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Northwest Arkansas termed 'recession-proof' Sunday, May 4, 2008 By John Lyon and Doug Thompson Arkansas News Bureau FAYETTEVILLE - Is Northwest Arkansas recession-proof? It is, according to Mark Hovind of Las Vegas, president of JobBait.com. Using data from the Bureau of Labor Statistics, Hovind recently compiled a list of 27 metropolitan areas where jobs outpaced the labor force during the recessions of 1990 and 1991 and in the past year, and he designated those areas "recession-proof." The Fayetteville-Springdale-Rogers metro area made the list. Rogers Mayor Steve Womack said the term "recession-proof" may be a bit overstated, but he understands why Northwest Arkansas received the designation. "Certainly nobody is recession-proof, but if there was an area of Arkansas that would be the closest to recession-proof it would probably be Northwest Arkansas for a number of reasons, not least of which is that you've got a corporate headquarters located here of a company that does well in recessionary times: Wal-Mart," Womack said. Shares of Bentonville-based Wal-Mart closed Wednesday at $57.98 on the New York Stock Exchange, close to the company's 52-week high of $59.09. "People still are looking for value, they're looking for the low price and trying to stretch the dollar, and typically Wal-Mart caters to people that are suffering from those types of financial hardships," Womack said. "And when Wal-Mart does well, a lot of Northwest Arkansas does pretty well." Phil Taylor, a retired University of Arkansas business professor, said economic diversity helps lessen the impact of a downturn. "In the past, recessions have relatively been more mild in this area than national recessions, but I never would have called us 'recession proof,'" Taylor said. "Arkansas as a whole doesn't go down as much during recessions, but we haven't gone up as much during boom times either, and that's because we're not as heavily industrialized and are relatively diverse." As for Northwest Arkansas in particular, he said, "we have a university and a lot of headquarters: Wal-Mart, Tyson, J.B. Hunt. We do have some manufacturing, but it's a small portion." "I wouldn't call us recession-proof, but we're certainly much better off than other parts of the country," said Raymond Burns, director of the Rogers-Lowell Chamber of Commerce. Being home to the headquarters of the world's largest retailer, as well as other large corporations, has secondary benefits, according to Burns. "As for the hospitality industry, business travelers still have to come here (to do business with those corporations), and that's our bread and butter," he said. But everyone feels the affect of high gas prices, and Northwest Arkansas is not immune, Burns said. He also questioned whether Hovind's analysis would hold up over the long term, noting that it was based on data gathered during recent recessions, and the last recession took place while Northwest Arkansas was enjoying a period of exceptional growth. Washington County Judge Jerry Hunton said he knows people are suffering in Northwest Arkansas. He said two county jobs that recently came open, a receptionist for the road department and a janitor, drew more than 80 applicants between them, an unusually high number. "I don't know how strong the job market is right now," he said. "I know everybody is feeling the pinch of fuel and food costs." Employment in Fayetteville-Springdale-Rogers rose from 208,700 in March 2007 to 209,000 in March 2008, or 0.1 percent, according to preliminary data from the Bureau of Labor Statistics. Nationwide, employment rose from 145.3 million in March 2007 to 145.97 million in March 2008, or 0.46 percent. "The area is basically flat," said Jeff Collins of Streetsmart Data Services in Springdale. "When you look at things like that, for an area that's 'recession-proof,' those are not the statistics you'd expect." But Collins said he would agree with Hovind that, given the unique circumstances of the area, "you'd rather be in Northwest Arkansas than most other places in the country" during a recession. Other noteworthy statistics: -In the first quarter of 2007 there were 84 home foreclosures in Washington and the same number in Benton County. The numbers skyrocketed in the first quarter of this year, to 426 foreclosures in Washington County and 757 in Benton County. -In the U.S. Bankruptcy Court in Fayetteville, 40 small businesses related to the housing sector filed for bankruptcy between Jan. 1 and April 27. "Our building industry has kind of gone rampant," said Springdale Mayor Jerre Van Hoose. "We way overbuilt. A lot of people came in to work in the building industry, and it's really slowed down in terms of the larger housing." The subprime mortgage crisis has only made that problem worse, Womack said. But Van Hoose, Womack and Fayetteville Mayor Dan Coody all said they expect the area to continue attracting new residents. "We keep attracting entrepreneurs, retirees and people who want to leave the hectic big city for a high quality of life," Coody said. Hovind said his analysis was limited to one specific set of data. "All I'm using is employment growth, which is what the consumer feels the most," he said. "They're also going to feel bankruptcies and gas prices and food prices and all those other things." Hoovind said the metropolitan areas he included in his list are, for various reasons, likely to feel the effects of a recession less than other areas. In retrospect, "recession-proof' may not have been the best term he could have used, he said. "Recession-resistant would be better," he said. |
