Two reports issued in the past week bode well for the mending of Arkansas' economy from the coronavirus pandemic.
Economists who cover the state and the region are forecasting that Arkansas could recover more quickly than previously expected from the economic turbulence caused by the virus over the past three months.
"It looks like the economic contraction in Arkansas has not been as severe as in other states," Michael Pakko, an economist with the University of Arkansas at Little Rock, said Wednesday.
The state's resiliency, combined with the beginnings of a rebound on the national level, indicates economic conditions in Arkansas may be picking up, Pakko said. "Those are two threads of relatively positive information for Arkansas," he said.
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An economic update released Tuesday by the Federal Reserve Bank of St. Louis validated Pakko's assessment, noting that there has been "a slight improvement in economic conditions" from a similar report issued in mid-April.
"Overall, most firms believe they can continue to operate for months in the current environment without financial distress," the report said.
The Fed's St. Louis region includes all of Arkansas and parts of Illinois, Indiana, Kentucky, Missouri, Mississippi and Tennessee. In addition to St. Louis, key metropolitan areas in the region are Little Rock, Louisville and Memphis.
In a June 10 forecast for the state, Pakko predicted statewide employment, consumer spending and sales-tax collections would improve over previous projections. In May, Pakko said the state's joblessness rate could hit 17% this summer.
Now, joblessness is predicted to hover around 10% through the summer before starting to decline in the fourth quarter, Pakko said Wednesday.
Employers are optimistic that economic recovery will happen quicker than previously forecast and that they are equipped to survive the pandemic, according to the Fed report.
"Financial stress at firms has eased considerably," Fed economist Charles Gascon said Wednesday. "In April about a quarter of firms expected they would need additional cash/credit in less than a month; this has dropped to only 4%."
Gascon is co-author of the report, which surveyed a cross-sector of businesses in the seven-state region between May 27-June 5.
The report noted that most business owners "expect a strong rebound in activity" and anticipate demand for their services "will return to pre-crisis levels in less than nine months."
Economic forecasts in March and April predicted recovery would not begin until later and would linger into 2021 before a turnaround was evident.
Job losses are slowing and hiring has picked up, Pakko said. "Gradual recovery and steady positive job growth is now expected before the end of the year," Pakko wrote in the June report.
The Fed report also indicated jobs are returning quicker than expected. Business owners increased employment by 4.6% from mid-April to mid-May and expect hiring to bump up another 2.5% through this month, the report said.
A key measure tracking employment in Arkansas will be released Friday when the state announces unemployment figures for May.
Nationally, jobs rebounded in May after suffering severe losses in March and April. Employers added more than 2.5 million jobs during the month, leading to an unexpected drop in the unemployment rate to 13.3% from 14.7% in April.
That news was bolstered by national reports out Tuesday that said consumers increased spending in May as retail sales shot up 17.7%. Overall, retail sales in May were down 6.1% in a year-over-year comparison and May sales were about 8% below February, before the pandemic began wreaking economic havoc.