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Contradictory Conditions (Hunter Field Editor’s Note)

Hunter Field Editor's Note
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When it comes to the economy, right now it’s complicated.

Things are peachy on paper. Unemployment continues to hit historic lows. Stock market indexes are reaching new highs every week. Wage growth and consumer spending are both up.

If you dig into the data we reported from 57 of Arkansas’ largest private companies last week, revenue was up more than 8% on average last year. (Six of the companies that reported decreases were electric cooperatives.) Of the 40 companies reporting increased revenue, the average bump was 16% year over year.

Despite all of those factors, many people aren’t feeling this supposed economic boom.

Instead, they’re feeling higher prices at the grocery store. The cost of a family vacation is up, and the dreams of a lot of hopeful first-time homebuyers are dead on arrival due to high housing costs and interest rates.

This all coincides with national data that suggests wage growth has started to catch up with inflation, which continues to cool.

Thus begins the complicated cycle of contradictions that is our current economy. See the constant refrain from some corners of the business community begging the Fed to cut interest rates while complaining in the next breath about inflation.

That said, we’ve found in our recent surveys of CEOs and other executives in Arkansas that it’s a good time to be in business. From the C-suite, confidence in the economy is high, and businesses are investing in themselves and in expansion.

The ability to hire and retain solid employees remains a chief concern of most executives and business owners.

That’s followed closely by the rising costs of doing business, from more expensive labor to inflation in the cost of materials and services.

Next up is the Federal Reserve’s approach to interest rates and the 2024 presidential and congressional elections.

Broader public sentiment, I think, will eventually begin to shift. Time heals all wounds, and it takes time for increased wages to catch up to inflation.

After all, we aren’t still angry that a gallon of gas costs more than 95 cents. I admit the $2.90 I paid last week wasn’t fun, but it sure beats the $4-per-gallon prices of 2022.

As things level out, we can’t ignore inflationary pains that some prognosticators have suggested are overstated. Yes, wages are catching up, but they were never going to keep pace with the 7% to 8% inflation rates seen in 2022 and prices that aren’t ever going back to pre-pandemic levels.

Many also haven’t missed the opportunity to take swipes at the media, blaming it for failing to accurately report positive economic news.

That ignores the nuanced story that is the U.S. economy in 2024.

Email Hunter Field, editor of Arkansas Business, at hfield@abpg.com
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