Economist Michael Pakko called the planned closing of the Whirlpool plant in Fort Smith "clearly bad news" but nonetheless forecast continued slow but steady economic growth for Arkansas.
The state's major drag continues to be unemployment, and Pakko, chief economist and state economic forecaster for the Institute for Economic Advancement at the University of Arkansas at Little Rock, said the residual effect of the plant closing would entail about 1,500 lost jobs.
Whirpool said it would close the plant in the spring.
"There's no sugar coating it. It's bad news," Pakko told the 2011 Arkansas Economic Forecast Conference Wednesday morning in downtown Little Rock. "But big hits like this one often are not representative of the underlying trends."
Pakko thinks those trends are headed up, despite a slower than expected recovery that has fallen short of expectations.
"By the end of 2013, jobs will still be far short of where we were when we started the recession," he said. "But we are seeing growth in every other category."
Pakko expects the Arkansas jobless rate to tap out at 8.2 percent in 2011, still below the national projection of just over 9 percent but closer than the 2 percent gap the state maintained over the national rate for most of the past several years. Still, Arkansas continues to fare better in most categories than the nation as a whole.
Once forecasted revisions are figured into 2011 numbers next March, Pakko said 2011 will be referred to as the "year of lost growth."
He cited waning consumer confidence, political uncertainty, spikes in gas prices and the weather -- spring storms, flooding and a summer drought -- as the culprits. While admitting it's getting harder to paint an economic outlook in an optimistic context, it's not impossible, he said.
"I think the slowdown we've seen is temporary," he said. "We'll start to see a renewed pickup in activity."
Pakko forecast positive growth for the state through 2013 in:
- Sales tax revenue: 3.2 percent in 2012 and 2 percent in 2013
- Home sales: 12.6 and 4.3
- Personal income: 5.1 and 3.0
- GDP: 3.2 and 2.8
Home prices in Arkansas are down 1.4 percent over the last five years compared with 14.6 nationally, but have risen 13.6 percent in that time in Texarkana, 7.6 percent in Hot Springs and 6 percent in Pine Bluff.
Elsewhere in the state, home prices are down 16.7 percent since 2007 in the Fayetteville metro and up 1.9 percent in Little Rock.
See Pakko's full report at ArkansasEconomist.com.
