Regional Consumers Planning Major Purchases, Increase Savings
FAYETTEVILLE, Ark. (June 28, 2016) – Consumers in the Arkansas, Missouri and Oklahoma region said they have plans to both make major household purchases in the next six months and to increase their household savings rate, according to final information released today from the Arvest Consumer Sentiment Survey.
Those are among the more noticeable findings from the third installment of the Spring 2016 Arvest Consumer Sentiment Survey released today. This installment is the final piece of the survey, conducted in March and including Greater Kansas City, and focuses on consumers' attitudes and behaviors concerning spending, saving and debt.
"It appears consumers are continuing a trend that started last year, that of small increases in making major purchases and taking on slightly more consumer debt," Arvest Marketing Director Jason Kincy said. "But an increasing percentage of consumers have expressed a desire to increase their savings rate even after we have seen savings rates steadily going up over the past two years. So although consumers are feeling confident enough to start spending and accumulate more consumer debt, they are keeping an eye on the future by building a savings cushion between themselves and changes in the economy."
Most notably, 34 percent of regional respondents indicate they plan to make major purchases in the next six months, compared with 28 percent in September. The percentage of respondents who report they made a major household purchase in the past six months rose from 38 to 39 percent. Among the remaining 66 percent who do not plan such major purchases in the next six months, 19 percent of those reported they were waiting for the right time to buy while 81 percent said they had no plans to buy at all. Major household purchases were defined as furniture, a television, refrigerator or other large items.
In Arkansas, 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, "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."
David Mitchell, director of the Bureau of Economic Research at Missouri State University, said similar things about Missourians.
"Although consumers' outlook for the economy in the very near term might have appeared somewhat ambiguous," Mitchell said, "they clearly see a brighter picture in the long term as evidenced by their desire to make purchases and acquire credit."
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, with increases in auto loans (from 32 percent in September to 33 percent in March), credit cards (from 40 percent to 41 percent), and student loans (from 14 percent to 21 percent). The percent of respondents who reported having no current consumer debt dropped from 27 percent to 22 percent.
When looking at the savings rate, regional consumers reported they are saving 15.8 percent of their earnings, up from 13.6 percent in the previous survey. The overall savings rate for Arkansas is 16.4 percent, while Missouri is at 16.0 percent and Oklahoma 15.1 percent.
The majority of regional respondents, 68 percent, expect to maintain their current savings rate over the next six months and 22 percent expect to increase their savings rate. Only 10 percent expect to decrease their savings rate over the same time period.
In Oklahoma, a state largely dependent on the energy industry, economist Russell Evans said increased savings rates make sense.
"A hesitance to spend and notion to save are consistent with expressed expectations for a challenging present and uncertain future," said Evans, executive director of the Steven C. Agee Economic Research & Policy Institute at Oklahoma City University.
The Arvest Consumer Sentiment Survey is conducted by the CBER, which also evaluates the Arkansas data, with the University of Oklahoma’s Public Opinion Learning Laboratory conducting 1,200 random phone and online surveys.
The survey is conducted twice a year, with the next results expected to be released in October. 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.
Arvest Bank's sponsorship of this survey, which follows the model of the national Survey of Consumers produced by the University of Michigan, 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.
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.
Information about the survey and research partners, copies of this release, summary documents and print-ready logos can be found at www.arvestconsumersurvey.com.