A pessimistic outlook gets even worse (with one exception)
Earlier this week, Talk Business published a second quarterly Arkansas Consumer Confidence Report. As in the previous survey taken in the first quarter of the year, this report showed considerable pessimism about the current and prospective state of the economy. In fact, consumer confidence seems to have deteriorated markedly over the past three months.
The most significant shift was evident in the response to a question about household spending plans.* Only 17% of survey respondents reported plans to spend more on goods and services over the next six months, compared to 41% in the first quarter. Over half of the respondents (50.5%) planned to spend less — up sharply from 29% in the first quarter. Follow-up questions in this survey showed that those who plan to spend less are concerned with conserving money (57%), while those who plan to spend more anticipate higher prices (60.5%). Neither outlook is particularly positive.
Another significant change in outlook concerned local job market conditions. The second quarter survey showed that 76% characterize jobs as “hard to find,” up from 69.5% in the first quarter. Expectations about future labor market conditions deteriorated as well: The new report indicates that 45.5% expect job conditions to get worse over the next six months. In the first quarter survey, only 37.5% expected conditions to worsen.
A shift in current personal financial conditions was also evident. In the second quarter survey, 42% reported being financially worse off than six months ago. Only 34.5% gave that answer in the first quarter. The shift reflected fewer respondents reporting “about the same” (48% vs. 54.5%), with no significant change in the proportion indicating that they were financially better off (only 10% in the second quarter and 11% in the first quarter).
Two questions on the survey pertaining to national and state business conditions showed an interesting dichotomy:
- Perceptions national business conditions worsened, with 80% characterizing the current situation as “bad,” up from 74.% perecent in the first quarter. The percentage of those calling national business conditions “good” fell from 5% to 3%.
- In contrast, a question about business conditions in the Arkansas economy represented the only survey question to elicit no statistically significant changes in responses since the first quarter.* As shown in the figure below, the contrast between perceptions of the state and national economies remains striking.
In spite of greater pessimism about the national economy, local job market conditions, and personal financial outlooks, survey respondents have so far been consistent in characterising economic conditions in Arkansas as being better than those in the U.S. as a whole.
The Arkansas Consumer Confidence Report is sponsored by Delta Trust and Bank and the Electric Cooperatives of Arkansas, and is compiled by Talk Business. The report is based on a telephone survey that asks several questions about household economic and financial conditions, as well as perceptions about the economic environment. The details of the questions and responses in the latest report can be found here.
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*Statements of statistical significance are based on two-proportion z-tests.