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Missourians remain skeptical of economic rebound

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The second phase of Arvest Bank’s Consumer Sentiment Survey found Americans might be more confused about the state of the nation’s economy than ever before.  

Managed by the Center for Business and Economic Research in the Sam M. Walton College of Business at the University of Arkansas, the 1,200-person phone survey conducted by Oklahoma’s Public Opinion Learning Laboratory found residents in Missouri, Oklahoma and Arkansas are optimistic about their personal financial situation, but less so when it comes to business conditions.

“People are confused about the economy and that came out in our data,” said David Mitchell, director of the Bureau of Economic Research at Missouri State University. Bentonville, Ark.-based Arvest retained Mitchell to analyze survey results in Missouri, which includes a few counties in Kansas, part of the Kansas City metropolitan statistical area. “There is still a disconnect between what people feel personally and what they think of the economy overall.

“Some numbers are up, some numbers are down and that’s reflected in this yo-yo effect we are seeing in the current economy. First quarter, the (gross domestic product) is down, second quarter, it’s up 4 percent.”

In Missouri, 54 percent of consumers expect their personal financial situation to remain the same over the next 12 months, while 16 percent expect it to improve – a stark contrast to the same respondents’ opinions on business conditions during the course of the next 12 months. Of the 353 Missourians surveyed, 52 percent expect bad times for business, 18 percent were uncertain and 30 percent were more optimistic.

“The economy is doing better, unemployment is down, GDP is up – that makes people feel better about their situation,” said Stephen Evans, a certified financial planner and owner of Springfield-based Evans Wealth Planning LLC. “A run on the stock market makes people happy, but it takes a lot to get people to feel good about the economy.”

Conversely, Missourians indicated buying conditions would improve in the next 12 months. Forty-six percent felt conditions were good, while 32 percent indicated bad times were ahead. Mitchell said the disconnect between opinions on the business outlook and buying conditions is puzzling.

“People are inundated with news stories every day about wages not growing and people losing their jobs. They think, ‘Hey, I still have a job. I must be better off than George down the street,’” he said of the consumer buying mindset. “Buying conditions look good because they have a job, but they are still confused.

“People don’t know if job growth is sustainable and they are not sure what to make of the news reports. That leads to uncertainty about the business climate.”

The first phase of the survey set a consumer confidence index of 68.6 in Missouri, greater than Arkansas’ 67.4, but trailing Oklahoma’s 76.4. By comparison, the national index for June was 82.5, which is measured against a baseline index value of 100 from December 1964.

The index score is based on five questions designed to evaluate consumer perceptions about their current and future finances; current and future business conditions; plans to purchase major household items; existing debt; and existing and planned savings and demographic information.

Continuing to follow the model of the national survey of consumers produced by the University of Michigan, the second phase set the current conditions index – gauging personal financial situations and buying conditions – at 77.6 in Missouri, between Arkansas’ 74.2 and Oklahoma’s 82.2. Regionally, the index measured 78.7.

The consumer expectations index – measuring future personal and business conditions – tallied 62.9 in Missouri, slightly higher than 62.7 in Arkansas, but lower than 72.6 in Oklahoma and the regional index of 66.7.

The Sooner State emerged as a standout in all three index scores. Mitchell believes the Oklahoma’s optimism stems from its high levels of energy production.

“Oil and gas are booming down there. That creates a huge drive in jobs,” he said. “Those tend to be high wage and translate into more spending. Even if they are not better off, there is the perception that the neighbors just got a new pool, so they are doing something right.”

Arvest Bank Springfield Region President Brad Crain said the results are not unexpected.

“As we have seen with most downturns, they start on the coasts and move in. The same can be said for rebounds,” he said. “I think most consumers are optimistic. They believe we are poised to see continued improvement.”

The Arvest Consumer Sentiment Study will be conducted twice a year, with the next survey in late November. Crain said the bank’s goal is two fold.

“This information helps us understand our customers and their mindset regarding the economy and their banking needs,” he said. “We have always been a relationship-based bank, but as we try to understand the needs of each individual we serve, this data gives us a backdrop to pull from.”

Financial planner Evans believes overall, people remain scared.

“In the past 60 years, we have seen just three major downturns and two of those have been since 2002,” he said. “People have been through a lot. They are overwhelmed and unwilling to trust.

“There is lingering uncertainly about things like the (Affordable Care Act), but the economy is starting to get a foothold again. People aren’t economists, but they know when they feel happy.”
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