Arkansas can expect more job growth in the service and construction sectors over the next two years, according to a state economic forecaster. Manufacturing jobs, meanwhile, may not fully recover from the losses experienced in the most recent economic recession.
UALR Economist Michael Pakko presented his forecast Wednesday at the Little Rock Regional Economic Briefing, held by the UALR Institute for Economic Advancement and the Federal Reserve Bank of St. Louis. His presentation was coupled with one by economist Charles Gascon of the St. Louis Fed, who compared Arkansas's current economic status with surrounding states.
Pakko says Arkansas can anticipate about 2 percent real GDP growth in 2015 and 2016. But with the state's workforce likely to see fewer opportunities in the Manufacturing sector and more opportunities in the service sector, he says the transition they may have to face could be assisted by better access to education.
“We don't necessarily don't need to send all our kids to college. Bu there's a lot of opportunities in the skilled trades that can be enhanced by some more resources in community colleges, 2-year programs to give young people some marketable skills that are really in demand out there. But there are not a lot of people who have those particular skills,” he says.
Pakko expects the slow job growth rate to continue through the remainder of the year, at only a one percent growth rate, leading to about 11,000 jobs gained for the entirety of 2014; though he believes about 24,000 new jobs will be created in each of the next two years.
Arkansas's recovery from the most recent economic recession has led to gains in some areas of income: interest, dividends and rental income have all shown gains in the past 5 years. Individual payroll income from wages and salaries, meanwhile, has not shown the same level of improvement. Pakko anticipates more robust job growth in Arkansas, which has not been the case recently.
“The bottom line is that the statistics are telling us what I think most families out there know already...that the economic recovery we've experienced for the past five years has not been really robust. That it's leaving people behind. There are still a lot of families that aren't feeling their budgets recover even though the economy has recovered,” he says.
Despite this, Pakko says the state's average personal incomes will likely grow by 5 to 6 percent over the next two years. Considering inflation, that figure would be about 2 to 3 percent. The same goes for taxable sales. He says increased demand for home sales will likely lead to more construction jobs and also expects the healthcare and hospitality sectors to continue to grow, while job growth in the state's manufacturing sector will continue to lag.
For his report, Pakko used a forecasting tool provided by Moody's Analytics, assessing data available through Wells Fargo, the National Association of Business Economics and Wall Street Journal surveys.
You can see slides of his presentation here.