Consumers in Arkansas are not as optimistic as their neighbors in Missouri or Oklahoma and the there is division in sentiment within the Natural State as well, according to the first Arvest Consumer Sentiment Survey released today (July 17).
The consumer sentiment index for Arkansas was 67.4, trailing that of Missouri (68.6) and Oklahoma (76.4). The national index for June is 82.5. The local survey was conducted in May and June by the Center for Business and Economic Research at the University of Arkansas and the University of Oklahoma’s Public Opinion Learning Laboratory.
“These new consumer sentiment data indicate that Arkansas can expect 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. We will look forward to our next data point to begin telling us about trends in optimism,” Kathy Deck, director for CBER at the UA, said in a statement.
Deck said the initial readings indicate that consumers in the region, and especially in Arkansas, are “leery” about overall economic conditions in the near future, although they reported being relatively upbeat about their current financial status.
“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,” Deck added.
The report indicates a rising degree of confidence among higher income levels and those with advanced graduate degrees. Arkansas families earning under $75,000 annually registered at 62.6 on the index, families earning more than $75,000 a year indexed at a reading of 82.2. A similar variance was found in the index by educational attainment with high school or less registering at 60.8, the same level as those with bachelor’s degrees. This was considerably lower than the 81.7 index level for consumers with graduate degrees.
As predicted, those with jobs have a brighter outlook than the unemployed ranks looking for work. The report found employed respondents in Arkansas registered a reading of 71.8, lower than the 74.2 for the three-state region. Unemployed Arkansans indexed at 57.3, below the 61.3 reading in the three-state area.
The Arkansas economy has demonstrated contradictory economic performance during the first half of 2014, according to Deck.
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. There are 16,000 fewer jobs in the state today than at the peak ahead of the recession. The Bureau of Economic Analysis reports that state personal income levels have grown faster than the national average since 2000 but declined at the end of 2013 and beginning of 2014 due to declines in farm income.
Homeowners in Arkansas were not as optimistic as renters according to the report. Homeowners indexed at 66.1, while renters had a reading of 68.6, both were below the respective regional readings of 71.1 and 69.8.
The presence of children in the home also raised the level the optimism among Arkansas respondents with a reading of 69.5, the same as the regional index level. Arkansas households without children indexed at 66.4, lower than the 69.9 level in the tri-state region.
The last subgroup in the survey was an index by age. Among Arkansas respondents those between the ages 25 and 44 had the highest reading at 73.9. Adults between the ages of 45 and 64 registered a 68.1 on the index. Young adults indexed the lowest at 54.8 while senior citizens 65 and older registered 62.3.
Again, Arkansas residents had lower sentiments by age category than the region as a whole, which indexed young adults 18 to 24 years at 73.3. Adults between 25 and 44 indexed at 78.3, while older adults (45 to 64) registered 69.3 and 63.4 for seniors over 65 years of age.
This first report will serve as a baseline for future surveys every six months, the next report is due out in late November, ahead of the holiday season.
“When Arvest first considered sponsoring this survey, we thought it would be beneficial for our communities to have an accurate reading of what consumers think about the economy in the states where we operate,” said Donny Story, CEO of Arvest Bank in Fayetteville. “These first results give us better, more localized, information than what has been available. What is important is simply knowing where people in Arkansas stand in their views — especially since consumers drive the majority of economic activity. With future results, we will be able see if sentiment in Arkansas is trending up or down with sentiment nationally.”