A new report compares Northwest Arkansas to other prosperous metros in the United States, but the COVID-19 pandemic and the accompanying recession have impacted economic activity so far this year.
The Center for Business and Economic Research (CBER) in the Sam M. Walton College of Business at the University of Arkansas, in collaboration with the Northwest Arkansas Council, released Thursday (Oct. 8) the 2020 State of the Northwest Arkansas Region Report. The annual report is a benchmarking tool used to evaluate the economic performance of Northwest Arkansas and compares it to peer regions, including Austin, Texas; Des Moines, Iowa; Madison, Wis.; Durham-Chapel Hill, N.C.; Raleigh, N.C., and Provo-Orem, Utah.
“These are regions we really want to be like,” CBER Director Mervin Jebaraj said. “It’s important to keep that in mind while we’re comparing ourselves to these regions. We want to do better and be like those regions.”
In a webinar, Jebaraj presented the report and discussed how the pandemic has affected the region. Meanwhile, Mike Harvey, the chief operating officer for the Northwest Arkansas Council, spoke about the council’s efforts to recruit talent to the region.
Economic indicators that increased in Northwest Arkansas were GDP, business establishment growth, average annual wages, and university research and development expenditures. Those that regressed or showed limited growth were the poverty rate and educational attainment.
Jebaraj said he usually updates how much the region has improved since the report, which uses annual data, but nearly every one of the 12 economic indicators is worse as of October because of the recession. He also noted the report doesn’t include the population of McDonald County, Mo., as it was removed from the Northwest Arkansas metro area last year. Because of this change, the population rose 1.8% to 534,904 in 2019, from 525,239 in the previous year. The population in the previous report was about 550,000, he said.
Real GDP rose 2.4% to $23.5 billion in 2018, from the previous year, according to the most recent annual data. Business establishments increased by 2.4% to 13,736 in 2019, from 13,412 in the previous year. Average annual wages also increased by 2.4% to $47,600 in 2019, from $46,470 in the previous year. University research and development expenditures increased 11.2% to $175.49 million in 2018, from $157.79 million in the previous year.
However, the poverty rate rose 0.1 percentage point to 12.6% in 2019, from the previous year. And, the percentage of those who are at least 25 years old with a bachelor’s degree increased 1.4 percentage points to 33% in 2019, from the previous year.
Compared to the peer regions, only the Durham-Chapel Hill metro area had a higher poverty rate, at 14%. The larger proportion of college students in the regions contributed to the higher poverty rates, the report shows. The region with the lowest poverty rate was the Des Moines metro, at 8.7%.
Regarding educational attainment, 44.6% of those who are at least 25 had at least a bachelor’s degree in the peer regions. Since 2015, higher education attainment rose 2.2 percentage points in Northwest Arkansas and 3.2 percentage points in the peer regions.
Jebaraj noted an advantage Northwest Arkansas has compared to the peer regions was the cost of homeownership. However, the cost as a percentage of monthly household income increased 0.5 percentage points to 15.2% in 2019, from the previous year. Since 2015, the cost has fallen 0.4 percentage points because of the improvement in the region’s household incomes. Among the peer regions, Durham-Chapel Hill had the next lowest cost at 16.4%, and Austin had the highest at 18.3%.
Average round-trip domestic airfare in Northwest Arkansas declined by 9.6% to $485 in 2019, from $536 in the previous year. The airfare amount remains the highest among peer regions. The Madison metro area has the second-highest, at $442. The Durham-Chapel Hill and Raleigh metro areas had the lowest, each at $330.
Along with the details of the report, Jebaraj spoke about how the pandemic and recession have impacted the economy and compared consumer spending in early 2020 to September levels. He also provided information on the change in the number of open small businesses and their revenue.
In his presentation, Harvey said the recruitment focus has been on technology, entrepreneurs, creatives and remote workers. The talent supply has yet to meet market demand. However, during the pandemic, recruiting activity has increased, said Harvey, noting employers are allowing people to work remotely full-time.
Link here for the report.