Consumers Positive about Personal Finances, Expect Good Buying Conditions in Near Future
FAYETTEVILLE, Ark. – Consumers in Arkansas, Oklahoma and Missouri, including Greater Kansas City, surveyed in March said their personal financial situation this year was much better compared to last year, and they were far more optimistic that their situation would improve within the next year. More than half of those surveyed believe the next six months will be a good time to purchase major household items.
These observations are found in the second phase of the Spring 2015 Arvest Consumer Sentiment Survey released today. This phase includes a study of consumers’ outlooks on personal finances, buying conditions over the next six months, and business conditions over the next year and the next five years.
Consumers in the three-state area were surveyed in March. Results indicate 86 percent of them expect their personal financial situation to remain the same or improve over the next 12 months, up 7.5 percent from October’s survey.
Specifically, consumers showed more confidence in their personal financial situation, evidenced by the fact 33 percent expect improvement in that regard over the next 12 months. That’s up 13.8 percent from October. Those who expect their situation to remain the same climbed to 53 percent from 51 reported in October.
More than half of those surveyed, 59 percent, expect the next six months to be a good time to buy household items such as furniture, televisions and refrigerators. That’s up from 50 percent in October.
“It is interesting to watch consumers’ confidence grow in relation to the good economic news we had been accustomed to seeing reported around the country,” Arvest Marketing Director Jason Kincy said. “Many consumers may have been waiting for a while to replace or upgrade some major consumer products in their homes until they felt more confident in the region’s economy. As bankers, we are working with many customers to assist them with those major purchases through consumer loans or strategic savings plans.”
When looking at expectations of business conditions, respondents were slightly less optimistic. Only 34 percent expect business conditions to be favorable in the next year, compared with 25 percent in October. But only 39 percent expect business conditions to be bad during the next 12 months, down from 51 percent in October.
Expectations were similar when expanding the time period to five years, with 42 percent of those surveyed anticipating continuous good times, up 16.7 percent from October.
Kathy Deck, Director of the Center for Business and Economic Research (CBER) at the University of Arkansas, said the uptick in Arkansans’ outlook “is consistent with growth in the labor force and declines in unemployment throughout the state.”
Missourians were similarly optimistic about their personal situations, according to David Mitchell, Director of the Bureau of Economic Research at Missouri State University.
“A year ago, less than one in five consumers expected that their financial situation would improve over the coming year — today that number is one in three,” Mitchell said. “When looking at consumers who expected their finances to be worse in one year, the numbers are completely flipped — today only one in five consumers expect their finances to deteriorate over the coming year. A year ago, one in three consumers were expecting this. These improved outlook numbers point to consumers who are ready to begin making major purchases again if wage growth accompanies some of these employment gains.”
In Oklahoma, Russell Evans, Director of the Steven C. Agee Economic Research & Policy Institute at Oklahoma City University, said that while consumer expectations are up, there is some concern over future economic conditions.
“The anxiety is understandable as weakness in the oil and natural gas sector will test the extent to which the state’s economy has diversified.
This round of survey results also includes a Current Conditions Sub-Index and a Consumer Expectations Sub-Index, which follows the model of the national Thomson/Reuters Michigan Surveys of Consumers.
These sub-indexes are meaningful in comparison to national indexes or to previous values of Arvest Consumer Sentiment indexes. Higher numbers indicate some combination of consumer satisfaction with their current and expected personal finances, current and expected economic performance, and the purchasing environment. Larger increases indicate more confidence across the three areas.
The Current Conditions Sub-Index is tabulated from the answers to two questions on the survey: “How is your current financial situation compared with a year ago?” and “What do you think of buying conditions over the next six months?” The Current Conditions Sub-Index for the region is 92.2 in March, compared to 82.0 in October.
The Consumer Expectations Sub-Index is tabulated from the answers to three survey questions: “How do you expect your financial situation to change in the next year?” “How do you think business conditions will be in a year?” and “How do you expect business conditions will be in five years?” The regional Consumer Expectations Sub-Index in October is 89.6, compared to October’s 76.3.
The Arvest Consumer Sentiment Survey is conducted by the CBER, with the University of Oklahoma’s Public Opinion Learning Laboratory conducting 1,200 random phone surveys.
Arvest Bank’s sponsorship of this survey is due to its desire to provide beneficial data for its customers and communities. The data provides a reading of how consumers are feeling about the economy in the states where the bank operates. Additionally, with future results, consumers, as well as the business community, will be able to see how sentiment is trending.
While the CBER evaluates the data for the state of Arkansas, the Bureau of Economic Research at Missouri State University provides state analysis of the Missouri data. The Steven C. Agee Economic Research & Policy Institute, Meinders School of Business at Oklahoma City University, evaluates the data for Oklahoma.
The survey will be conducted twice a year, with the next survey expected to be completed in September 2015. With each study, the index score will be released first, followed by a second release on consumer outlook including the Current Conditions Index and the Consumer Expectations Index and a third release on savings and spending expectations.
Information about the survey and research partners, copies of this release, summary documents and print-ready logos can be found at www.arvestconsumersurvey.com.