Continued Slow Growth Seen for Arkansas Economy

FAYETTEVILLE, Ark. – Arkansas is poised to enjoy continued economic growth over the next year, but not enough new jobs to push the state’s economy back to pre-recession highs, a University of Arkansas economist said Friday.

But Kathy Deck, director of the Center for Business and Economic Research at the Sam M. Walton College of Business, said Northwest Arkansas should see employment gains over the next 12 months. She gave her analysis of Arkansas’ economy at the 19^th annual Business Forecast luncheon.

“The forecast for Arkansas in 2013 is one of continued plodding growth—not enough strength in employment to regain our pre-recession highs over the next few years,” Deck said. “On the other hand, Northwest Arkansas is poised to continue enjoying substantial employment gains. Construction (of both housing and highways), leisure and hospitality, retail entrepreneurship and professional service gains should help lead the way.”

Deck shared additional insights into the Arkansas economy at Friday’s luncheon in Rogers, attended by nearly 1,000 business and government leaders:

• Arkansas per capita personal income is growing more quickly than the U.S. average over the past 40 years. Since 1970, per capita income in Arkansas has grown from 69.5 percent to 81.6 percent of the U.S. average.

• Arkansas gross domestic product (GDP) is more concentrated in agriculture, construction, manufacturing, trade and transportation, management of companies, other services, and government than the U.S. average.

• Arkansas GDP is less concentrated in information, finance and real estate, professional and technical services, administrative services, and arts, entertainment and recreation than the U.S. average.

• Employment growth in Arkansas is not on pace to make up the recession’s shortfall at any point in the next few years.

• There were net job losses in the professional and business services, information, financial activities and construction sectors in Arkansas in 2012.

• Despite these losses, the unemployment rate in Arkansas has fallen to 7.1 percent from its post-recession high of 9.0 percent.

• The Arkansas labor force is declining on a year-over-year basis at this point, even though the U.S. labor force is growing at about 1 percent.

• Employment growth has been modest in all metropolitan areas of Arkansas except Northwest Arkansas.

• In Northwest Arkansas, no sectors had employment declines on a year-over-year basis in 2012, and overall employment grew at 4.3 percent.

• Success in 2013 is likely to depend on new construction, leisure and hospitality growth, strength in retail and a continued rebound in the professional services sector.

The Center for Business and Economic Research coordinates the Business Forecast luncheon so that leaders can hear top economists give their insight into the economic conditions in the state, nation and world over the next year. The center is a public service/outreach organization whose mission is to serve its constituents with the highest quality research support; basic and applied business and economic analysis; timely, relevant business, economic and related public policy information; and other outreach activities. In addition to supporting research within the college, the center supports economic development by providing economic and demographic data and analysis to business, government and individuals. The center also actively works with the economic development community of the state to build Arkansas’ capacity to create high-wage, high-skill employment.