Posted 7/17/2014 08:57 am
Updated 4 months ago
Arvest Bank’s first consumer sentiment survey finds Arkansans have a dimmer outlook on the economy than their neighbors in Oklahoma and Missouri.
The report for June, compiled by the Center for Business and Economic Research in the Sam M. Walton College of Business at the University of Arkansas, put the consumer sentiment index for Arkansas at 67.4, trailing that of Missouri (68.6) and Oklahoma (76.4).
The national survey of consumer sentiment, compiled by Thomson Reuters and the University of Michigan, stood at 82.5 in June.
"Our initial readings indicate that consumers in the region, and especially in Arkansas, are quite leery about overall economic conditions in the near future, although they reported being relatively upbeat about their current financial status," Kathy Deck, CBER director and lead economist for the survey, said. "The consumer sentiment numbers seem consistent with the contradictory nature of other economic data for the state, particularly the declining labor force in the face of improving payroll employment."
The Arvest index is based on the methodology of the University of Michigan's national index, and is also based on five questions that evaluate the consumer's sentiment about current and future finances, current and future business conditions, plans to purchase major household items, current level of consumer debt, current and planned savings and demographic information.
The index indicated the state's economy has illustrated contradictory economic performance like the national economy. It used Arkansas' falling unemployment rate as an indicator.
The state's unemployment rate was 6.4 in May, down from 7.3 in January. The unemployment rate has been below 7 since March. It's the first time the unemployment rate has been below 7 since January 2009.
At the same time, Arkansas' number of unemployed workers has also been on the decline, falling 12,900 workers since January to 84,100 in May. However, the state's labor force has also been on the decline, down 13,000 between January and May.
"Declines in the unemployment rate, usually considered positive overall, can be accounted for by declines in the labor force, which is not positive news, according to the Bureau of Labor Statistics," the index states.
The sentiment of Arkansas families varied signficantly based on household income. Families with an income below $75,000 had a sentiment rating of 62.26, while families with an income above $75,000 had a rating of 82.2.
By age, the subgroup with the lowest sentiment rating was seen in the respondents between 18-24 years of age. That subgroup had a sentiment rating of 54.8. Respondents between 25-44 had the highest rating at 73.9. The sentiment rating fell to 68.1 for those between the ages of 45-64, and dipped again to 62.3 with respondents above 65.
By education, respondents with graduate degrees had a much more positive sentiment than those without. Arkansas respondents with graduate degrees had a sentiment rating of 81.7. Respondents with a bachelor's degree or a high school diploma or less both had a sentiment rating of 60.8.
Deck said the data shows Arkansas can expect to see continued on-again, off-again growth.
"Until consumers indicate that they feel confident about their economic futures, personal income growth will be the key to additional spending and a breakout recovery," she said.
John Womack, chairman and chief executive officer of Arvest Bank in central Arkansas said the first results of the data gives better, more localized information regarding the consumer sentiment.
"What is most important is simply knowing where people in the state stand in their views - especially since consumers drive the majority of economic activity," he said.
Arvest's survey will be conducted twice a year. The next one will be completed in late November.