbors in Oklahoma and Missouri.

Arvest said it modeled the survey after the University of Michigan consumer sentiment poll which is a broad predictor of consumer spending and savings patterns important for lenders and businesses to gauge.

“We are so pleased that the first survey has generated measureable results — an economic snapshot, if you will — of our states that can be used to measure the changes in consumer attitudes and opinions as we move forward,” said Clay Nickel, director of investment strategy with Arvest Asset Management.

Arvest conducts the survey’s twice annually and compiles three separate data sets. This is the third and final report from the June and July surveys. The first two data releases indicated Arkansas respondents were more cautious than those surveyed in Oklahoma and Missouri. These results were part of the Consumer Sentiment Index first released in July by Arvest Bank and in the second installment in August.

The next survey is expected to be completed in November.