Arkansas and surrounding areas reported a slight uptick in overall economic conditions through mid-July, though the housing market in the state’s northwest region is sizzling and lifting activity in that corridor.
The Federal Reserve Bank’s Beige Book report, released Wednesday, notes “modest improvements” across the seven-state St. Louis district that includes Arkansas.
Northwest Arkansas, however, is a bright spot in an otherwise mundane economic report. “The Northwest Arkansas economy was even stronger than the district as a whole,” Fed economist Nathan Jefferson said Wednesday.
“Northwest Arkansas has seen the housing market remain stronger than the rest of the country. We’re still seeing buyers making offers above asking price.”
Housing activity is slower across the rest of Arkansas and the region, according to the Beige Book report. “Home-buying activity slowed across most of the district due to rising interest rates, and rents rose,” the report said.
The region as a whole and the rest of the state are finding it difficult to sustain momentum, with consumer-price increases and supply-chain bottlenecks throttling the improvements that have been realized in the labor force, where activity has picked up and more workers are returning to fill open jobs.
Inflation remains a major concern for consumers and businesses. “Price increases are one of the barriers that both consumers and business are facing,” Jefferson said.
The consumer price index for June, which also was released Wednesday, recorded an annual inflation rate of 9.1% — the highest in four decades – and well above the 8.6% reported in May.
Even so, retailers, restaurants and other service-related businesses are reporting strong demand while struggling to find workers to meet consumer needs.
“Services is where the real demand increases have been over the past few months,” Jefferson said. Food-service businesses, leisure and hospitality, hotels and airlines have seen activity pick up over the past few months. “Demand is up but they’re still having difficulties finding workers.” Jefferson added.
Other sectors, boosted by wage increases, are finding better luck with the labor force, the report noted. “The labor market has improved a little bit and labor shortages aren’t quite as severe as they were a couple of months ago,” Jefferson said. “But it’s still tougher, especially for seasonal firms or service firms — they’re still seeing difficulties.”
In addition to the robust housing market in Northwest Arkansas, the state is gaining more improvements in the leisure-travel and recreational sectors, according to Jefferson. For example, Northwest Arkansas National Airport reports activity is just 5% down from pre-pandemic levels. “That is stronger than in many areas across the rest of the country,” Jefferson noted.
Overall, though, the state’s economy is tracking with the U.S. “The trends that we’re seeing nationally and across the district generally are the trends we’re seeing in Arkansas as well,” Jefferson said. “There’s really been no radical changes month-to-month.”
The Federal Reserve issues the Beige Book report eight times a year to give a snapshot of national and regional economic conditions. The St. Louis district summarizes activity in all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.