State Economy Less Affected by Recession Because of Its Local Nature, UA Economist Suggests

by Mark Carter  on Tuesday, Nov. 3, 2009 3:56 pm  

(Video: In a series of videos, Kathy Deck talks to Arkansas Business about unemployment and the recession, growth in northwest Arkansas and green jobs.

Why has Arkansas been less affected by the most recent recession than the rest of the country?

University of Arkansas economist Kathy Deck doesn't believe she has the answer, but she offered a theory Tuesday afternoon during one of several breakout sessions at the Commerce Arkansas business expo.

Sponsored by Arkansas Business and the Little Rock Regional Chamber of Commerce, the second annual expo was held all day Tuesday at the Statehouse Convention Center in downtown Little Rock and included the presentation of the Arkansas Business CFO of the Year awards and a keynote address by Windstream CEO Jeff Gardner

Deck's afternoon session focused on the economic road to recovery in 2010. She believes Arkansas' local emphasis has played a role in why it has seemed insulated from the recession compared with other parts of the country.

"I don't have a satisfactory explanation, one that passes my own smell test," she said. "But I believe it may be because of the state's mix of jobs and products. We're local in nature. Not that we don't export to the rest of the country or even the world, but we serve ourselves and our close neighbors in greater proportion than the rest of the country."

Deck noted the 3.5 percent growth rate of the nation's GDP for the third quarter, and called it a "muted recovery."

"The 3.5 growth rate is better than no growth, but it's not great," she said. "In the early '80s, the recovery rate was proportionate to the decline. We're not expecting to see growth rates like we did in the early '80s. This is a muted recovery because it's not being led by the private sector. It's being led by the government, propping up the GDP with the stimulus package."

Deck posed her own question after forecasting more modest growth in 2010:

"In 2011, will the private sector have the wheels to go on its own without propping up from the government?"

 

 

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