Economic Growth Ahead in 2016 for Arkansas, Expert Says

Economic growth is what’s on the menu for the state’s economy in 2016. So said Kathy Deck, director of the Center for Business and Economic Research on Friday at the annual luncheon hosted by the CBER.

“Across the state of Arkansas in 2015 things were pretty good,” Deck said adding that looking forward into 2016, “it looks like we have a lot of the things in place that we need here in this state, here in this region to continue doing as well as we have been doing.”

However, Deck cautioned that there are a few areas that need addressing namely the lagging professional and business services and trade, transportation and utilities sectors.

The CBER is part of the University of Arkansas’ Sam M. Walton College of Business and this year more than 1,000 business and community leaders attended the “22nd annual Business Forecast Luncheon event at the John Q. Hammons Center in Rogers.

The moderator was Bill Dillard, vice president of Little Rock-based Dillard’s Inc.

Other economists who spoke at this year’s luncheon were Michael Drury, chief economist for McVean Trading & Investments LLC and Kevin Kliesen, business economist and bank officer in the research division at the Federal Reserve Bank in St. Louis

Deck said one important indicator to turn to when projecting what’s ahead in 2016 for the state’s economy is employment.

“What has happened in Arkansas in terms of our employment is we had an interesting period in Arkansas after the recession where we just didn’t recover,” she said. “In Arkansas we just went sideways for quite some time but in 2013 and 2014 that stopped being the case and Arkansas started improving its employment situation dramatically.”

Indeed, last year the state added 22,500 jobs, she said. In 2016, Arkansas is projected to add another 11,000 jobs.

“And that is truly cruising altitude and good news in the extreme,” she said.

In Arkansas, the sectors leading employment include trade, transportation and utilities with 21 percent employment, manufacturing with 12 percent, education and health services with 15 percent, professional and business services with 11 percent and leisure and hospitality with 9 percent. (The data is from the Bureau of Labor Statistics and was collected up to November 2015.)

“The Arkansas economy is still manufacturing heavy,” Deck said, adding “we’re beginning to get more in education and health services, but what would really help this state is if that professional and businesses services sector was a little bit bigger.”

Areas that saw bumps in the road last year were the manufacturing and mining and logging sectors. The latter is wrapped up in the downturn in the energy sector with losses on par with what the rest of the nation is facing,” Deck explained. “We know that the energy sector has been a really tough place to be in 2015 and 2016.”

“The good news,” Deck said, “is that construction employment is on fire in Arkansas, and especially in Northwest Arkansas.”

In general, she said the 1.6 percent employment growth the state experienced last year was “fantastic”.

“If you look at unemployment for the state, the state and the nation are moving very very closely together,” she said. “You can’t tell the difference in terms of unemployment rates between the state and the nation.” However, Deck added that unemployment in Northwest Arkansas is lower than in both.

As for where the growth is happening, Deck said for its part, Fort Smith continues to struggle with employment growth.

“In terms of employment growth [in Fort Smith] there has been nothing like a recovery from the recession,” she said adding that on a hopeful note, a number of investments are taking hold to improve employment growth in the city’s downtown and Fort Chaffee areas, as well as at the University of Arkansas at Fort Smith.

For their parts, Little Rock and central Arkansas reached pre-recession peek employment numbers last year with Jonesboro leading the way with the highest employment growth rates in the state. On the downside, Pine Bluff lags the rest of the state.

Lastly, Northwest Arkansas’ saw employment growth that was “no short of amazing,” Deck said with 4,800 jobs added over the last year. Despite some job losses at Walmart and among vendors due to consolidation, Deck was adamant that the area’s more than $20 billion economy could “handle the regular kinds of job announcements that we’re going to get over time as companies try to position themselves for success.”  

A high point of growth in Northwest Arkansas over the past year has taken place in the area’s leisure and hospitality sectors. “If you think about nine years ago when I stood up here [for the first time] and the amenities and the things that Northwest Arkansas did not have nine years ago that it has now,” Deck said adding with a chuckle, “you know there are good places to eat now.”

To summarize: Deck’s forecast found:

• Per capita personal income growth means more amenities and an even better place to live.
• Construction is strong but not leading employment growth a more sustainable situation than before the recession.
• The area should expect more out of region visitors given the mix of investment s in the leisure and hospitality amenities sector.
• One note of caution is that both professional and business services and trade, transportation and utilities are growing more slowly than in the recent past.