The latest Beige Book report from the Federal Reserve Bank of St. Louis indicates a slightly improved economy for the region since the previous report, with some sectors remaining largely unchanged.
Charles Gascon is a regional economist at the Federal Reserve Bank of St. Louis. He says since the national economy is growing at a fairly steady pace, those numbers in turn influence regional and state economies. That includes Arkansas.
"The state has high concentrations of employment and activity coming from manufacturing, transportation, agriculture and retail as well. These are sectors that really are susceptible to the national economy,” Gascon said. “So when the U.S. economy does well, these sectors tend to grow and that means that the state economy tends to grow. If the national economy weakens, you tend to see even a bit more of a weakening in the state economy."
Arkansas is one of two states in the region that increased its minimum wage in the new year. The Beige Book mentions contacts in both Missouri and Arkansas expressing uncertainty over the impact from the new minimum wages. Gascon says some firms are waiting to see what exactly will change before hiring more workers.
"Understanding what prices look like is [going to] determine how they’re going to go about hiring. In some states, particularly states like in the case of Missouri, where this is a new increase, the pricing isn’t entirely clear. My understanding in Arkansas is it’s been kind of a steady increase over the last couple years, so I would assume that these pricing problems are a little bit clearer in those cases," Gascon said.
The Beige Book also reports a regional decline in residential real estate activity, but modest increases in commercial construction, with the report categorizing Little Rock’s increase as moderate.
While Gascon believes the decrease in residential real estate activity may just be a symptom of the typical home-buying off-season, the increase in commercial construction reflects a regional trend, as opposed to a national one.
"There are places in northwest Arkansas for example that have seen a very steady increase in construction activity and population growth over time. When you look at construction activity, generally in the midwest area, and then into the midsouth, we’ve seen construction activity pick up," Gascon said.
One area that stayed consistent from the previous report was agricultural conditions. Arkansas farmers dealt with both the continued trade war with China and constant rain throughout the last growing season. Gascon says unpredictability tends to be a constant when looking at agriculture.
"In our conversations with ag[riculture] contacts, I think they live in a world which things are unpredictable and so I don’t think you expect any of our contacts, and I wouldn’t expect any of our contacts, to look to the future with any type of certainty," Gascon said.
Information for the Beige Book, published eight times a year, is gathered by economists interviewing a variety of sources to gather largely anecdotal information.
The Federal Reserve Bank of St. Louis represents the Eighth District of the Federal Reserve which covers the entirety of Arkansas as well as sections of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.