A new survey suggests a pessimistic outlook
Earlier this week, Talk Business inagurated a new tool for evaluating consumer sentiment in Arkansas– the Arkansas Consumer Confidence Report sponsored by Delta Trust and Bank. 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. This is the first report in what is intended to be a regular quarterly series.
The results of the survey were characterized as expressing caution and concern. One might also view the findings as indicating downright pessimism. For instance, in response to the question “do you think that six months from now your personal financial situation will be better off, worse off, or about the same?” only 12% of the survey respondents said “better off,” while 38% said “worse off.”
One question that solicited a slightly more positive response was regarding future spending plans. A plurality of respondents – 41% – reported that they expected to spend more on goods and services over the next six months, while only 29% said they expected to spend less. This is good news for the economy if households plan to purchase more goods and services. However, the phrasing of the question leaves open the possibility that some respondents are simply expressing an expectation of higher prices.
In general, the pessimistic tone of the responses to the survey is at odds with economic data suggesting an improving economy. The economic recovery has now officially more than 20 months along, with signs of solid growth in measures of income, spending and production. Employment has been a problematic lagging indicator, but even that measure has been showing some improvement. As reflected in the survey, however, consumer expectations continue to be mired in a mindset that seems more indicative of ongoing recession.
There was one area of questioning that indicated a correspondence between perceptions and economic data: In response to a pair of questions about general business conditions, the survey showed significantly more pessimism about the national economy than the state economy. Slightly over half of the survey respondents characterized Arkansas’ business conditions as “good” or “normal.” On the other hand, nearly three-quarters considered U.S. business conditions to be “bad.”
It will be interesting to see how these survey findings evolve over time. The new Consumer Confidence Survey promises to be a useful tool for evaluating public perceptions about the state’s economic condition.