The state of Arkansas had another strong job growth year in 2018, but almost all of it was centered on three main metro areas.
Little Rock, northwest Arkansas and Jonesboro provided the state’s job growth, Mervin Jebaraj said at the 25th annual Business Forecast luncheon Friday at the Hammons Center in Rogers. Jebaraj is director of the Center for Business & Economic Research at the University of Arkansas’ Walton College of Business and gave the state report to approximately 1,200 at the luncheon.
Carolyn Evans, the head economist at Intel Corp., gave the global report, and Ross DeVol, a fellow with the Walton Family Foundation and former chief research officer for the Milken Institute, gave the national report.
Little Rock doubled its job creation from 3,500 in 2017 to 7,000 in 2018, and northwest Arkansas created approximately 6,000 jobs. Jonesboro created another 1,300, but the other metro areas in the state — such as Pine Bluff and Fort Smith — saw job losses.
Growth was also slower in 2018 than in the previous year, but it was still strong growth, Jebaraj said.
The state’s unemployment rate continued to be a positive, at 3.5 percent, compared to the national rate of just under 4 percent. The raisin in the oatmeal is that part of the reason for the low unemployment rate is a drop in the labor force participation — people who couldn’t or didn’t find work and are no longer looking.
“That’s a bad reason to see unemployment declines,” Jebaraj said.
Arkansas still had mostly good news in 2018, and the forecast for 2019 was also promising. Jebaraj said one significant loss — the luncheon crowd didn’t seem to agree, to his amusement — was that the northwest Arkansas metropolitan statistical area will no longer include McDonald County in Missouri. It would consist of Washington, Benton and Madison counties.
Northwest Arkansas’ job growth slowed, and Jebaraj predicted it would coincide with a slower population growth in the region. Many newcomers move to northwest Arkansas to take a job, so Jebaraj predicted that slightly fewer jobs would mean slightly fewer people moving there.
Jebaraj got a big laugh from the crowd when he pointed out that northwest Arkansas’ second-fastest job industry was leisure and hospitality, partly because of the increase of trampoline parks, rock climbing venues and the like.
“If you want to break your bones, northwest Arkansas has something for you,” said Jebaraj, who then added that the health care industry had a strong year as well. “We can set your broken bones, too.”
Jebaraj said the state will need to increase its investments in research and development to continue to create new jobs. He said research has to lead to commercialization which in turns creates businesses.
It was a theme echoed by DeVol. Businesses are responsible for 60-65 percent of R&D investments and research universities are critical components to growth.
The University of Arkansas has made increasing its R&D investments a serious university focus in the past year. In the statistics DeVol showed the luncheon audience, Arkansas ranked in the bottom 10 states nationally in nearly every category that involved research and development and human capital investment.
“Companies’ most valued assets walk out of the building every night,” DeVol said.
Evans said the changing world economy is partially because of China’s growth. China’s share of the global gross domestic product was 12 percent in 2010 but had jumped to 16 percent in 2017.
Evans said the United States’ share dropped from 25 to 24 percent during the same seven-year span but was still showing strong growth. Evans said the U.S. economy should remain the global leader.
Small business optimism had remained strong in the nation until the past four months. The decline has been attributed to the ongoing tariff-and-trade war with China and the recent government shutdown. The U.S. job market remains “on fire.”
Evans said most forecasts predict global GDP growth of slightly less than 3 percent in 2019, which is revised downward from previous forecasts.
“Make no mistake, it’s still a very strong growth, but weaker,” Evans said of the consensus.