Arkansans Are Buying, Paying Down Debt

Optimistic Arkansas consumers are cautiously restructuring debt, paying bills and making large purchases as low gas prices and interest rates free up portions of their budgets.

That is one of the more noticeable findings from the third installment of the Spring 2015 Arvest Consumer Sentiment Survey released June 23. This installment is the final piece of the survey, conducted in March, and focuses on consumers’ attitudes concerning spending, saving and debt.

The number of Arkansas respondents who said they made a major household purchase in the past six months went up 5 points in March to 39 percent compared with the October survey results. Major household purchases include items such as furniture, televisions and refrigerators. Missouri, including Greater Kansas City, reported an increase from 35 percent to 39 percent in those who made major purchases in the past six months, while Oklahoma was the only state that reported a drop (38 percent to 35 percent) in this category.

“Arkansans know that this is a good time to spend,” 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. “Low gas prices, low interest rates and slightly higher incomes pushed the buying conditions index all the way to 131.0. Those same conditions mean that Arkansans can also pay down some existing debt or increase their personal savings rates without sacrificing too much in the short term.”

“Our customers have made more major purchases in areas like home improvement, autos and watercraft, while continuing to maintain their savings rate,” said Craig Rivaldo, president and CEO at Arvest Bank in Benton County. “We’re happy to help them achieve their goals — whatever they might be — by providing the planning and resources they need.”

In Arkansas, 24 percent said they intend to make a major household purchase in the next six months. Of those not planning to make a major purchase, 13 percent said they were waiting for the right time to buy. In Missouri, those percentages were 25 percent and 20 percent, respectively, while in Oklahoma they were 28 percent and 20 percent.

Arkansas respondents holding a current home mortgage rose three points to 34 percent in March from 31 percent October’s survey. Additionally, only 2 percent of Arkansans said they plan to get a home mortgage in the next six months.

The state’s household savings rate, meanwhile, decreased from 11.9 percent to 11.6 percent during that same period. While the percentage of those planning to increase their savings rate rose from 18 percent to 19 percent, the number of those planning to maintain their current rate went from 71 percent to 74 percent.

Arkansans’ consumer debt also fell below that of their neighbors in Missouri in mortgage and home equity (5 percent). A total of 42 percent of Missouri respondents reported mortgage debt, and another 9 percent reported home equity debt. Oklahomans reported 33 percent and 5 percent, respectively.

Arkansas reported its largest jump in consumer credit in the student debt category, with 27 percent reporting they had current student debt. In Missouri and Oklahoma, only 12 percent each reported they had student debt in the March survey.