Watch These in 2004 (President?s Notes)

As we kick off 2004, here’s what I’ll be monitoring on the business news and trends front:

• Education reform and the Arkansas Supreme Court. Every indication is that the Arkansas General Assembly, dominated by rural legislators, will take the easiest route possible and hope the Supreme Court will be satisfied. But will Gov. Mike Huckabee go along or use his veto? A followup lawsuit to the Lake View School District cased is inevitable in any event.

• Tax decisions to pay for education reform. Again, the path of least resistance would be a big sales tax increase with current exemptions kept intact. But some legislators would enjoy punishing the business lobby and media for their support of consolidation, so efforts to remove exemptions from professional services remain likely.

• Opening of the Clinton Presidential Library and its impact on Arkansas tourism. The big event will follow the presidential election in November, and it’s certain to be an extravaganza. Will the big convention bookings and tourism travel follow? I think they will.

• The presidential election. Is retired Gen. Wesley Clark of Little Rock a serious candidate? Howard Dean has incredible momentum for the Democratic nomination, but finding anyone who believes he can defeat President Bush is difficult.

Catching Sadaam Hussein was big for Bush. Getting rebels under control in Iraq may be impossible, but catching Osama bin Laden could offset that.

It still boils down to the economy, and surely it will be picking up steam conveniently by the second or third quarter to hand Bush an easy re-election. However, another major terrorist attack and its impact on the recovering economy would have major implications against Bush.

• The labor market. Various forecasts show upticks in hiring, beginning as early as the first quarter. That’s the final piece of the economy recovery we need to see for consumer spending enthusiasm. We in Arkansas need to stop lamenting the loss of manufacturing jobs because it will continue here just as it will throughout the country — if we pick up a new plant here and there, it’s a bonus. Let’s support the growth of Arkansas-based companies, support entreprenuership through venture capital and embrace the services, health care and biotechnology sector opportunities.

And speaking of the labor market, are we going to improve the quality of our labor market through advancements in secondary and higher education? For decades, manufacturing enabled us to mask the fact that only 16 percent of the state’s adults have a college degree. Our exposure moving forward is enormous.

• Acxiom’s future and growth. The absence of business capital investment has kept a lid on the firm’s growth the past three years. Thankfully long-term contracts were in place. The new partnership with Accenture, which is expected to open more doors with Fortune 500 firms and give Acxiom a leg up on its data processing competition, appears to hold promise.

• Wal-Mart’s growth and legal issues. The largest firm in the world will still be a favorite target of the government, trial lawyers and unions. Is it too much to ask to let this economic engine purr?

• Dillard’s strategy. Surely something has to give as Dillard’s continues to see declines in sales and earnings. I’m not sure what the next step is for Dillard’s or any other slumping department store chain. I hear buzz about a new store in west Little Rock, and Dillard’s will be the kingpin in who gets to build a new mall in Jonesboro.

• Continued banking wars. We have no shortage of good banks and bankers in Arkansas. I’ll be watching specifically the impact of Arvest and Twin City Bank on the Little Rock market and First Security Bancorp in Northwest Arkansas.

• Fidelity Information Services employment. How much more of the Little Rock operation will be phased out?

• Alltel Corp.’s place in the telecommunications market. Alltel has been awfully quiet, but in the telecom world that’s been a good thing. Is CEO Scott Ford in an acquisition mode or will he continue to be satisfied with strong cash flow and a steady stock price awhile longer?

• Regional economic development efforts. Northwest Arkansas is way ahead of the rest of the state in this area, and central Arkansas is positioning itself nicely. What will be the payoffs in 2004?

Overall, I’m upbeat about 2004. The tough issues we have to face don’t seem any more daunting than what we’ve endured before — at least I keep telling myself that.

Best wishes for a profitable new year.