Elopak is one of several companies building manufacturing plants at the Port of Little Rock and contributing to the area’s economic vitality, Port Authority Executive Director Bryan Day says. (Illustration courtesy of Elopak)
A hopeful picture of the national and Arkansas economies emerged Thursday at an annual economic forecast conference, although two economists cited some risks to continued growth.
Economists Tara Sinclair and Michael Pakko said the U.S. and Arkansas economies both recovered remarkably well since the inflationary period that popped up after the pandemic year of 2020.
Sinclair, a George Washington University economics and international affairs professor, and Pakko, chief economist and state economic forecaster at the Arkansas Economic Development Institute at the University of Arkansas at Little Rock, gave their assessment of 2024 economic data and projections for 2025-2026 on Thursday at the annual Arkansas Economic Forecast Conference at the Wyndham Riverfront Hotel in North Little Rock.
Bryan Day, executive director of the Little Rock Port Authority, touted the strong growth of the region served by the port and recent major economic development milestones that he said bode well for continued growth.
Sinclair cited strong labor market and productivity data as well as cooling inflation as reasons to believe the Federal Reserve’s “soft landing” for the national economy is being achieved.
“I’m not seeing a resurgence of inflation,” she said, but noted that prices remain elevated despite lower inflation.
“Clearly, it’s a persistent concern,” Sinclair said.
She added that bringing prices down would come with “steep economic costs,” comparing it to everyone waiting for a sale while businesses suffer for lack of customers.
Pakko said Arkansas outperformed the national economy by most measures since 2020, saying the state economy started its recovery at a relatively higher point than the U.S. did and has stayed on that upward trend.
“The pandemic contraction didn’t hit Arkansas as hard as the U.S.,” Pakko said.
Personal income in Arkansas has grown steadily and at a better rate than the country as a whole, by about 6% since 2019 compared to 4.4% for the U.S., he said. Personal income in the state should continue to grow by 4% to 4.5% over the next couple of years, he added.
Arkansas’ gross domestic product (GDP), a measure of the value of all goods and services produced by the state, grew by close to 14% since 2019, according to Pakko’s slides. He told the conference GDP should continue to grow by 1-1.5% a year through 2026.
While the state has a lower unemployment rate than the U.S. at 3.3%, there still are a lot of job openings compared to the number without jobs, Pakko said. Job openings per unemployed person ranges between 1.5 and 2.
“There is still some slack” in the labor market, he said.
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‘Poised to fare well’
Sinclair and Pakko said both the U.S. and Arkansas economies face similar risks, almost all of them outside anyone’s control.
Both cited uncertainty about any effects the incoming Trump administration has on the economy, especially the president-elect’s promise to impose steep tariffs on imported goods.
Day said that “if those tariffs take effect, it will slow us down” because the companies that operate at the port rely on imported materials.
Other risks to continued economic growth include the housing market and higher longer-term interest rates and the impact of commercial real estate loans carried by many regional and community banks, Sinclair said.
Pakko said Arkansas’ economic growth could be hurt by downturns in the global economy and financial markets, international conflicts and falling commodity prices.
He predicted a possible slowdown in the retail and food services sector over the next year or so, “but nothing recessionary.”
Overall, “Arkansas is poised to fare well,” Pakko said.
Central Arkansas
Day said the central Arkansas region’s economy is strong “and should remain strong.”
The port itself contributes close to half a billion dollars to the area’s economy, he said, and there have been 42 economic development projects in the region in recent years that created 12,000 jobs and $2 billion in investments.
The Little Rock region contributes 52% of the new jobs in the state, the port director said.
He mentioned four projects located at the port that helped the growth profile:
- Trex Co., a Virginia-based composite decking company that is building a $400 million manufacturing plant that is expected to employ 550 when it goes online late next year.
- Elopak, a Norwegian company that makes cartons for liquid foods and is building a $70 million plant with about 100 jobs when it starts up in the first quarter of 2025.
- Faymonville Group, a Belgian family-owned manufacturer of heavy-duty specialty trailers which announced in late October that it will build a $100 million facility ultimately employing 500 at the port.
- Welspun Tubular LLC, a subsidiary of India-based Welspun Corp. that announced last month a planned $100 million expansion of its large-diameter pipe plant that will employ 75.
Day said all of those businesses chose Arkansas for their facilities because it is a “business-friendly state” and because Arkansas people, as one executive said, “have the biggest hearts.”
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