The third and final phase of the Arvest Bank Consumer Sentiment Survey found the tri-state region is still in savings mode as uncertainly about the economy lingers.
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 the majority of residents in Missouri, Oklahoma and Arkansas haven’t made a major household purchase within the past six months and are saving at a rate above the national average.
“About 61 percent of people regionally haven’t made a major purchase. They are still pessimistic of spending that money,” 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. “We have a recent pattern of job growth for a few months and then a sudden decline. That’s still in the minds of consumers.”
In Missouri, 62 percent of respondents said they hadn’t made a major purchase within the last six months.
The 390 Missourians surveyed reported they save about 11.7 percent of their earnings.
Families without children reported saving 12.5 percent, while families with children reported saving 9.7 percent.
BKD Wealth Advisers LLC Chief Investment Officer Jeff Layman believes Missourians aren’t saving as much as the survey indicated.
“That’s roughly double the national savings rate of about 5.7 percent,” he said. “People are making major purchases – they just might not be household purchases.
“Auto sales are 2 million above the 20-year average sales rate at 17 million units. That tells me, nationally, people are buying big-ticket items.”
At 59 years old, Layman believes the average age of Missouri respondents plays a large factor in the results.
“If the average age of respondents is 60 and 80 percent own their home, just think about that for a minute,” he said, noting the factor could explain the deviation from national trends. “At 60, you are in your savings peak and if you’ve owned your home for multiple years now, you probably aren’t making many major purchases for it.”
While already high, the survey also found 15 percent of both Missouri and Oklahoma respondents were interested in increasing their savings rate over the next six months, while Arkansas respondents reported 23 percent.
Mitchell agrees an 11.6 percent regional savings rate is higher than expected, saying defining the word savings is key.
“Do respondents define savings as something in the bank for retirement or emergency money and little bits they are storing away for a new car?” he said. “There’s a key difference there.”
The third survey installment also examined consumer debt, divided among the categories of mortgage, home equity, auto loan, credit card and student loans.
In the survey, 37 percent reported mortgage debt, 6 percent reported home equity debt, 28 percent reported auto loans, 31 percent reported credit card debt and 11 percent reported student loans.
About one-third of the region’s respondents, 33 percent, reported having no current consumer debt.
Regional numbers are in line with Missouri residents, who reported 38 percent mortgage debt, 8 percent home equity debt, 30 percent credit card debt and 8 percent student loan debt.
A little more than a third, 35 percent, said they have no debt.
“It’s normal to have debt,” said Mitchell, noting he wasn’t surprised mortgage debt came in highest. “However, 30 percent seems low for credit card debt in Missouri. As many people have credit cards as have mortgages.”
Arvest plans to conduct its survey twice a year, with the next installment slated to be surveyed in October and released Nov. 11. The Arvest Consumer Sentiment Survey is modeled after the monthly Survey of Consumers conducted by Thomson Reuters and the University of Michigan. Initiated in 1946, the most recent survey is the 587th in the series.
“With the age factor, this first set of survey data is a little skewed,” Layman said. “I don’t think it tells a complete picture of what’s going on. That’s not to say that it doesn’t have merit, I’m just not sure it can be accurately compared to the national data yet.”
Brad Crain, president of Arvest Bank Springfield, said the initial survey is a jumping off point.
“We’re most excited to have developed a survey in line with the national survey. You can’t find that in other states,” he said. “This survey will give us a baseline for the future.
As we continue, it will make the data more meaningful going forward.”
Given consumer sentiment results in the two prior portions of the survey – which found lower consumer sentiment and more skepticism of the economy that the national average – responses in the final installment weren’t surprising.
“Most consumers still have a cautious eye toward the economy,” Crain said.
Mitchell said overall the survey tells an overwhelming tale of uncertainty.
“People don’t want to risk it because they have seen this movie before and they know how it turns out,” he said. “Most jobs created in the recovery are at a low wage. We are moving forward, but not with great speed.
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