In the state and nation, there was a decisive movement toward an improving economy in several key areas in 2015, but some dark clouds loom on the energy front headed into 2016.
The editors of Talk Business & Politics have compiled our top statewide stories of the year in the business arena. (A regional list of top stories in the Fort Smith area and stories in Northwest Arkansas will be published later in the week.) The statewide top stories are as follows:
Low Pump Prices
The impact of falling gasoline prices made for a happy full year for consumers and many businesses. At the start of 2015, pump prices for a gallon of unleaded gasoline was around $2.10. By year’s end, $1.60 a gallon was not uncommon. That translated into more discretionary spending among shoppers and savings to the company bottom line. But what goes up, must come down and vice-versa. In 2016, gas prices may remain low for some time, but they’ve likely bottomed out.
Low Natural Gas Prices
Just as pump prices fell in 2015, so did natural gas prices. Both contributed to negative news for the Arkansas economy. Companies like El Dorado-based Murphy Oil and Murphy USA took a big earnings hit, and the once-prosperous Fayetteville Shale Play – which was a safety net during the Great Recession for Arkansas – is unlikely to rebound anytime soon. Those low natural gas prices led to a near stoppage in drilling activity and ancillary companies made significant layoffs in state and worldwide with the oversupply of natural gas on the market.
Tyson Foods Merger with Hillshire Brands
The $8.5 billion merger between Tyson Foods and Hillshire Brands in 2014 had its fair share of skeptics. However, the Springdale-based meat giant garnered pretty rave reviews as the year progressed. Revenues, profits and synergies from the deal met or exceeded expectations and the food giant is poised for a strong 2016 assuming it can navigate the tricky commodities markets and other hurdles.
Wal-Mart Makes Leadership Changes
Wal-Mart CEO Doug McMillon continued putting his stamp on executive leadership of the world’s largest retailer in 2015, and he made multi-billion dollar investments in raising front-line worker pay and back-end digital retail execution. The moves and the money resulted in frequent headlines, not all positive, and took a ton of shine off Wal-Mart’s stock value. The coming year is likely to define how intelligent or ill-advised the moves may be.
Home Sales Strong (Again)
For a fourth consecutive year, Arkansas’ home sales saw year-over-year increases. In 2015, home sales averaged about 9% higher than the previous year and average prices were up more than 4.5%. A rebound in Northwest Arkansas fueled the strong growth. Barring a total collapse at the tail end of the year, the housing market remains healthy in the Natural State.
Falling Unemployment + Job Growth
Not every number in the monthly employment and unemployment reports were glowing, but there was progress. For starters, the state’s jobless rate fell all year long from 5.6% to 5% in November. Add to that job growth of about 34,000 net jobs during the year and you have a trend in the right direction. Construction, healthcare and tourism jobs all sustained solid growth during the year, while manufacturing and energy-related jobs suffered setbacks.
There were a lot of them in 2015, led by Bank of the Ozarks which announced two mega-deals nearly back-to-back. The Little Rock-based financial institution closed stock-swap deals in Florida and Georgia, which pushed its assets over the $15 billion threshold. Ozarks also finished deals in New York and North Carolina. Other publicly-traded banks in Arkansas – Home Bancshares, Simmons First and Bear State Financial – closed out of state deals as well. Look for more in 2016.
Small Business, Startup Momentum
It was a banner year for Arkansas’ startup community. Spurred by activity and interest in Central and Northwest Arkansas, a number of resources emerged to give new businesses a better chance for success. There has never been a better time or opportunity for a small business to germinate in state. With advancements on the table in financing, mentorship and other incubator opportunities, the future looks bright.
John Correnti Death, Big River Steel Goes On
John Correnti, the primary driver of the state’s first superproject, Big River Steel, passed away in August. Despite his unexpected passing, the $1.3 billion steel factory quickly announced leadership changes and a schedule for completion in July 2016.