Consumers actively spend on household items, credit loosens

Optimistic attitudes among consumers buying on credit helped to fuel more large household purchases for Arkansas residents in the past six months, according to the final report from the Fall 2016 Arvest Consumer Sentiment Survey, released Tuesday (Nov. 22).

The survey found 41% of Arkansas consumers doled out money and a few more secured credit to purchase items such as furniture, household electronics and refrigerators in recent months. This compared to 39% of consumers who did so ahead of the March survey.

Respondents were also asked about future spending plans in the next six-month period, and 35% indicated plans to make a large purchase before March 2017. This compared to 30% in the March 2016 report.

Kathy Deck, director of the Center for Business and Economic Research (CBER) at the University of Arkansas and lead economist for the survey, said Arkansans set a new high level of optimism in the August survey.

“Even as 57% of Arkansas consumers indicated that buying conditions were good, 35% of respondents expect to make a major purchase in the next six months,” Deck said. “This is the highest level of purchase expectations since the Arvest Consumer Sentiment Survey began.

“Meanwhile, 68% of respondents have no plans to acquire additional credit, while an additional 23% of consumers indicated that they did not anticipate any difficulty acquiring credit they would need. Current savings rates were down slightly from the previous period, but in line with what consumers have been reporting over the past few years,” Deck said.

About 6% of Arkansans said they would likely acquire debt in the next six months for auto loans and increase credit card balances, compared to 7% in the March survey. Those who plan to seek mortgage loans were 3%, down from 6%, and those who said they would seek student loans fell from 4% to 3%.

From March to August, Arkansas consumers’ household savings rate decreased from 16.4% to 13.4%. The percentage of those planning to increase their savings rate rose from 21% to 26%, according to Kent Williamson, president and CEO of Arvest Bank in Springdale.

He said a few people are somewhat more comfortable with taking on a new debt and the bank has seen an uptick in demand for consumer and auto loans.

Arkansans’ consumer debt continued to align with that of their neighbors in Missouri, including Greater Kansas City, and Oklahoma in most categories.

BY THE NUMBERS (Arkansas)
40% had mortgages in August,
4% had home equity loans,
37% had auto loans,
51% had credit card balances,
22% had student loans, and
34% had no outstanding debt.