Anemic job growth predicted

Crowd told state’s 2012 labor force smaller than in 2011

J.B. Hunt’s John Roberts III (from left), Adolfo Laurenti of Mesirow Financial, Christopher Waller of the Federal Reserve Bank of St. Louis and University of Arkansas economist Kathy Deck discuss economics Friday.
J.B. Hunt’s John Roberts III (from left), Adolfo Laurenti of Mesirow Financial, Christopher Waller of the Federal Reserve Bank of St. Louis and University of Arkansas economist Kathy Deck discuss economics Friday.

— The Arkansas economy is going to limp along until the state sees steady job growth, a University of Arkansas economist told more than 700 people gathered Friday for UA’s Business Forecast lunch.

Kathy Deck, director of the University of Arkansas’ Center of Business and Economic Research, said the state’s job growth is projected to be around 0.7 percent for 2013.

“That’s just not enough,” she said.

The event was held at the John Q. Hammons Center in Rogers and hosted by the Center for Business and Economic Research at the Sam M. Walton College of Business at the UA.

Arkansas’ civilian labor force was 1.36 million workers in December, compared with 1.38 million in December 2011. The decline does not match national trends that show overall, the nation’s labor force increased1 percent year over year. The labor force is the total number of employed workers in the state plus the number of unemployed people still looking for work.

Deck said the state’s economy has lost 50,000 to 60,000 jobs since the recession of 2008 and it’s unlikely those jobs are returning any time soon.

“These people are either moving or they’re giving up,” she said.

The way to recapture those jobs is through creating a well-educated and skilled work force that can attract high-wage businesses that will also boost the state’s per capita income.

In an interview after the presentation, Deck said a steel mill proposed for Osceola, in Mississippi County north of Memphis, will be a step in the right direction.

In late January, Big River Steel LLC announced that it wants to build a $1.1 billion mill that is expected to employ 525 at an average salary of $75,000. The state Legislature is now considering whether to issue $125 million in state general obligation bonds as incentives for the project.

Deck said the state needs more projects like this to get the economy moving more quickly.

The state’s employment growth has been moderate, Deck said, except in Northwest Arkansas where overall employment grew by 4.3 percent.

Arkansas’ unemployment rate stood at 7.1 percent in December, down from 7.8 percent a year earlier.

All seven metropolitan areas in Arkansas saw declines in their unemployment rates in December, according to the U.S. Bureau of Labor Statistics.

The unemployment rate was 6.3 percent in the Little Rock area for December, down from 6.7 percent a year earlier; Northwest Arkansas’ rate dropped to 5.1 percent from 5.7 percent; and Fort Smith was 8.1 percent, down from 8.5 percent.

Christopher Waller, research director and senior vice president at the Federal Reserve Bank of St. Louis, said the U.S. gross domestic product will grow in the range of 2 percent to 3 percent in 2013, and range from3 percent to 4 percent by 2015 along with little to no inflation pressure. Gross domestic product is the total value of goods and services produced in a country in a year.

Waller said house sales are up and the country is seeing rising demand for lumber and materials used in repairs and remodeling.

However, commercial construction is still low and has a long way to go before catching up to pre-recession levels.

Adolfo Laurenti, deputy chief economist and managing director of Mesirow Financial, said 2013 will see economic challenges all over the world. Mesirow is a Chicago-based financial services firm.

Laurenti said problems in the eurozone, where several European countries dealt with a debt crisis and the potential collapse of their financial institutions, should become more stable over the next year. He also predicted modest growth for eurozone countries.

He said China’s red-hot growth has slowed but its economy is rebalancing with a push toward infrastructure improvements and a focus on more internal consumption.

While infrastructure investments are good in the short term, Laurenti said it’s unclear whether they will become the economic drivers they are intended to be.

“A new airport is only valuable if people show up to use it,” Laurenti said.

Business, Pages 27 on 02/09/2013

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