Bitter and Sweet (Editorial)

by Arkansas Business Editors  on Monday, Dec. 6, 2010 12:00 am  

This issue of Arkansas Business is a bittersweet mix of reminders of the painful period our state and national economies have passed through.

On one side we have a high-flying real estate developer brought to bankruptcy (yet apparently unwilling to let go of the lifestyle) and one of the state's largest construction companies having to start almost from scratch.

Yet we also report on a record year for another construction company and on contractors who were grateful for the work made possible by the much-maligned federal stimulus program.

We also note that retail sales seem to be improving (Dillard's Inc.'s same store sales were up an astonishing 8 percent in November) and state tax revenue is also firming up to the point that Gov. Mike Beebe plans to give state employees raises. We even see signs of improvement in some county sales tax receipts.

Wall Street rallied last week, and shareholders in Baldor Electric Co. woke Tuesday to the news that the company had struck a deal that would pay them a 41 percent premium on their shares.

Corporate earnings are in record territory, and banks are reporting healthy earnings despite sluggish loan demand. The cash hasn't translated to much hiring yet, and it will probably take years for all the damage to the job market to be healed. But even the bad news on Arkansas' unemployment rate (up slightly to 7.8 percent in November) held the good news that 2,500 more people were employed and that 2,000 people were seeking to enter the work force.

Sluggish is still too kind a word to describe the housing market, but the bigger the bubble, the messier the pop. For qualified buyers and homeowners with equity, the crazy-low rates on mortgage loans are a gift that can keep on giving for 15 or 30 years. We're seeing signs that commercial real estate is picking up a bit - transactions closed, tenants announced, out-of-state companies putting their toes in the Arkansas market. The formerly routine business of doing business is starting to feel almost normal again.

Here's to normalcy, to business as usual. Not the way it was being done during the artificial economy of the 2000s, but to business based on real demand and balanced supply, to cash and to smart, manageable debt. To long-term business-building rather than short-term flipping, to creating value rather than merely churning dollars. Here's to the last month of 2010 and the beginning of a recovery that is tangible rather than statistical.



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