story by Ryan Saylor
rsaylor@thecitywire.com
Consumer sentiment may be lower in Arkansas than other parts of the country, but Director of the Center for Business and Economic Research at the Sam M. Walton College of Business at the University of Arkansas in Fayetteville Kathy Deck told the Fort Smith Regional Chamber of Commerce's First Friday Breakfast attendees that the local Fort Smith economy should expect a turn around in the coming months and years.
Deck's speech to the Chamber crowd comes the same week Arvest Bank, in conjunction with Deck and the Walton College and three other regional universities in Missouri and Oklahoma, released the Fall 2014 Consumer Sentiment Survey showing a slight drop in consumer confidence across the region.
In the Fort Smith region, she said the lowest point economically in recent years was the closure of the Whirlpool manufacturing facility in south Fort Smith, which sent a ripple effect through the supplier community and put Fort Smith's unemployment figure at among the highest in the Arkansas and Oklahoma region.
The Fort Smith area manufacturing sector employed an estimated 18,000 in August 2014, down from 18,200 in July, and down from 18,400 August 2013. Sector employment is down almost 37% from a decade ago when August 2004 manufacturing employment in the metro area stood at 28,400. Also, the annual average monthly employment in manufacturing has fallen from 28,900 in 2005, 19,200 in 2012, and to 18,300 in 2013.
The Northwest Arkansas manufacturing sector employed an estimated 26,200 in August 2014, down from 26,300 July, and down from the 26,500 during August 2013. Sector employment is down 21.3% from more than a decade ago when August 2004 manufacturing employment in the metro area stood at 33,300.
But Deck said with the shock wearing off from the Whirlpool closure and the continued rebound in the local economy, the Fort Smith region could start posting positive employment numbers that match job announcements with jobs data.
"What you see is that Fort Smith was in decline for several years and has basically stabilized in terms of its employment perspective. Like I said, when you combine the (jobs data) with the announcements that are out there, we could begin to see significant improvement over the next year or two in the Fort Smith economy."
Deck's speech not only came the same week as the release of Arvest's consumer sentiment figures, but just minutes after the announcement that the national unemployment rate had held steady at 5.8%, with 321,000 jobs added in November.
The unemployment rate, Deck added, was in line with what is considered solid unemployment figures in years past.
"When I was in school, I was told that 6.5% was the natural rate. So 5.8% is a historically good unemployment rate," she said, though she added that the improvements at the national level will take longer to trickle down to Arkansas and the Fort Smith area as the region lagged fully entering the recession and will lag getting out of it.
What should help continue driving economic growth in the short term, Deck said, is if this winter remains relatively mild and dry. Compared to last year when a quarter of economic data was directly impacted due to winter weather crippling much of the country over multiple storms, she said the data and weather are already pointing to an improved year that should not be disrupted nearly as much by the climate.
For the long term outlook, Deck said moments like these with solid growth in gross domestic product over long periods of time generally get economists a bit on edge about when the hammer will fall and a period of slow growth or recession could begin. But she said with the latest jobs data, the signs just are not there for a sudden course correction.
"When you're at this point of expansion, some of us start to get a little bit nervous … because we do live in a business cycle and this is already longer than most post-war expansions have been in economic history. So sometimes you start to wonder if there are signs on the horizon that we're getting into the next recession just from a business cycle perspective. But I'm here to tell you not really. Those kind of warning signs out there about what might be a future recession just aren't appearing."