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Fears of a recession are subsiding in the United States and globally, but a slowdown in population growth is causing economies to likewise slowdown.
Three economists gave presentations to a crowd of about 1,000 at the 26th annual Business Forecast Luncheon on Thursday at the Hammons Center in Rogers. The event is held by the Center for Business and Economic Research at the University of Arkansas’ Walton College of Business.
Constance Hunter, chief economist for KPMG, said gross domestic product (GDP) growth depends on increases in the number of workers and their productivity. Worldwide in developed countries, population growth has slowed, and she expects it to be flat for the next three years.
“What this means the entire burden of potential GDP falls on productivity,” Hunter said.
The reason isn’t just birth rates, Hunter said. In the U.S., birth rates are down along with immigration numbers and life expectancy.
Slower population growth in the robust northwest Arkansas area also slowed the economy, said Mervin Jebaraj, the director of the CBER. The state still added 15,000 jobs in 2019, and Jebaraj said projections are for 16,000 in 2020.
“The employment growth has slowed a little bit, but 2019 was still better than 2018 for the state as a whole,” Jebaraj said.
The state’s economic growth was fueled by its continuing Big Three metropolitan statistical areas: northwest Arkansas; central Arkansas centered around Little Rock, North Little Rock and Conway; and Jonesboro. Hot Springs also got into the impressive growth mix in 2019, adding 600 jobs.
Fort Smith’s job growth continued to be relatively stagnant but it has recovered most of the jobs it lost during the recession a decade ago. Pine Bluff continues to lose jobs, about 5,000 in the past decade, but the opening of the Saracen Casino Resort may help stop the trend, Jebaraj said.
Jebaraj said unemployment rates hit record lows in 2019 and have remained there while the state has also seen wages increase.
Professional and business services continue to be the linchpin of northwest Arkansas’ growth, and Jebaraj projected that half the state’s new jobs are created in the region. Statewide, construction, hospitality and financial industry jobs showed good growth.
Jebaraj, or perhaps Razorbacks karma, drew a big laugh late in his presentation when he said he was about to make a jab about the university’s struggling football program. Just as he did so, the power to his slide show went out, leaving the screen black for several seconds.
“I learned my lesson; I won’t do that again,” Jebaraj said.
The global economy presenter was Manuel Balmaseda, the chief economist with CEMEX, a building materials company in San Pedro, Mexico. He joked that during the last five years when asked about recessions, economists would answer along the lines of within the next two years.
“The truth is we have been postponing the recession every year for the last four to five years,” Balmaseda said.
Balmaseda said there is a clear economic slowdown worldwide but there doesn’t seem to be anything ominous or worrisome about the conditions.
“We are in a slowdown for sure,” Balmaseda said. “A recession doesn’t mean crisis. There is a big difference between slowdown and a recession.”