Growth in 2013 expected to be soft

Arkansas forum receives outlook

— An economist at the University of Arkansas at Fayetteville told a group in Fort Smith that she expects slow economic growth in the state and nation for 2013, as long as the looming “fiscal cliff” and other economic risks are kept at bay.

Kathy Deck, director of the Center for Business and Economic Research at the Walton College of Business, spoke Wednesday as part of the Fort Smith Regional Economic Outlook Forum. The event, with about 75 in attendance, was held at the Smith-Pendergraft Campus Center.

Deck said projections indicate the nation’s gross domestic product will continue to limp along with 1.5 to 2 percent growth next year.

“We can expect muted, moderate, boring, not good enough, growth,” she said.

She said most economists are optimistic that a deal that won’t result in large across-the-board income-tax increases or drastic spending cuts will be reached before the deadline for the “fiscal cliff” is reached. The “fiscal cliff” is a package of tax increases and spending cuts that will go into effect next year unless Congress and President Barack Obama strike an accord to stop them.

“I’m in favor of boring growth,” Deck said.

The forum coincided with the release of the thirdquarter Fort Smith Regional Outlook Report. The event and the regional outlook reports are sponsored by Arvest Bank.

Kermit Kuehn, director of the Center for Business Research and Economic Development at UA-Fort Smith, said the unemployment rate for the Fort Smith Metropolitan Statistical Area was virtually unchanged for the third quarter at 8 percent, down from 8.1 percent for the same period last year. The statewide rate was 7.1 percent for the quarter, down from 8.1 percent from the same time a year before.

The statistical area includes Sebastian, Crawford and Franklin counties in Arkansas, and Le Flore and Sequoyah counties in Oklahoma.

The city still is adjusting to the June closing of its Whirlpool Corp. plant, which resulted in the loss of nearly 1,000 manufacturing jobs. At its high point, the plant employed as many as 4,600. The factory remains vacant.

According to the outlook report, total nonfarm employment declined 1.3 percent in the third quarter, a loss of 1,434 jobs compared with last year. The top three sectors for job losses were health services, with 833; financial services, with 333; and government, with 167. The top gainers were manufacturing with 700 jobs and leisure and hospitality with 33.

The Center for Business Research and Economic Development also released the second part of a sector analysis of the Fort Smith statistical area’s economy from 2007-10. Latisha Settlage, associate professor of economics at UA-Fort Smith is the report’s author.

The report notes the makeup of the Fort Smith regional economy has been changing for more than 10 years, and examines the changes and their effects on the area including the 15 percent decline in manufacturing sector jobs since 2007 and a broad shift to service-sector jobs.

Kuehn said in an interview the report will be a useful tool for recruiting business to the region by identifying vital economic connections between sectors.

“We need to better understand who we are,” Kuehn said

Tim Allen, chief operating officer of the Fort Smith Regional Chamber of Commerce, said the area is ending the year on a good note, with word in late November that Walther Arms Inc. will move its headquarters into the Fort Smith Umarex USA plant.

Walther Arms Inc. and Umarex USA are private companies owned by Arnsberg, Germany-based PW Group.

The plant expansion at the Umarex building at Chaffee Crossing could cost as much as $7 million. The company said the combined operation could add as many as 70 to 120 jobs over the next five years.

Allen said the Fort Smith region must strive to retain the businesses it has and work harder to recruit new ones. He said recruitment must take a regional and statewide approach rather than return to the days when every city was out for itself.

“Everyone outside Arkansas is our competition,” he said.

Business, Pages 25 on 12/13/2012

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