Arvest-Backed Survey Reveals Increases in Both Major Purchases & Savings Rate
FAYETTEVILLE, Ark. – Economists cited lower fuel prices and lower interest rates for Arkansas, Missouri and Oklahoma consumers’ improved confidence in their personal finances and willingness to make major household purchases.
Those are among the more noticeable findings from the third installment of the Spring 2015 Arvest Consumer Sentiment Survey released today. This installment is the final piece of the survey, conducted in March, and focuses on consumers’ attitudes concerning spending, saving and debt.
More regional respondents, 38 percent, reported they had made a major household purchase in the past six months, an increase of 2 percent since October. And 25 percent indicated they planned to make such a purchase in the next six months, up 1 percent since October. Among the 75 percent who do not plan to make a major purchase in the next six months, 17 percent reported they were waiting for the right time to buy, while 83 percent said they had no plans to buy at all. Major household purchases were defined as furniture, a television, refrigerator or other large items.
When looking at the regional savings rate, consumers reported saving 12.4 percent of their earnings, which is slightly higher than the 12.1 percent from the previous survey.
Kathy Deck, director of the Center for Business and Economic Research (CBER) in the Sam M. Walton College of Business at the University of Arkansas and lead economist for the survey, said there are multiple reasons for consumers’ behavior in Arkansas.
“Low gas prices, low interest rates and slightly higher incomes pushed the buying conditions index all the way to 131.0,” Deck said. “Those same conditions mean that Arkansans can also pay down some existing debt or increase their personal savings rates without sacrificing too much in the short-term.”
The sentiment is similar in Oklahoma, according to Russell Evans, executive director of the Steven C. Agee Economic Research & Policy Institute at Oklahoma City University.
“Oklahomans remain confident in their current and expected future personal financial conditions. This confidence, combined with savings from lower energy costs and favorable credit conditions, is reflected in attitudes towards major purchases.”
Confidence in the economy is up in Missouri, including Greater Kansas City, though David Mitchell, director of the Bureau of Economic Research at Missouri State University, said consumers there “are tempering this confidence with some caution.”
“They want to be sure that this time the economic recovery will ‘stick’ before taking on additional debt,” he said.
Arvest Marketing Director Jason Kincy said loan activity indicates consumers seem to feel confident enough in the economy and their own financial situations to address needs they may have been putting off for a while.
“At the same time,” Kincy said, “we’ve also seen an increase in deposits, which typically reflects increased cash on hand. So, whether they’re spending or saving, the best thing we can do for our customers is to provide the planning and resources they need to meet their specific needs in a responsible manner.”
Consumer debt within the region was divided among several categories – mortgage, home equity, auto, credit cards and student loans. In the region overall, more consumers reported having consumer debt of some kind. The biggest increase was in mortgage loans, which grew to 39 percent compared to 33 percent in October’s survey. The percent of respondents who reported having no current consumer debt was at 28 percent, compared to 31 percent in October.
In terms of saving, families with incomes of more than $75,000 reported saving 17.1 percent, while families with incomes of less than $75,000 reported saving 8.5 percent. Families with children reported saving 11.7 percent and families without children reported saving 12.6 percent. The overall savings rate for Arkansas is 11.6 percent, while Missouri is at 12.1 percent and Oklahoma 13.2 percent.
The majority of regional respondents, 72 percent, expect to maintain their current savings rate over the next six months and 20 percent expect to increase their savings rate. Only 8 percent expect to decrease their savings rate over the same time period.
The Arvest Consumer Sentiment Survey is conducted by the CBER. The University of Oklahoma’s Public Opinion Learning Laboratory conducted the 1,200 random phone surveys.
With each study, the Consumer Sentiment Survey Index score will be released first, followed by a second release on consumer outlook including the Current Conditions Index and the Consumer Expectations Index, which are sub-indexes of the Consumer Sentiment Survey Index. The survey and indexes follow the model of the national Survey of Consumers produced by the University of Michigan.
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. Because consumers drive the majority of economic activity, it is important to know where people in these states stand in their views.
The Arvest Consumer Sentiment Survey will be conducted twice a year, with the next survey results expected to be released in November. Information about the survey and research partners, copies of this release, summary documents and print-ready logos can be found at www.arvestconsumersurvey.com.