Economic activity has improved “slightly” in Arkansas’ region, according to the latest report from the Federal Reserve Bank. In the latest Beige Book report, the agency revealed that economic activity had “increased slightly” but that it is variable across multiple sectors.
The Federal Reserve found that labor market conditions and wages had improved in the 8thDistrict, which includes Arkansas, but that job growth had slowed. According to the Beige Book, firms have reported a “tight labor market” impacted by workers’ health concerns and family care obligations. In one case, a firm estimated that 10 to 15 percent of its workforce was absent on a daily basis. In response to labor shortages, some companies have reportedly increased wages, along small business wages have remained mostly stable.
Across the region, prices have shown moderate growth. Some of the price increases could be attributed to higher expenses, such as sanitization products and personal protective equipment.
While prices have increased, consumer spending is a varied picture across the region. The Federal Reserve reports that debit and credit card spending was “mixed” in the district and that general retailers also reported “mixed business activity.” However, both restaurants and auto dealers in the district had strong sales in recent weeks. Auto dealers, though, have had to contend with inventory shortages.
In contrast with these business sectors, the hospitality and tourism industries have had significantly lower business activity than usual. While businesses surveyed by the Federal Reserve said they had “constant business activity” in the late summer and early fall, they predict a decline in business activity for the remainder of the year.
Other sectors have shown similar weakening throughout Arkansas’ general region. The finance industry has “slightly weakened” since the previous Beige Book report with loan demand dropping after the Paycheck Protection Program (PPP) came to an end. The Federal Reserve expects for the finance industry’s net interest margins and profitability to be narrowed due to loan competition and low interest rates.
The residential real estate industry has also seen an activity decrease, although it has recovered from the lows of the early pandemic. In the commercial real estate market, activity has shown more variation. industrial space construction has remained strong, although there has been a limited amount of speculative activity.
Overall, the Federal Reserve reported that economic activity through the United States was “slight to modest” since the previous Beige Book was released.
