ROGERS -- Arkansas' economy should continue to move along at "cruising altitude" in 2016, one of the state's leading economists said Friday at the 23rd annual Business Forecast Luncheon.
Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas, told a group of about 1,000 at the John Q. Hammons Convention Center that Northwest Arkansas is expected to continue to lead the way for the state, which produced about 22,500 new jobs in 2015.
"When you think about what has happened last year in Arkansas, things were pretty good," Deck said. "As we look forward at our forecast, think about our risks, about our upside risks, downside risks, it seems like we have a lot of things in place that we need here in this state, here in this region to continue doing as well as we have been doing."
Deck was joined by Michael Drury, chief economist for McVean Trading and Investments LLC, and Kevin Kliesen, business economist at the Federal Reserve Bank in St. Louis, as guest speakers during Friday's luncheon. Bill Dillard III, vice president at Little Rock-based Dillard's Inc., emceed the event and said it felt like the economy was "in a maze" with contradictory indicators like housing growth and manufacturing contraction.
"I think it's fair to say we're in uncharted territory," Dillard said.
But none of the economists sounded the alarm for an impending recession during Friday's discussion.
In fact, Drury said the U.S. didn't participate in a global recession felt by the rest of the world last year. He said China has been the most publicized drag on the global economy for the past year and a half, but he believes the country is in the process of working its way out of its doldrums.
Drury said plunging oil prices are driving recovery throughout the global economy and ruled out a recession in 2016, 2017 or 2018. He said he believes the rest of the world will perform better than the United States this year, but that does not mean the country will struggle.
"I don't see a financial crisis on the horizon," Drury said.
Kliesen said the U.S. economy, which is in its seventh year of expansion, continues to be guided by modest growth and low inflation. Job gains remain strong, and the unemployment rate is low as well. He projected the economy would continue to move forward in early 2016 after the fourth quarter gross domestic product report continued to show a slight increase.
"The same drivers that have really driven the economy the last year, the consumer and housing construction, are once again the strongest parts of the report," Kliesen said. "So as long as those two sectors continue to do well, I think we'll probably also do pretty well this year as well."
Arkansas' unemployment rate dipped to 4.8 percent in December. It was the lowest since April 2001 with employment gains showing up in Northwest Arkansas, Jonesboro and Little Rock. Deck said the Little Rock employment rate's rise to pre-recession levels was important for the entire state.
The positive job trend for the state should continue in 2016, as Deck projected the creation of 11,000 jobs, including an estimated 5,000 in Northwest Arkansas alone.
By sectors, Deck said construction is "on fire." But there were gains in other sectors like professional and business services, education and health services, and leisure and hospitality. She said the 1.6 percent in nonfarm employment growth was an improvement and "fantastic" for the state.
Manufacturing and mining and logging were two sectors "under duress." Manufacturing jobs, which account for 11 percent of the state's employment, fell by about four percent in 2015. Mining and logging jobs slipped by 9 percent in 2015.
Deck said there's "more [losses] to come" in the mining and logging sector as well as in the energy sector after Southwestern Energy cut 600 jobs in Arkansas earlier this month.
"There's more pain, more job losses in that energy sector," Deck said. "But that's not different in Arkansas than it is anywhere else. We know the energy sector is a tough place to be in 2015 and 2016."
Northwest Arkansas continues to outpace the state and national average in per-capita personal income.
Deck said that was a significant mark in a region that continues to be "nothing short of amazing."
"We have always been a state where we were just a little below average," Deck said about the per-capita personal income. "Certainly Arkansas remains a little below average. But that's not true in Northwest Arkansas. We are a place that has a standard of living that is enviable, quite enviable."
Business on 01/30/2016