State’s Chief Economist Says 2011 ‘the Lost Year’
Calling 2011 "the lost year," the state’s chief economic forecaster, Dr. Michael Pakko, said he doesn’t expect Arkansas to net any new jobs for the year and he was cautious that other sectors of the economy would fully rebound in 2013.
"By the end of 2013, the U.S. jobs picture will still be far short of where we started the recession at the end of 2007," Pakko said in reference to a jobs recovery.
Pakko, a former research economist at the Federal Reserve Bank of St. Louis, became the Chief Economist and State Economic Forecaster at the Institute for Economic Advancement (IEA) at the University of Arkansas at Little Rock (UALR) in 2009. He gave his annual report to about 100 business and community leaders at the Doubletree Hotel in Little Rock.
Pakko said he expects a revision to the state’s jobs data, due in March 2012, to wipe out labor gains seen from preliminary data in 2011. He expects revised data, which traditionally comes months after initial results, will show the loss of 9,000 to 11,000 job gains from this year.
"The jobs recovery will be painfully slow," he said. Pakko predicted that Arkansas’ unemployment would range from its current level of 8.3% to somewhere around 8% in 2012. By 2013, he said he expected unemployment to dip below that level.
On a brighter side, Pakko noted that he felt the state and nation would avoid a double-dip recession.
"We are seeing growth in almost every category of economic activity," Pakko said. "There’s certainly no high probability of a new recession emerging… we’re just going to see a continued period of growth albeit rather slow."
He suggested real Gross Domestic Product (GDP) in Arkansas would rise by "more than 3% in 2011 and 2012" and he said personal income would likely rise by "about 5%" during that period.
However, Pakko warned that inflation would likely eat into half of that personal income gain.
Pakko also said that based on home sales data, he expected 2012 to be a better year for a housing recovery. While he felt 2011 home sales would not top 2010, he calculated that in 2012 home sales could rise by as much as 12% in a year-over-year comparison.
"Considering we started from the lowest point in recent history, it’s good that we’re seeing a relatively rapid recovery," he said.