BENTON COUNTY — The economic recovery will pick up in Northwest Arkansas this year if unemployment and home foreclosures don’t rise and home sales increase.
Also, green jobs and sustainability initiatives could be the next economic engine for the region. That’s what economists told about 900 people Friday in Rogers at Business Forecast 2010, the 16th annual event hosted by the Walton College of Business at the University of Arkansas.
December unemployment in Benton and Washington counties was 5.7percent down from the peak of 6.2 percent in June. The nation’s unemployment was 9.7 percent in January and the state rate was 7.7 percent in December.
“Our employment losses have been less severe,” said Kathy Deck, director of the Center for Business and Economic Research at the Walton College. The state and region fared better than the nation throughout the economic downturn, she said.
Though the recession that started in November 2007 was severe, that could be a good sign for recovery, said Chris Varvares, president of Macro-economics Advisers. The bigger the recession, the stronger the recovery, he said.
Varvares predicted consumer spending would rise 3 percent this year. Companies that cut back inventories were caught short in the fourth quarter and increased production. Many companies also trimmed too many workers so they may hire more people than usual when production increases, he said. Deck expects construction and housing starts to pick up, but warned local residents not to expect a boom.
“It’s just having to get used to the idea that the growth will not be at an ever-increasing rate,” she said.
A slower, steady growth rate in Northwest Arkansas is fine with Bert Kell, ArvestBank senior vice president of trust.
He said he knew boom times - construction of large houses worth $500,000, numerous retail spaces and restaurants - couldn’t last.
Slower population growth of 2 percent to 3 percent annually will keep the area vital without straining resources spent to built streets, roads and utility lines, he said.
Companies including Bentonville-based Wal-Mart, Springdale-based Tyson and Lowell-based J.B. Hunt drove past growth, Deck said.
Wal-Mart cutting 300 jobs is a hit to Northwest Arkansas residents’ confidence, she said, but thecompany still has about 12,000 corporate employees in the region.
The next driver of job and population growth is sustainability and green jobs, Deck said. That includes a consortium at the University of Arkansas to help companies reduce packaging, save energy and use technology to save money.
Fayetteville Mayor Lioneld Jordan is working with the state to open a center in Fayetteville to train residents for green jobs.
The future of manufacturing is changing, because the sector’s employment declined since 1991, Deck said. Companies shifted production to other countries and technology let factories do more with fewer workers, she said.
“This recession simply accelerated the process,” Deck said.
Marc Campbell, chief financial officer for FM Corp., an injection molding company in Rogers, expects the decline of U.S. manufacturing to continue.
“We are looking at a new reality and it won’t be like it was before,” Campbell said.
The region’s recovery risks include lack of venture capital for startup firms and Arkansans having less education on average than the nation.
“Those factors did not go away during the recession. They’re still there waiting for us to deal with as we go into the recovery,” Deck said.
Area, Pages 9 on 02/10/2010