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Regional Sentiment Plunges in Fourth Quarter

Regional Sentiment Plunges in Fourth Quarter(Posted: January 2, 2013)

Consumer sentiment ratings by regional consumers dropped significantly in the fourth quarter, down 14.7 percent, according to the preliminary report released Jan. 4 by the Center for Business Research and Economic Development at the University of Arkansas - Fort Smith.

The Index of Consumer Sentiment (ICS) for the Fort Smith region was 52.2, down from the third quarter result of 61.2.

The University of Michigan survey, which measures national sentiment, reported a 72.9 for December. This was nearly seven percent lower than September. Index scores below 100 reflect less optimism about the economy than scores above 100.

The report revealed that area consumers were particularly negative toward future prospects for the national and regional economy, where scores for consumer expectations going forward dropped over 21.3 percent from the previous quarter.

"Regional sentiment reversed its uptrend of the past few quarters in a significant way in this report," stated Kermit Kuehn of Fort Smith, center director. "While it hasn't been particularly strong before, it bordered on downright ugly this time."

Arvest Bank president Craig Rivaldo concurred.

"When you have a continuous stream of negative news coming out of Washington, it's bound to impact the regional consumer in a significant way – and not always for the better," said Rivaldo.

The report outlined results for two sub-indices. The Index for Current Conditions (ICC), a measure of consumer attitudes about their current economic situations, was down 4.1 percent to 58.1 from 60.6. National sentiment scores were up slightly on this dimension.

Kuehn said the Index for Consumer Expectations (ICE), which measures consumer feelings about future economic conditions, was down a "whopping" 21.3 percent, recording a 48.5, and was in line with double-digit declines observed in the University of Michigan survey.

Kuehn noted regional consumers were not very optimistic that the recent elections would improve the regional or national economy. He pointed out that nearly 70 percent of respondents felt that the national elections would make things worse going forward into 2013.

A detailed analysis of the entire 17-item survey distributed to 3,250 regional households will be published in the Fort Smith Regional Economic Outlook Report, a quarterly report sponsored by Arvest, which is expected to be released the second week of March.

For more information on the center, go to www.uafs.edu/cob/cbred, call 479-788-7938 or email CBRED@uafs.edu.




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