Federal Reserve District, 8th ; Regional economics

prepared by the Center for Regional Economics-8th District (CRE8)

English

Research Papers in Economics

Current Economic Conditions in the
Eighth Federal Reserve District
Little Rock Zone
December 23, 2010
Prepared by the
Center for Regional Economics—8th District (CRE8)
Federal Reserve Bank of St. LouisThis report (known as the Burgundy Book) summarizes information on economic conditions in the Little Rock zone
of the Eighth Federal Reserve District (see map above), headquartered in St. Louis. Separate reports have also
been prepared for the Louisville, Memphis, and St. Louis zones and can be downloaded from the CRE8 website
(research.stlouisfed.org/regecon/).
The first section of this report summarizes information provided by various contacts within the District and is
similar to the type of information found in the Fed’s Beige Book (federalreserve.gov/fomc/beigebook/2010/).
The period covered by this section coincides roughly with the two Beige Book periods immediately preceding this
report.The second section includes government-provided data for Arkansas and the metro areas of the Little Rock
zone.These data are the most recent available at the time this report was assembled.
For more information, please contact the Little Rock office:
Robert A. Hopkins,  501-324-8200,  robert.hopkins@stls.frb.org
Economist:
Alejandro Badel,  314-444-8712,  alejandro.badel@stls.frb.org
Texarkana
Pine Bluff
Hot Springs
Fort Smith
Fayetteville-Springdale-Rogers
Little Rock-North Little Rock
Memphis
Jackson
Jonesboro
Springfield
Columbia
Jefferson City
St. Louis
Evansville
Owensboro
Bowling Green
Elizabethtown
Louisville-Jefferson County
TENNESSEE ES EE SS N E NNE E SS SE T TEN TEN
SSIPPI PP PP SIP S PI SIP SIS MISS IS SS M M SIS
A ANSAS AS AS ARKAN S AN A RK KA A A AR
Y UCKY CKY CKY UC NTU ENTU NT N KEN N K KENTU K ENTU EN K NTU UC Y KEN KE K
M MISSOURI M MISS S M SOUR SO S UR
ILLINOIS IL ILL ILL OIS NO S OIS ILLIN LINO I INDIANA NDI IA AN ND NA AN IA IN I IN
Eighth 
Federal Reserve 
DistrictGeneral Retailers
￿ October and early November sales increased compared 
with the same time last year for one out of six contacts; 
sales decreased for two out of three contacts.
￿ Sales met or exceeded expectations for two out of five 
contacts.
￿ Sales were expected to increase in this quarter relative to 
the same time last year for half of the contacts.
Car Dealers
￿ October and early November sales increased compared 
with the same time last year for two out of three contacts. 
￿ Sales were expected to increase in this quarter relative to 
the same time last year for five out of six contacts.
Manufacturing
￿ Plastics, construction machinery, and electronics contacts 
plan to add workers and plants.
￿ Wiring, air conditioning, and primary metals contacts plan 
to decrease operations and employment.
Services
￿ A contact in health care plans to expand operations and 
hire workers.
￿ Architecture and business support contacts plan to decrease
operations and employment.
Real Estate 
￿ Home sales for January through October were 6 percent 
lower than last year’s.
￿ Single-family housing permits for January through October 
were 10 percent higher than last year’s.
Little Rock Zone Report—December 23, 2010
At the close of November, the annual growth of employment, building permits, and housing prices was –1.9 percent, 18.8 percent,
and –0.5 percent in the Little Rock MSA and 0.7 percent, 5.8 percent, and –1.2 percent in the nation.  The annual growth of per-
sonal income was 2.9 percent in Arkansas and 2.1 percent in the nation. In the past three months, local employment increased 
by an average of 0.1 percent per month, while the nation’s remained constant.  The unemployment rate in Little Rock (7 percent)
was substantially lower than the nation’s (9.5 percent). According to all indicators except annual employment growth, Little Rock
has outperformed the nation.  This view coincides with mildly positive anecdotal reports from car dealers but contrasts with some-
what negative reports by retailers, bankers, and construction firms in the area.
￿ Between the second and third quarters, industrial and 
suburban office vacancy rates increased, while downtown 
office vacancy rates decreased.
Construction
￿ A contact noted slow commercial construction activity.
￿ A contact in southeast Arkansas reported few commercial 
construction projects.
Banking and Finance
￿ Consumer and business lending activity declined, with 
customers in both categories seeming reluctant to take on 
large amounts of new debt.
￿ Residential mortgage lending activity increased slightly 
because of an increase in refinances and isolated reports of
an increase in new loans.
￿ Little or no change was reported in deposits.
Agriculture
￿ Weather conditions were warmer and drier than usual in 
Little Rock over the past quarter.
￿ The harvest progressed ahead of schedule in the zone: 
At least 10 percent more of soybeans and cotton were 
harvested by early November, in comparison with the 
average completion rate over the past 5 years.
￿ Corn and cotton yields increased by 1 percent or more 
from 2009, while yields for soybeans, sorghum, and rice 
decreased from the previous year.
￿ Progress on winter wheat planting and crop growth was 
ahead of the 5-year average, with 77 percent of the crop 
rated as fair or better.–6.0
–5.0
–4.0
–3.0
–2.0
–1.0
0.0
1.0
Total 
Nonfarm
100%
Natural
Resources,
Mining, and
Construction
5%
Manufacturing
6%
Trade,
Transportation,
and Utilities
19%
Information
2%
Financial
Activities
6%
Professional
and 
Business
Services
12%
Education
and 
Health
15%
Leisure 
and
Hospitality
9%
Other 
Services
5%
Government
21%
Percent
Little Rock Employment Growth by Sector
Year/Year Percent Change, November 2009–November 2010
–0.8
–0.6
–0.4
–0.2
0.0
0.2
0.4
0.6
2006 2007 2008 2009 2010
Percent
United States
Little Rock MSA
Nonfarm Payroll Employment Growth
3-Month Average, SA, January 2006–November 2010
Little Rock’s recession-related decline in employment, centered on January 2009, was milder than in the nation overall. However,
the recovery started much later in Little Rock, where the first positive growth rate was oberved in November 2010. Average monthly
employment growth was 0.11 percent in Little Rock during the past three months, while it was 0.01 percent in the nation.
Employment growth by sector during the past 12 months distinguishes general trends from sector-specific trends in Little Rock’s
economic performance. Annual employment fell by 1.9 percent in this zone, compared with a 0.7 percent increase for the United
States.  The three largest sectors in the Little Rock MSA are Government; Trade, Transportation, and Utilities; and Education and
Health, accounting for 21 percent, 19 percent, and 15 percent of employment. Growth in these three sectors was –1.4 percent, 
–1.5 percent, and –0.2 percent, respectively. Sectoral and aggregate employment changes in the Little Rock MSA moved primarily
in the same negative direction.  The Other Services sector had the best performance in Little Rock (0.6 percent) and accounts for 
5 percent of employment in this area.Little Rock Zone—MSA Housing Activity
Total building permits,
units year-to-date
House price index,
October Percent percent  change,
2010 change 2010:Q3/2009:Q3
Little Rock 2,966 18.8 –0.47
Fayetteville-Springdale-Rogers, Ark. 1,043 –29.0 –2.17
Fort Smith, Ark. 541 –19.6 0.11
Hot Springs, Ark. 34 6.3 –5.42
Pine Bluff, Ark. 93 69.1 1.20
Texarkana, Ark.-Tex. 182 –29.7 –2.27
United States 510,880 5.8 –1.19
SOURCE: Bureau of the Census, Federal Housing Financing Authority.
The 18.8 percent expansion of building permits in the Little Rock MSA contrasts with contractions in the Fayetteville-Springdale-
Rogers, Fort Smith, andTexarkana MSAs. This expansion was remarkable compared with a 5.8 percent expansion for the United
States.  The 0.5 percent house price decline in the Little Rock MSA contrasts with the house price increases in the Fort Smith and
Pine Bluff MSAs. The house price decline was mild compared with the 1.2 percent decrease for the United States. The greatest 
increase in building permits was registered in the Pine Bluff MSA, while the greatest decline was registered in the Texarkana MSA.
The greatest increase in house prices was also registered in the Pine Bluff MSA, while the greatest decline was registered in the 
Hot Springs MSA.
Little Rock Zone—MSA Employment and Unemployment
Nonfarm payroll employment percent change, 
November 2009–November 2010
Unemployment rate 
Total Goods producing Service providing October 2010
Little Rock –1.90 –3.66 –1.67 7.0
Fayetteville-Springdale-Rogers, Ark. –1.29 –4.59 –0.55 6.5
Fort Smith, Ark. –1.02 –1.38 –0.91 8.2
Texarkana, Ark.-Tex. 2.14 3.23 2.00 7.3
United States 0.64 0.34 0.69 9.5
NOTE: Sector-level employment data are not available for Hot Springs, Ark., or Pine Bluff, Ark.; as a result, these MSAs are not included in the previous chart or in this table.
SOURCE: Bureau of Labor Statistics.
Employment contraction in the Little Rock zone is substantial in the Little Rock, Fayetteville-Springdale-Rogers, and Fort Smith
MSAs.  This holds for both goods-producing and service-providing activities.  The highest unemployment rate in the Little Rock zone
was registered in the Fort Smith MSA at 8.2 percent.  This unemployment rate is still lower than the 9.5 percent rate registered for
the United States.The Philadelphia Fed’s coincident index combines information on payroll employment, wages, unemployment, and hours of work
to give a single measure of economic performance.  This index gives an idea of the state economic environment in which Little Rock
operates. Arkansas’s coincident index reveals a milder impact of the recession and a quicker recovery compared with the nation.
The index bottomed at 93.4 for Arkansas, while it bottomed at 92.6 for the United States. Current values of the index suggest that
economic activity in Arkansas is at 94.8 percent of its pre-recession levels, while it is at 94.3 percent in the nation. In summary,
the state economic environment of the Little Rock zone should roughly coincide with the nation’s.
In Arkansas, personal income growth was well above the nation’s for several periods before the recession (around June 2007).  
The recession’s impact on Arkansas’s personal income has also been milder and the recovery stronger than in the nation. Between
the third quarter of 2009 and the third quarter of 2010, personal income grew 2.9 percent in Arkansas and 2.1 percent in the 
nation.
92
93
94
95
96
97
98
99
100
101
102
2008 2009 2010
Index (Jan. 2008 = 100)
SOURCE: Federal Reserve Bank of Philadelphia.
Arkansas
United States
Arkansas Coincident Economic Activity Index
0
1
2
3
4
5
6
7
8
2006 2007 2008 2009 2010
–3
–2
–1
Percent
Arkansas
United States
SOURCE: Bureau of Economic Analysis.
Arkansas Real Personal Income Growth
Percent Change, Year/Year

Current economic conditions in the Eighth Federal Reserve District. Little Rock

http://research.stlouisfed.org/regecon/burgundybooks/10/12/BB1210LR.pdf

Current economic conditions in the Eighth Federal Reserve District. Little Rock

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics