by Mark Carter
Posted 1/6/2014 09:46 am
Updated 7 months ago
Metroplan on Monday released its 2013 "Economic Review and Outlook," revealing slow but steady economic growth for central Arkansas and an increase in the number of young adults seeking homes in the urban core.
Metroplan is the federally designated planning organization for Pulaski, Faulkner, Saline and Lonoke counties. It is a voluntary association of local governments that has existed since 1955.
Each year, it publishes two reports, the "Demographic Review and Outlook" and the "Economic Review and Outlook."
Read the new economic report here (PDF).
The economic outlook for fall 2013 showed the region slightly behind the U.S. in terms of economic growth but ahead of the rest of the state, as well as accelerated growth over last year. In addition, young adults ages 25 to 34 are showing a greater preference for living in the urban core as opposed to outlying areas, the report said.
Regional housing construction was up in the region over the first half of 2013, led by 35 percent growth in Cabot and 16 percent growth in Benton.
The report also addressed sustainable manufacturing in the region, patent and entrepreneurship trends and the potential impact of innovation generated by the BioVentures biotechnology incubator at the University of Arkansas for Medical Sciences and the planned Argenta Innovation Center and Little Rock Technology Park.
The following are excerpts from parts of the report:
The report said employment growth and rate of employment have improved over the year. But Arkansas employment is growing more slowly than the U.S. average, even as the state's unemployment rate has declined to 6.5 percent in August from 7.9 percent in 2010.
"However, much of the local drop in unemployment owes to declining labor force participation, a sign that some individuals have opted out of the job market. Based on Metroplan population estimates and Arkansas Department of Workforce Services employment data, local job growth is running slower than local population growth."
Downsizing in the telecommunications sector has resulted in a net job loss in Arkansas' information sector, the report said. Jobs in wholesale trade have also declined.
"The region's outstanding success has been in retail trade, but this sector has lower-than-average income per job, and faces poor long-term prospects as e-commerce replaces a growing share of retail sales."
The report cites a Brookings Institution study ranking U.S. metros by the share of patents issued per capita and finds Arkansas' metro ranking poorly. Still, the report says there are "positive signs" that central Arkansas is building "an entrepreneurial culture."
The region’s comparatively low cost structure, coupled with average to above-average education levels, suggests potential synergy. Efforts are afoot, like the Argenta Innovation Center and the Little Rock Technology Park, to lay the groundwork for innovation within the region’s promising urban nodes," the report says. "One of the best local opportunities lies in biotechnology, a sector that is seeing above-average patent growth in the national economy."
Retail and Real Estate
The report says retail employment was one of the fastest-growing sectors in central Arkansas from 2011 to 2013, though some growth represents a "bounce-back" from Great Recession losses. Meanwhile, regional retail sales climbed from about $881 million in December 2006 to $1 billion in August 2013, an increase of 8.7 percent. But when adjusting for seasonal change and inflation, those sales were down 7.8 percent.
"Growth in e-commerce, and the downward vector of local in-store sales, suggest an uncertain future for retailing in central Arkansas," the report said.
The report said overall regional housing construction was up "marginally" during the first half of 2013, with single-family housing construction increasing by a small fraction and multi-family housing rising more quickly.
"The slow trend probably reflects continuing weakness in housing markets, and a slowdown of in-migration to the region as well," the report said.
The report also includes anecdotes from regional business leaders commenting on the state of the economy. Among them:
"Although the recovery continues to be painfully slow, the Arkansas economy has not lapsed into recession. Employment growth—particularly in manufacturing and construction—is lagging behind the rest of the nation. However, overall employment is rising, incomes are growing, and sales continue to expand." -- Michael Pakko, economist at the Arkansas Institute for Economic Advancement at the University of Arkansas at Little Rock.
"Little Rock is clearly in recovery mode, however sales tax revenues are only slightly improved. Little Rock weathered the recession quite well, with our unemployment rate hovering around 6+ percent, clearly 2 points below the national unemployment rate and 1 point consistently below the state average. Forbes has ranked Little Rock as having the fourth best economy in the nation. We have seen more than $1 billion in new investment in the last six years, with more than 4,000 jobs created." -- Little Rock Mayor Mark Stodola.
"Central Arkansas’ economy continues to recover, as can be seen in local economic statistics, but the recovery is still uneven across sectors and is moving forward in fits and starts among even the stronger areas. In my area of real estate, for instance, the big year-over-year improvements we saw in the spring have been pulled back somewhat by rising mortgage rates." -- Ward Davis, CEO of the Village at Hendrix in Conway.
"I think the central Arkansas economy is in a slow recovery mode. We are not experiencing any particular type of robust growth but things have improved from the 2008–2012 era. If the Fed doesn’t tamper with its bond purchasing program, the housing market will continue to recover and perhaps local unemployment will improve ... we are in need of new, significant employers here." -- Jimmy Moses of Moses Tucker Realty of Little Rock.
"Local economy is 'squirrelly' amidst a very mild recovery. After a good start, the first of the year, this summer tanked and was hard on most restauranteurs and industry suppliers. Summer sales were down as much as 12–14 percent versus last year same period for some folks. Some of the individual decline could be due to an unusually large number of restaurants that opened all over town, but that would not account for the industry-wide drop in sales hitting our wholesale suppliers." -- Mark Abernathy, owner of Local Luna, Red Door restaurants.