Arkansans Cautious About Adding New Debt

Fewer Arkansas consumers reported having existing mortgage debt, while the overall household savings rate in the state increased more than 2 percent according to findings from the third phase of the Fall 2014 Arvest Consumer Sentiment Survey released Tuesday.

This phase is the final piece of the survey, conducted in October, and focuses on consumers’ attitudes concerning spending, saving and debt.

Arkansas respondents holding a current home mortgage fell six points to 31 percent in October, according to the report, down from 37 percent in June’s survey. Additionally, only 3 percent of Arkansans said they plan to get a home mortgage in the next six months.

The state’s household savings rate, meanwhile, increased from 9.5 percent to 11.9 percent during that same period. While the percentage of those planning to increase their savings rate dropped from 23 percent to 18 percent, the number of those planning to maintain their current rate went from 67 percent to 71 percent.

“In Arkansas, there was a marked decline in the number of respondents indicating that they have existing mortgage debt,” said Kathy Deck, director of the Center for Business and Economic Research (CBER) in the Sam M. Walton College of Business at the University of Arkansas and lead economist for the survey. “When this response is combined with that of higher savings rates and the intent to maintain those savings rates, a reasonable interpretation is that Arkansans remain cautious and conservative about taking on new debt.”

Arkansans’ consumer debt also fell below that of their neighbors in Missouri and Oklahoma in two categories: mortgage and home equity (4 percent). A total of 36 percent of Missouri respondents reported mortgage debt, and another 8 percent reported home equity debt, while Oklahomans reported 34 percent and 6 percent, respectively.

Arkansas and Oklahoma also had 12 percent report student loan debt, while Missouri had 17 percent report the same.

In regard to spending, 36 percent of Arkansans surveyed said they have made a major household purchase in the last six months, down 3 three percent from June. That includes items like furniture, televisions and refrigerators. Missouri (38 percent to 35 percent) and Oklahoma (43 percent to 38 percent) also had drops in this category.

October’s survey results include the answers to four questions not included in the June survey due to incomplete data. Those questions included whether respondents planned to buy major household items in the next six months, and why they might wait to make those purchases.

In Arkansas, 26 percent said they intend to make a major household purchase in the next six months. Of those not planning to make a major purchase, 25 percent said they were waiting for the right time to buy. In Missouri, those percentages were 27 percent and 20 percent, respectively, while in Oklahoma they were 22 percent and 16 percent.

“Arkansas consumers seem to be serious about saving, which almost always is a good idea,” said Steve Burkhead, vice president and location manager at Arvest Asset Management in Washington County. “It also appears they are waiting to make major expenditures at a time that is best for them. We’re encouraged by that kind of forethought, and are ready and willing to help our customers plan their future financial path no matter what it might entail.”

The survey is conducted by the CBER, which also evaluates the Arkansas data, with the University of Oklahoma’s Public Opinion Learning Laboratory conducting 1,200 phone surveys.

The next survey is expected to be completed in May 2015. With each study, the Consumer Sentiment Survey Index score will be released first, followed by a second release on consumer outlook including the Current Conditions Index and the Consumer Expectations Index, which are sub-indexes of the Consumer Sentiment Survey Index. The third release will focus on spending, savings and debt expectations.

Arvest Bank’s sponsorship of this survey, which follows the model of the national Survey of Consumers produced by the University of Michigan, is due to its desire to provide beneficial data for its customers and communities. The data provides a reading of how consumers are feeling about the economy in the states where the bank operates. Additionally, with future results, consumers, as well as the business community, will be able to see how sentiment is trending.

The Bureau of Economic Research at Missouri State University provides state analysis of the Missouri data. The Steven C. Agee Economic Research & Policy Institute, Meinders School of Business at Oklahoma City University, evaluates the data for Oklahoma.

Information about the survey and research partners, copies of this release, summary documents and print-ready logos can be found at www.arvestconsumersurvey.com.