FAYETTEVILLE — Northwest Arkansas accounts for all of the state’s net job growth over the past two years, according to numbers presented at Friday’s Quarterly Business Analysis Luncheon presented by the Center in Economics and Business Research from the University of Arkansas.
The job losses are offsetting job gains in the rest of the state, according to figures presented by center director Mervin Jebaraj. The state has created 15,000 jobs over the past two years, about half the job growth rate from pre-pandemic years, he said. The figure matches almost exactly the growth in employment in that region over the same period, he said.
“Arkansas finally has more jobs than before the pandemic, but almost all of the jobs added are in northwest Arkansas,” in Benton and Washington counties, Jebaraj said in remarks. in front of an audience of at least 160 people.
More workers means home sales should remain strong despite rising mortgage interest rates, Jebaraj said. Lumber prices stabilized after two extremely volatile years that plagued housing construction.
Still, supply chain issues are holding back home construction in the area.
“People are ready to buy here, but not a house without appliances installed,” he said.
A completed home will sell almost immediately, he said. The number of unoccupied new constructions is functionally zero, he said. Demand for living space is also eating away at any available rental property.
Byron Galloway of Springdale, private banking adviser for Arvest Bank, said Jebaraj’s findings were consistent with what he is seeing in the business world. Still, it was encouraging to see Jebaraj’s research on the subject, particularly his belief that a recession is not yet imminent, Galloway said.
Monique Pierre de Fayetteville, chief executive of property developers Partners for Better Housing, said she also sees the trends and conditions described by Jebaraj, but that those presentations give detailed explanations of those conditions.
“It makes us more nimble in our decision-making,” she said.
Northwest Arkansas faces the same inflation and supply chain issues as the rest of the world, but don’t expect a recession just yet, Jebaraj advised.
“Consumer spending and business investment in the first quarter increased,” he said.
The main reason why the overall indicators appear to be down is that government spending is down, he said. A contributing factor is a decline in exports, as many US trading partners are not recovering from the covid pandemic crisis as well as the United States.
“We outperform everyone,” he said.
Consumer spending has increased so much that it actually exceeds spending last Christmas shopping season, Jebaraj said. Pierre asked Jebaraj after his remarks if credit card debt was increasing because of spending. No, Jebaraj said. Consumers have money because they didn’t have much to spend their money on during the pandemic-related shutdowns.
The war sparked by Russia’s invasion of Ukraine is affecting energy supplies to the rest of the world more than to the United States, Jebaraj said.
Food prices around the world are rising faster than here, exacerbated by the Russian blockade of Ukrainian food exports. Ukraine not only accounted for 9% of global wheat exports before the war, but is a major source of cooking oil, according to news reports. Sunflower oil from Ukraine accounted for 42% of global sunflower oil exports in 2019, according to United Nations figures, and accounted for 76% of India’s supply of this oil.
Another factor limiting the food supply in the United States is falling immigration rates, Jebaraj said. Produce is not picked in the field and meat processing suffers from a lack of labor, he said.
Likewise, there is no quick fix to fuel shortages and rising fuel prices, Jebaraj said. OPEC is facing severe labor shortages that are holding back production around the world. In the United States, oil companies “lost their shirts in 2020” by ramping up production and then seeing the pandemic hit, he said. These companies are in no rush to restart production, he said. Rather, they are seeking to recoup the financial losses they suffered when demand collapsed during the pandemic.