Recovery to plod, state’s NW told

But region’s future is bright, business leaders hear at luncheon

Friday, November 2, 2012

— The economy of Northwest Arkansas is undergoing “very wide expansion,” but no one should expect a quick rebound from the recent recession, business owners and leaders were told Thursday.

“We should be expecting slow, steady growth into the future,” said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville.

The quarterly business analysis luncheon at the Donald W. Reynolds Center for Enterprise Development drew attendance from across the region.

Deck tempered her outlook by adding that if Congress and President BarackObama fail to head off the federal government’s “fiscal cliff” - a series of measures including the end of temporary payroll-tax cut for workers, certain tax breaks for business, individual income tax increases, and potentially deep cuts in Medicare and defense spending - the outlook for the economy will worsen.

Recent negotiations, she said, suggest that “we won’t shoot ourselves in the foot.”

Other threats to the recovery, Deck said, would be a failure by European nations to “do whatever is necessary” to head off defaults in the region; slowing economic growth in China, which she said would be bad news for its trading partners; and a reversal of the recent rebound in the U.S. housing market.

She added that U.S. manufacturing appears likely to expand very slowly, suggesting that the sector is “not going to be the driver” of a U.S. economic recovery.

Butch Garganus of Colliers International said the office vacancy rates in the region appear to be tighter than what was reflected in the report.

“All the Wal-Mart suppliers appear to be expanding,” he said,adding that the “mom and pop” suppliers to the Wal-Mart suppliers are increasing in number.

Colliers International, which has an office in Bentonville, is a subsidiary of First Service Corp. It has 522 offices worldwide and offers services to property owners, tenants, investors and developers.

Dewitt Smith, president and chief executive of Devereux Management Co. in Rogers, said his firm is receiving requests for office space from Wal-Mart vendors as well as a rapidly expanding health-care market.

“In Northwest Arkansas,we’re recovering in a more civilized manner,” he said. “We are making long-range decisions. We’re going to have a great decade.” Deck said in her presentation that consumer debt is at all time high levels, indicating that consumers have the capacity to handle additional debt. The Federal Reserve reported that total consumer debt was $2.7 trillion in August.

Other promising signs for the economy, she said, are that vehicle sales are up and retail sales - including gasoline - are at record levels.

Business, Pages 29 on 11/02/2012