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Current Economic Conditions in the

Eighth Federal Reserve District
Little Rock Zone
December 17, 2009

Prepared by the

Center for Regional Economics—8th District (CRE8)
Federal Reserve Bank of St. Louis

Eighth
Federal Reserve
District
I
ILLINOIS
ILL NO
ILLINO S
ILLINOIS

IN IANA
IN IAN
INDIANA
ND
NDIAN

Columbia
Jefferson City

St. Louis

MISSOURI
ISS UR
SSOUR
S
SO

Louisville-Jefferson County

Evansville
Owensboro

Elizabethtown

KENTUCKY
KENTUCKY
KEN UCKY
EN UC
N
NTU

Springfield
Bowling Green

Fayetteville-Springdale-Rogers
Jonesboro
Jackson

ARKA AS
ARKAN AS
RKANSAS
AN

TEN SSEE
TEN ESSEE
TENNESSEE
NNE
N

Fort Smith

Memphis

Little Rock-North Little Rock
Hot Springs
Pine Bluff

Texarkana

MISS SIPPI
MISS SSIPPI
SSISS PP

This report (known as the Burgundy Book ) summarizes information on economic conditions in the Little Rock zone
of the Eighth Federal Reserve District (see map above), headquartered in St. Louis. Separate reports have also
been prepared for the Louisville, Memphis, and St. Louis zones and can be downloaded from the CRE8 website
(research.stlouisfed.org/regecon/).
The first section of this report summarizes information provided by various contacts within the District and is
similar to the type of information found in the Fed’s Beige Book (federalreserve.gov/fomc/beigebook/2009/).
The period covered by this section coincides roughly with the two Beige Book periods immediately preceding this
report. The second section includes government-provided data for Arkansas and the metro areas of the Little Rock
zone. These data are the most recent available at the time this report was assembled.
For more information, please contact the Little Rock office:
Robert A. Hopkins, 501-324-8200, robert.hopkins@stls.frb.org
Economist:
Howard Wall, 314-444-8533, wall@stls.frb.org

Little Rock Zone Report—December 17, 2009
The overall economic picture for the Little Rock zone was mixed. While general retail sales were slow, car dealers reported somewhat
better news. Reports from manufacturing were mixed, while those from the service sector were more positive. Activity in the real
estate and construction sector mostly declined, whereas reports on banking activity were somewhat positive. The agriculture and
natural resources sector reported, on balance, negative news.

Consumer Spending

Real Estate and Construction

Retail sales for October and early November were mixed among
the general retailers and car dealers. One-third of the general
retailers and 40 percent of the car dealers indicated that sales
were up compared with the same months in 2008. About 17
percent of general retailers and 20 percent of car dealers reported
decreased sales. Among general retailers, 50 percent noted that
sales met their expectations, 25 percent reported sales below
expectations, and 25 percent reported sales above expectations.
Among car dealers, 40 percent noted that used car sales had
increased relative to new car sales, while none reported the
opposite. Also, 20 percent noted an increase in low-end vehicle
sales relative to high-end vehicle sales, but another 20 percent
reported the opposite. About 20 percent reported recent increases
in rebates and incentives, but none reported decreases. About
40 percent of the car dealers reported more rejections of finance
applications, but 20 percent reported more acceptances. About
17 percent of the general retailers reported high inventories,
while 60 percent of car dealers reported too-low inventories;
the remaining contacts reported that their inventories were at
desired levels.

Compared with the same period in 2008, September 2009
year-to-date home sales were down by 10 percent and
September 2009 year-to-date single-family housing permits
declined by 14 percent. Compared with the second quarter of
2009, the third-quarter 2009 industrial vacancy rate increased.
During the same period, the suburban and downtown office
vacancy rates decreased. A contact in northeast Arkansas
reported that commercial construction was very slow with
few new projects.

Manufacturing and Other Business Activity
On net, manufacturing has declined slightly since our previous
report. Firms in the electrical component manufacturing industry
reported plans to open a new facility. Contacts in the rubber
tire manufacturing, heating, ventilation, and air conditioning
manufacturing, and paper products manufacturing industries
reported plans to expand existing facilities and operations,
including hiring additional workers. In contrast, a contact in the
transportation industry reported plans to close a plant, resulting
in a significant number of job losses. Firms in lumber manufacturing and furniture manufacturing also announced plans
to decrease production and lay off workers. The service sector
continued to show signs of improvement, with a firm in business support services announcing a new facility and new jobs.
In contrast, a large medical center announced pay freezes due
to budget shortfalls.

Banking and Finance
Contacts reported mildly positive reports on local banking
conditions. On net, commercial and industrial lending activity
was unchanged. Reports on the level of lending to consumers
ranged from unchanged to a slight increase. One contact noted
a surprise spike in home equity loans. Residential mortgage
lending activity increased with multiple reports of higher demand
for these loans. Several contacts also indicated that refinancing
activity has increased in recent months. Reports indicate a
steady increase in deposits.

Agriculture and Natural Resources
Wet conditions caused some delays in harvesting and winter
wheat planting. November estimates showed that yields for corn
and cotton were 2 percent and 12 percent lower than last year’s
yields, but yields for rice and sorghum were 1 percent and 6
percent higher than last year, while soybean yields were the
same. From October to November, yield estimates changed by
less than 3 percent except for cotton, which decreased by 14
percent. As of mid-November, farmers in Arkansas were behind
normal with their winter wheat planting, and crop growth was
even farther behind normal. About three-fourths of the emerged
winter wheat in Arkansas was rated in fair condition or better,
which was a much lower percentage than the same time last
year.

Throughout the year, Little Rock employment growth has outpaced that of the
country as a whole, although it has been
trending down for Little Rock. Over the
three-month period ending in October
2009, Little Rock employment fell at a
0.07 percent monthly rate, while U.S.
employment fell at a 0.17 percent monthly
rate.

Nonfarm Payroll Employment Growth
3-Month Average, SA, January 2001–October 2009
Percent
0.8
0.6
0.4
0.2
0
–0.2
United States
Little Rock MSA

–0.4
–0.6
2001

2002

2003

2004

2005

2006

2007

2008

2009

Little Rock Employment Growth by Sector
Year/Year Percent Change, October 2008–October 2009
Percent
6.0
4.0
2.0
0.0
–2.0
–4.0
–6.0
–8.0

Total
Nonfarm

Natural Manufacturing Trade, Information Financial
Transportation,
Activities
Resources,
Mining, and
and Utilities
Construction

Professional Education Leisure
and
and
and
Business
Health Hospitality
Services

Other
Services

Government

Between October 2008 and October 2009,
nonfarm employment in the Little Rock
MSA fell by 1.6 percent, although there
was employment growth in several sectors.
Leisure and hospitality saw the strongest
growth (4.7 percent), followed by education and health (2.2 percent). Several
sectors saw relatively steep job losses over
the period. Employment fell by 6.9 percent
in trade, transportation, and utilities; 5.7
percent in manufacturing; and 4.4 percent
in professional and business services.

Little Rock Zone—MSA Employment and Unemployment
Nonfarm payroll employment percent change,
October 2008–October 2009
Total
Little Rock
Fayetteville-Springdale-Rogers, Ark.
Fort Smith, Ark.
Texarkana, Ark.-Tex.
United States
SOURCE: Bureau of Labor Statistics.

Goods producing

Service providing

Unemployment rate
October 2009

–1.60
–1.43
–1.66
–2.06
–3.87

–3.64
–3.60
–7.44
–13.70
–12.03

–1.31
–0.89
0.43
–0.39
–2.37

6.7
6.1
8.3
7.2
10.2

Little Rock Zone—MSA Housing Activity
Total building permits,
units year-to-date
Percent
change

House price index,
percent change,
2009:Q3/2008:Q3

9.8
–39.4
14.1
–36.0
–51.8
90.4
–40.5

September
2009

0.43
–6.42
0.26
0.75
0.09
4.73
–4.08

Little Rock
2,496
Fayetteville-Springdale-Rogers, Ark. 1,468
Fort Smith, Ark.
673
Hot Springs, Ark.
32
Pine Bluff, Ark.
55
Texarkana, Ark.-Tex.
259
United States
483,013

Housing markets in the Little Rock zone
have tended to outperform the country as
whole. Year-to-date total residential building
permits in September were higher than a
year earlier in Little Rock, Fort Smith, and
Texarkana, and only Pine Bluff underperformed the rest of the country in this regard.
The house price index fell by more than the
national average in Fayetteville-SpringdaleRogers, while rising slightly in most other
MSAs in the zone.

SOURCE: Bureau of the Census, Federal Housing Financing Authority.

Arkansas Coincident Economic Activity Index
Index (1992 = 100)
165
160
155
150
145
140
Arkansas

135
130
2000

United States
2001

2002

2003

2004

2005

2006

2007

2008

The Philadelphia Fed’s coincident index
combines payroll employment, wages and
salaries, the unemployment rate, and hours
worked into a single index of economic
performance. According to this index,
Arkansas has underperformed the country
as a whole since 2001. Recently, however,
the state’s experience has mirrored the
nation’s. For the 12 months through
October 2009, the index declined by 3.2
percent for Arkansas, while it declined by
3.3 percent for the United States.

2009

SOURCE: Federal Reserve Bank of Philadelphia.

Personal income growth in Arkansas has
tended to keep ahead of national income
growth since 2007: In the second quarter
of 2009—the most recent quarter for which
there are data—year-over-year income
growth in Arkansas was –2.0 percent,
compared with a –2.4 percent growth
rate for the nation as a whole.

Arkansas Real Personal Income Growth
Percent Change, Year/Year
Percent
7

Arkansas

6

United States

5
4
3
2
1
0
–1
–2
–3
2000

2001

2002

2003

SOURCE: Bureau of Economic Analysis.

2004

2005

2006

2007

2008

2009

Year-Over-Year Percent Change in State Tax Revenue
2008:Q3
Personal
income
Arkansas
Illinois
Indiana
Kentucky
Mississippi
Missouri
Tennessee
United States

6.2
3.8
–1.9
6.6
–1.8
0.2
—
1.9

Corporate
income
–12.4
–3.4
–10.5
–48.4
–14.6
–3.0
–25.2
–14.9

2009:Q3

Sales

Total

Personal
income

3.6
1.9
19.7
3.2
2.5
–3.6
–2.0
4.8

3.4
1.4
9.1
0.9
1.4
–1.1
–4.2
3.0

–6.9
–11.7
–20.3
–7.1
–12.2
–8.1
—
–11.3

Corporate
income
–21.4
–28.4
–42.4
–40.5
–19.1
–8.5
8.2
–17.5

Sales

Total

–11.1
–13.1
–10.9
–7.5
–12.4
–6.0
–9.5
–8.8

–7.8
–12.6
–14.2
–5.5
–11.8
–6.9
–5.4
–11.1

NOTE: 2009:Q3 data are preliminary data from early-reporting states collected by the Rockefeller Institute of Government.
SOURCE: The Nelson A. Rockefeller Institute of Government/U.S. Bureau of the Census.