The Compass Report: Economic moderation seen in top Arkansas metro areas
by March 31, 2025 12:27 pm 914 views
Data from the four Arkansas metro areas measured by The Compass Report indicate moderation in fourth quarter 2024 economic activity, with sales tax revenue – a measure of consumer confidence – pointing to “challenges” in the overall economy.
In the fourth quarter 2024 (October-December) report, Central Arkansas received an “C+” grade, the Fort Smith metro had a “B-” grade, the Jonesboro area received a “C+” grade, and Northwest Arkansas had a “B+” grade.
The Compass Report is a partnership between the University of Arkansas at Fort Smith (UAFS) and Talk Business & Politics. First National Bank of Fort Smith is a sponsor of the statewide report.
Kendall Ross, UAFS associate vice chancellor of Economic and Workforce Development, and Troy Rodriguez, a data analyst in the UAFS Center for Economic Development who helps compile, manage and review the data, are responsible for data collection and written analysis for the report.
The report measures four leading and four current economic indicators to provide a grade for a regional economy. The eight categories measured to determine The Compass Report grade in the Central Arkansas, Fort Smith and Northwest Arkansas areas are total nonfarm jobs, unemployment rate, building permits, sales tax revenue, manufacturing jobs, service sector jobs, construction jobs, tourism jobs and concentration of manufacturing jobs. Because the data is not available, construction and tourism jobs are not included in the Jonesboro metro grade.
A key factor in understanding the report is in understanding the “grading” approach used to measure the current and leading economic indicators. For example, a grade of “C” reflects no change in economic activity. The grades “B” or “A” indicate improvement above the historical average, and “D” and “F” indicate a decline in economic activity compared to the historical average.
Greg Kaza, executive director of the Arkansas Policy Foundation, said the report is possibly the first indicator of consumer uncertainty.
“Policymakers are happy that payroll employment, the broadest state and local area indicator expanded across Arkansas and all four metropolitan metros in 4Q-2024, with unemployment rates remaining less than four percent (4%) full employment,” Kaza noted in his analysis of the report. “But uncertainty about regulatory policies and inflation have caught the attention of entrepreneurs focused on markets and consumers’ household budgets. The clearest evidence of the latter is the (Compass) Report’s observation that gross sales and use tax collections remained essentially flat year-over-year, signaling ‘cautious retail and discretionary expenditures.’ These are ‘potentially influenced’ by factors ‘such as inflationary pressures or rising interest rates.’”
TOP METRO TAKEAWAYS
Following are some of the key takeaways from Ross and Rodriguez included in The Compass Report.
• Central Arkansas
Central Arkansas earned an overall C+ grade in Q4 2024. The region showed a mixed but largely positive economic performance in Q4 2024, with strong employment growth and steady construction activity balanced by persistent consumer spending caution and challenges in sectors such as hospitality.
• Northwest Arkansas
Northwest Arkansas received a B+ overall grade for Q4 2024, demonstrating continued economic resilience. The dynamic region maintained strong economic momentum, supported by solid job creation, increased consumer spending, and vigorous construction activity, albeit tempered by a slight rise in unemployment rates.
• Fort Smith metro
The Fort Smith Metro earned an overall B- grade for the fourth quarter of 2024. The region demonstrated resilience through strong employment and declining unemployment, while consumer spending and construction faced notable headwinds, warranting ongoing monitoring in future quarters.
• Jonesboro metro
Jonesboro received an overall C+ grade for Q4 2024. The Jonesboro metro displayed moderate economic activity with stable employment growth but faced challenges in unemployment and consumer spending, indicating a mixed economic outlook.
DATA AND MORE ANALYSIS
Link here for the fourth quarter 2024 raw data gathered by the University of Arkansas at Fort Smith Center for Economic Development.
Link here for the quarterly narrative. Also, link here for the previous reports.