Business pluses, minuses observed

Economy front, center at forum

Business owners and leaders were treated to a mixed bag of optimism and pessimism when they gathered Wednesday at the University of Arkansas at Fort Smith.

The occasion was the Regional Economic Outlook Forum, a periodic event sponsored by Fayetteville based Arvest Bank.

Kermit Kuehn, director of the university’s Center for Business Research and Economic Development, said more people are seeking jobs than in the recent past, indicating some optimism, but he noted that the increase in applications pushes the unemployment rate higher if job seekers are not finding jobs. Unemployed people who are not seeking jobs are not counted as jobless.

Fort Smith’s economy is heavily dependent on manufacturing, a sector that took a big hit in the recent recession. Last year, Whirlpool Corp. closed its Fort Smith plant, which at one point employed about 4,600. That number had dwindled to about 825 by the time the plant closed.

Kuehn said that, while some job recovery has occurred, “the tough one has been manufacturing,” and that sector is still declining in the region. The Fort Smith unemployment rate stood at 7.7 percent in May.

On the plus side, he said, preliminary statistics for June show that “consumer sentiment is definitely up,” which could lead to a rise in consumer spending.

Kevin Kliesen, business economist and research officer for the St. Louis Federal Reserve office, said the rebound of the U.S. economy has “been a very weak recovery for lots of reasons, but job gains have been surprisingly good.” Year to date, he said, Fort Smith’s job count is up 1.8 percent.

Businesses remain cautious, he said, but added, “I think we can get some rebound.” Cities less dependent on manufacturing, such as college towns like Fayetteville, are performing well, he said.

At the federal level, he said, the fastest-growing sectors are health-care and high technology businesses.

Kliesen called the activity in the Fayetteville Shale region to produce natural gas a plus for the state’s manufacturing and energy costs. He downplayed the impact of “sequestration” of federal funds on the state’s economy, saying federal increases in marginal tax rates and an increase in payroll taxes had a bigger negative impact.

Mike Jacimore, Fort Smith sales manager for Arvest Bank, said he was “encouraged by the optimism in the Fort Smith area and in Northwest Arkansas.” Focusing on clusters of businesses “is a real strength,” he said, adding, “it just makes sense.”

Craig Rivaldo, president and chief executive officer for Arvest’s Fort Smith/River Valley division, said the turnout for the forum was the largest since the forums first began.

“Five years ago, we didn’t have this kind of information about Fort Smith,” he said.

Business, Pages 21 on 07/11/2013

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