Arkansans remain cautious shows new economic sentiment report

Arkansas residents are more cautious as the year winds down about the state’s economy than they were earlier this year, according to the Arvest Consumer Sentiment Survey released Tuesday (Nov. 3).

The October consumer sentiment index for Arkansas is 77.8, down from 79.1 in March, but the recent number remains higher than previous surveys in October 2014 (68.1) and June 2014 (67.4), according to the Arvest report which is now conducted in the spring and fall.

Arkansans were also more cautious than their neighbors in Oklahoma and Missouri, according to the report. The consumer sentiment index pegged Missouri at a reading of 85.8 and Oklahoma at 85, compared to 77.8 in the Natural State. Arkansas is the only one of the three states in this report to see lower confidence readings from consumers since March of this year. All three states have seen their consumer confidence ratings rise in the full-year period. 

“The modest decline in Arkansas consumer sentiment is somewhat at odds with the state’s improving economic situation,” said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas and the lead economist for the survey. “Arkansans remain far more negative in their perceptions of economic conditions than their regional and national counterparts.”

The state’s overall unemployment number has improved over the course of 2015. In September the state’s jobless number stood at 5.2% according to the Bureau of Labor Statistics, that compared to 5.6% in March when the previous survey was released. Arkansas’ unemployment rate improved from 5.8% in September 2014 and 7.1% in the same month of 2013.

As Deck said, several regions have unemployment rates far lower or at lease close to the state’s average in September. Pine Bluff was the only metro area whose unemployment rate (7%) is considerably more than the state average. Following are jobless rates for the other metro areas.

• Fort Smith metro, 5.3%

• Hot Springs, 5.3%

• Jonesboro, 4.3%

• Little Rock (central Arkansas), 4.4%

• Northwest Arkansas, 3.5%

• Texarkana, 4.8%

Deck said the recent Arkansas index has moved closer to with the overall national index (87.2) reported by Thomson Reuters and the University of Michigan than in previous surveys. The 9.4-point difference between the Arkansas and national indexes is half of what is was in October 2014. She said the decline in sentiment since March was broad based, occurring for families across the income spectrums.

“Good local macroeconomic news does not seem to be positively affecting individual perceptions about their own situations,” Deck said.

The largest decline came from Arkansas respondents who are unemployed. The September reading of 70.5 was more than 20 points below March’s 90.8. Not all the respondents had lower economic outlooks when compared to earlier this year. Young adults between ages of 18- to 24-year-olds posted a notable increase with their index level rising to 121 in September compared to 113 in March.

“While the index in Arkansas is down a little bit from earlier this year, it is still up more than 10 points from this time a year ago. That is what we are seeing in our customers’ behaviors – signs of improved sentiment,” said John Womack, president of Arvest Bank in Little Rock.

He said the bank has seen an increase in mortgage loans to purchase homes, which typically is a sign consumers are at least somewhat optimistic about their jobs and income potential in the future.

“We’re seeing increased activity in new credit card accounts and we’ve had a good year for consumer loans. Overall I would say that while this report shows a slight decline in consumer confidence from March, it’s still a vast improvement from the confidence we saw last year,” Womack added.