Arkansas consumers display more optimism about spending, boost savings

Consumers in Arkansas are feeling more confident about the macro economy and that could fuel higher spending in the back half of the year, according to the third release of Arvest Bank’s Consumer Sentiment Survey completed in March.

The report released Tuesday (June 28) found Arkansas consumers anticipate making large purchases now because they are seeing low unemployment rates, lower interest rates and the possibility of inflation looming on the horizon.

The semi-annual survey also found Arkansas consumers increased their savings rate from 13.9% to 16.4% from September to March. While savings is important to many consumers they also see the next six months as a time to go ahead with planned purchases before prices start going up, according to Kathy Deck, director of the Center for Business and Economic Research (CBER) at the University of Arkansas and lead economist for the survey.

Arkansas consumers out-saved their neighbors according to the March survey. While Arkansas consumers had a savings rate of 16.4%, Missouri’s rate was 16% and Oklahoma’s savings rate was 15.1%.

“With gas prices and interest rates remaining low and incomes rising, Arkansans were most positive about the idea that buying conditions are at an attractive level right now,” Deck said. “With such low unemployment rates, there may be inflationary pressures building in the state’s economy, so large purchases are particularly appealing right now.”

Almost one in three (30%) of consumers in Arkansas said they plan to make a major household purchase in the next six months, up from 24% in September. Major household purchases include furniture, televisions and refrigerators. Those who said they have recently made such purchases were 39% in March, compared to 37% in September.

While interest rates are low, consumers are not eager to increase their debt loads, with just 7% seeking auto loans and credit cards. Just 6% were interested in obtaining mortgage loans and 4% were looking at acquiring student loans.

Arkansas consumers continue to carry less debt than their neighbors in Missouri and Oklahoma, according to the survey. Arkansas respondents reported that 30% had mortgages in March, 2% had home equity loans, 29% had auto loans, 40% had credit card balances and 18% had student loans. Those who reported having no outstanding debt was 23%.

In Missouri 35% of respondents had mortgage debt, 6% had taken out a home equity loan, 35% had auto loans, while 45% had credit card debt and 23% owed on student loans. Just like with Arkansas, 23% of Missouri respondents report having no consumer debt.

In Oklahoma 32% of those surveyed have a mortgage on their homes with 3% having home equity lines of credit. More Oklahoma consumers have auto loans (35%) and student loans (25%) than their Arkansas neighbors. 21% of Oklahoma respondents said they have no debt.