LITTLE ROCK — The economy of the Little Rock metropolitan statistical area was one of the 20 weakest in the United States in the third quarter of this year, according to a study of the 100 largest areas by the Brookings Institution.
While many of the 100 largest areas have seen improved unemployment rates since recovering from the recession that ended in June 2009, the Little Rock metropolitan area’s unemployment rate has remained flat, the report shows.
Though the six-county Little Rock metropolitan area had the 20th-lowest unemployment rate at 7.1 percent, it ranked 89th in terms of unemployment percentage change from the third quarter last year to the third quarter 2011.
“I don’t think that it is terribly surprising, given what we’ve been watching in terms of job growth in both the state and Little Rock region,” said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville.
There are signs unemployment is faring better in the fourth quarter. The Little Rock metropolitan area’s unemployment rate dropped to 6.8 percent in October from 7.1 percent in September, according to the U.S. Bureau of Labor Statistics.
In past Brookings reports, the Little Rock metropolitan area had been in the top 20. In the fourth quarter of 2009, Little Rock had a 6.5 percent unemployment rate, eighth lowest.
The Brookings Institution is a nonprofit Washington, D.C., public policy organization that researches economic and social issues.
“It confirmed, in very stark terms, ... that the pace of economic expansion [in Little Rock] in general has slowed down relative to what it was a year ago,” said Michael Pakko, chief economist for the Institute for Economic Advancement at the University of Arkansas at Little Rock.
Howard Wial, a fellow with the Metropolitan Policy Program at Brookings and a co-author of the report, said state capitals and cities with military bases suffered during the third quarter of 2011. He added that transportation hubs such as Little Rock were hit hard as well.
“You can’t watch the news and not know that government jobs are under duress at all levels,” Deck said. “Little Rock is so very dependent on government employment, it’s no surprise ... that it’s a weakness for the region.”
She added that manufacturing jobs across the country have helped areas recover from the recession, but that things made in Little Rock are not in high demand right now.
Eleven of the other cities that fell into the 20 weakest performing are also in the South, including, Memphis; Jackson, Miss.; Birmingham, Ala.; and Atlanta.
The top 20 had strong automotive and technology manufacturing industries, the report said, including Dallas, Houston, Grand Rapids, Mich., New Orleans and Boston.
Transportation and warehousing, an important economic sector in the state, has been doing poorly in the Little Rock area, the report said. According to the Arkansas Department of Workforce Services, the state shed about 1,400 jobs in the transportation-warehousing/utilities sector from September to October.
In other categories for the third quarter of 2011, Little Rock ranked:
98th of 100 in a one-quarter change in the number of people employed, with a 0.6 percent decline.
67th in gross metropolitan product change, up 3.5 percent from the third quarter of 2008.
15th of 100 in the rate of foreclosures per 1,000 mortgages, at 1.43.
Pakko said the bright side of the report for Little Rock was being ranked the fifth best in terms of one-year change in housing prices, a 4.9 percent decline from a year earlier. Whereas the 100-metro-area average was a 9 percent decline.
“I’m cautiously optimistic that the factors that have been underlying the slowdown are temporary in nature and we should see renewed improvement in the next year,” Pakko said. “I don’t have a crystal ball, but when I look at possible factors that are driving the slowdown in Arkansas relative to the rest of the county, the same shocks are hitting us like the rest of the country.”
Business, Pages 29 on 12/15/2011