Consumer sentiment about the economy is growing more positive among Arkansans, edging out sentiment ratings in Oklahoma and Missouri, according to the Arvest survey conducted in March by the University of Arkansas in concert with the University of Oklahoma and Missouri State University.
The consumer sentiment index reading for Arkansas was 84.9 in March, up from 77.8 in September, 79.1 in March 2015 and significantly higher than 68.1 in October 2014 and 67.4 in the first survey done in June 2014. The recent survey marks the highest Arkansas index score since the survey began, and is the first time Arkansas’ index is higher than Oklahoma and Missouri.
“Reflecting an outperforming Arkansas economy, Arkansas consumer sentiment improved from September 2015 to March 2016,” said Kathy Deck, director of the Center for Business and Economic Research (CBER) at the University of Arkansas at Fayetteville and the lead economist for the survey.
She said it’s the first time since the survey began that Arkansas’ had a more optimistic outlook than the three-state region as a whole. Deck attributed that rosier outlook to the state’s improving employment and income situation in metropolitan and rural areas. She said higher- and lower-income residents had reason for optimism.
Arkansas respondent households earning under $75,000 annually had a optimism rating of 83.1, up from 70.4 in the previous survey (September 2015). Households earning more than $75,000 saw their optimism rating increased from 80.7 in September to 86.3 in March. Nearly everyone surveyed in Arkansas had a more optimistic outlook about the economy in March compared to the September survey.
The only decline came from Arkansas respondents between the ages of 18 and 24. The March reading of 91.5 was well below September’s reading of 121. With unemployment across the state at its lowest level in several years the economic sentiment readings increased steadily among the employed, the unemployed and those not in the workforce from September to March.
“The increased optimism of Arkansas consumers is easy to understand if you look around at the construction and business development happening now in our state,” said Craig Shy, executive vice president and loan manager for Arvest Bank in Fayetteville. “We’re seeing good activity in mortgage lending, so it seems our customers are feeling more confident, not only with where they are now financially but with where they think they will be in the future.”
Homeowners in Arkansas also indexed higher in March with a consumer sentiment rating of 83.6, up from 73.3 in September. Real estate veterans across the state agree that real estate prices are moving higher in most areas, homes are selling and foreclosures have come down to a tiny level in recent years helping prices to recover.
Missourians are slightly more pessimistic about the economy than they were in September 2015, according to the March survey, Since June 2014, consumer confidence has grown but essentially plateaued, driven by changes in consumer confidence between two income groups. Consumers with incomes below $75,000 are growing more confident while higher-income consumers saw confidence peak at 98.3 in March 2015 and slowly decline since then.
The reality of the severity and duration of the energy industry downturn and its implications for the Oklahoma economy are reflected in the March 2016 sentiment reading. The downturn is in reaction to weakness in the oil and gas industry, now in its 15th consecutive month of contraction that is expected to last throughout 2016. In March 2016, the Arvest Consumer Sentiment Index for Oklahoma was 81.3, down from 85.0 in September 2015 and lower than the regional reading of 83.4. The drop in consumer sentiment was driven primarily by families making less than $75,000 in annual income.
The regional index reading for the three-state area was 83.4%, up from the 82.6% in September. The increase is aligned with movement within the national index, as reported by Thomson Reuters and the University of Michigan. The national index was 90 for March, up from 87.2 in September.
Of the three states included in the Arvest Consumer Sentiment Survey, only Arkansas reported an increase in overall consumer sentiment. Missouri and Oklahoma reported slight decreases, from 85.8 in September to 83.9 in March in Missouri, and from 85.0 to 81.3 over the same period in Oklahoma.