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And hello again everyone.

Thanks very much for joining us where midway in the first month of the first quarter of a new calendar year, third quarter of the state's fiscal year on, judging by the state Treasury, it's almost as if nothing unusual that happened in the previous 10 or 11 months, almost.

But if you're self-employed or you run a small business, or you rely on one, you are take maybe rather different.

The Arkansas economy in the near future.

That's our focus in this half hour, and we're joined in this edition by Tab Townsell, executive director of Metro Plan, the Central Arkansas Planning agency doctor Mervyn Gemma, Roger, the University of Arkansas's Economic Research Center, and George Jerrod Northeast Arkansas Bureau chief of Talk, Business and politics gentlemen.

Thank you all for coming in tab.

Let me go to you first, 'cause in the latest edition of Metro plans.

This publication Metro trends the focus and I can't get close enough for the audience, but the focus is a number of individuals, all of whom wearing masks.

Clearly, Covid is the focus.

Anyway, and its impact on the economy is is the focus of Metropolitan.

The Central Arkansas area, at least as you gentlemen said, Anne Ladies said.

Absolutely it is.

That's the theme of the Metro Trains magazine for this year because you can't talk about this year in the economy without recognizing the impact of a pandemic throughout Arkansas.

And you know, it's not only just our Central Arkansas area MPO, but throughout the throughout the states economy as well, right?

Well, is there a segment of the Central Arkansas?

Obviously hospitality has taken it absolutely on the nose, but other aspects of the economy.

Certainly with with focus on the Central Arkansas.

Our statistics show that it's it's.

Dramatically affected some sectors and not affected other sectors at all.

As a matter of fact, other sectors are booming.

Particular nitches industries in the total economy, leisure and hospitality is taking it.

Dramatic it in our numbers that we published were over 11,000 jobs in our region.

You know, down over 10% of the workforce, and that probably fluctuates depending on.

Where the?

You know what the restrictions are at that given time?

You know that's dramatic.

Same way with education and medical there.

For some reason lumped together in our statistics, it's gone down over 6000 jobs, taking a pretty dramatic it as well as the other categories as well.

But if you look at grocery stores and general merchandising stores, it's done very well.

Construction has continued very well, and of course the Commerce is taking a multid double digit leaf.

Forward to.

Yeah, let me go to George Jerrod now for at least give us an update on Northeast Arkansas.

Yes, Steve, you know in Northeast Arkansas, the primary economic driver in this region is agriculture.

You know, we've been in kind of depressed state the last couple of years.

You know pre covid just because you know you know Arkansas is a top soybean producer and you know the trade war with China especially had really hammered the soybean markets.

You know, I talked to Arkansas Agricultural Secretary West Ward recently and he told me that they're pretty optimistic that this year.

That they're going to get some movement on that trade that the trade dispute, and he thinks that actually soybean acres may rise.

This year.

We were pretty close to 3 million acres planted this year, and that could that may go up several 1000 or several 100,000 acres this spring.

We'll see what happens, you know.

Obviously, Rice and corn.

Some of those other you know, crops we grow in this part of the state.

The prices have been good, you know, relatively speaking compared to last year, so there's some optimism there.

Obviously, in recent years we started growing peanuts in this part of the state.

Again we had, I think, about 34,000 acres this year, which is about 1000 acres more.

And I from everything I'm hearing right now.

Those acres will probably continue to increase as time goes on.

You know, Jonesborough, which is kind of the hub of this part of the state is kind of an island.

It's very isolated from.

Other parts of the state.

It's also isolated from economic trends to a degree.

You know, a lot of the manufacturing base up here is food processing.

You know we have a lot of government jobs, a lot of hospital jobs, so you know, even in times of recession or economic downturn, you know our unemployment rate in this part of the state doesn't typically go down as much.

So things are somewhat humming along.

I know I've got.

I've talked to several restaurant owners and some small business people.

Who are definitely suffering right now?

You know, I saw statistic, you know the other day that you know up to one and three restaurants nationwide could shut down.

If this continues on through the next year and I can see some of that trend lined, precipitating through this part of the state as well.

So I think it is a problem for sure.

Well, let me stick with you, George.

Just for a second and stick with eggs.

So much of that is going to hinge on trade policy, correct?

Yes, and you know we talked about last year we signed at the preliminary stage or stage one of this new trade agreement with China.

You know, they agreed recently to buy.

I believe 4.8 billion dollars worth of our AG products, which is a good step.

Now I will say this, you know, in the past you know the Chinese had made promises, especially in the AG sector that they haven't kept, you know for years, Steve, you know that we've talked about the Chinese, don't buy a lot of international rice, especially from us.

And there's always been optimism for years that they're going to buy and we we seem to reach these preliminary agreements with them to buy Arkansas Rice.

And then it never seems to come to fruition.

And so we'll see how this goes.

There's also something that Wes and I talked a lot about.

Are you know with the new administration coming in, there's going to be a new AG secretary of Secretary.

Vilsack will come back and take that role, so we'll see what the we'll see, how these, how this trade was up.

You know, this part of Arkansas is also unique in another sense because you know, another major industry appears.

Steal an one side effect of this trade.

War has been the rise of American steel on international markets, and that has been a boon.

To the steel companies up in this area, I'm sure you're familiar with Nucor and Big River Steel, which is now owned by US deal, and so we're in a unique position where we have one of our major industries is doing pretty well because of the trade war, and then we've got another part of our.

Our economic sector is doing poorly because of the fact that the changes are just not buying as many soybeans or they're using secondary markets to get our soybeans, which is still driving prices down tab.

Marvelous Kota, Mervin 1st that the shift.

We had an election in November.

We're about to get a new administration.

So with a new cast of characters that could could change the situation rather significantly and fairly quickly, one would think.

Yeah, I think you know we saw expectations from economists across the country switch with the finalization of the Georgia runoff elections.

I think before that you people were expecting divided government, so they said it was going to be in Republican hands and the administration in the House would be in Democratic hands and I think at that point prospects for additional stimulus, additional funds to businesses or to households were slim.

Like you know we were going to be stuck with whatever we had the 900 billion dollars at the end of December.

I think very quickly after that election was finalized a couple of days ago.

You saw most economists up their expectations for GDP growth, immediately.

Assuming, of course that the new democratically controlled Senate would go along with the administration in the House in providing additional stimulus.

What form that takes, we'll have to wait and see, but I think there's a huge menu of items that they could choose from, which include additional direct payments to households.

Whether or not that's tide to.

Vaccination or not, additional unemployment benefits which run out in 10 weeks.

The one that passed at the end of December and then additional PPP loans, which again don't last very long and will need to be re up to your soon.

Yeah, even with the change in administration and control of the center of that.

And by the way control, this obviously is a very very very narrow margin.

No margin for error there, but just the psychology of the change in the administrations are we likely to see a significant.

Through this quarter anyway, a significant bump.

I certainly think that it will last this quarter, and certainly longer time period and then too, because you know most of the money that's going to go out this quarter hat is going to be part of what happened in that $900 bill 900.

Billion dollar stimulus package that was passed at the end of December.

So depending on how quickly you know, just been a lot of talk about $2000 checks to individuals depending on how quickly that goes in will determine how much more we see this quarter versus later quarters this year.

But I think it's far more important to try to figure out how to get money to households that are unemployed and to businesses that are currently shuttered or struggling to pay rent and utilities and those types of expenses right tab townsell local government.

Looking longingly fervently at Washington urgently to Washington for some assistance.

Well, actually, strangely, the retail sales and the sales tax revenues this past year have actually been.

Generally higher to most local governments, even though it's not been as as much of a boon at all to Little Rock and North Little Rock or the surrounding areas.

I've seen quite large and healthy spikes in their sales tax collections, but you never know you never.

We are numbers don't show yet the running out of unemployment benefits, or you know, in the shutting down of more the economy as this late fall surge has overtaken us more.

So it's hard to tell.

There's a lot of uncertainty, a lot of people didn't.

Budget any growth in their local governments in budget any growth just because of that uncertainty.

So yes, they are, but they're probably not as as desperate for it as other sectors, or perhaps other state and local governments around the nation.

Well, for in terms of individual assistance, right?

Individual assistance.

That is a.

But certainly one of those things that they're after because that does sustain, and I think our numbers tracking through the middle part of the year, do show that there is a strong probability that those enhanced retail sales are coming, but cause of the sustained unemployment benefits and the direct checks to families and households.

So in that sense, they're very interested in what goes in to the households in their cities in terms of direct payments to the governments themselves to sustain lossed lost revenues.

They're not as concerned about that, but there is a lot of uncertainty.

Still, yeah, let me go back to more for just second in the talk about the Northwest Quadrant.

There, in the enormous growth Mervyn, is there a point of particular concern?

Even though things are looking still pretty dandy up there.

Yeah, I mean if you just look at the headline indicators, it might look like nothing particularly wrong.

I mean, we start unemployment rate is about 2% higher than it used to be before this pandemic started, but it's you know two or three percent lower than the peak unemployment that we reached in April and May.

So if you just looking at those particular perspectives, it might seem like nothing is wrong in our major.

Employers are doing fine, but the leisure and hospitality industry here.

Just like you know, Tab Tab mentioned in Central Arkansas has been particularly hard hit.

I mean, you're looking at one and five businesses.

Or in some cases about 1/4 of small businesses in that particular sector are still closed.

You're looking at their employees that might be permanently unemployed and those businesses that might be permanently closed.

So there's still a lot more room for us to get additional stimulus to try to figure out if those businesses are viable and can be reopened in the near future.

I think that's what we're going to look to see if the new stimulus bills provide, and you know so far, I mean the state has sales tax information up.

Until October, so it doesn't give us enough of a timeline, but if you're looking at national stats on retail sales, you know we've had a very poor Christmas shopping season, so we could expect to see some of the similar things here in Arkansas.

And so sales tax revenues might be down based on that.

And the other pieces you know, you're seeing.

State and local governments cut jobs both in schools and city governments in anticipation of Sloan's coming at some point in the future.

And that's what we saw in the last recession during the recession itself.

Congress provided direct funds to States and cities, but right after the recession ended, they pulled those funds back when the economy was not quite going.

So while other sectors of the economy, we're adding jobs, state and local governments were cutting jobs and that kind of dragged the overall economy and employment picture down as well.

So there's still quite a bit that needs to be done for state and local governments and for leisure and hospitality businesses.

Yeah, and some of this of the numbers coming out of Washington at the end of the first week.

Anyway of the new year.

Weren't terribly bright, were terribly encouraging.

Yeah, we saw nearly half a million jobs lost in the leisure Nino, particularly in restaurants alone, so that's fairly significant.

That should have been a good month in any normal year that would have been a good month in December for those businesses, and so that was a huge hit to that sector.

And that's what we would expect to see given you see the high case rates here in Arkansas, as well as the rest of the country.

So people are lot less comfortable going into restaurants and bars, and those types of businesses we're going to have to remove your mask and be and.

Close space with other people for an extended period of time, right?

Georgeann the northeast and in the Delta as a whole in addition to AG policy, what are you going to be looking at for the next, say 3 next two quarters anyway?

Well, Steve is you know here in Northeast Arkansas we've had exponential sales tax growth, especially in Jonesboro.

In Craighead County we set an all time record for sales tax collection in 2020 despite the pandemic.

So kind of what I'll be looking at.

You know the first and second quarters to see if those sales tax numbers continue to increase.

Basically, over the last 10 years, those numbers have.

We've set an all time record almost every year, so you could almost set your watch to it.

You know the thing about Northeast Arkansas is kind of.

There's there's two sides to this coin, the city of Jonesboro and Craighead County in Paragould and some of the cities around Jonesboro are doing pretty well.

There's population growth.

There's sales tax, growth, the unemployment numbers relatively low.

But what's happening in other parts of the Arkansas Delta Izadi population?

And so as these communities depopulate, it erodes their sales tax growth.

And obviously the other.

Things that come with that or a loss of jobs.

A loss of economic opportunity.

So it turns into a snowball.

So a snowball effect.

So what's happening in Jonesboro was positive, but what's happening in many other parts of the Delta is a lot of these smaller communities are starting to die and dry up from a lack of economic activity.

I will say this, you know, kind of reading some of the tea leaves into the future.

You know, we've been in a deep recession here for quite some time.

And you know, looking into the future, you know we do a lot of food manufacturing, food processing here.

And kind of, you know, the rule of thumb is is that when the economy slows down or goes into a downturn as people stop eating out as much and they start eating, you know they go to the grocery store more and so Nestle announced recently that they were going to invest 100 million dollars at their facility in Jonesboro to expand their hot pocket lines.

And while that seems like a, you know, it seems like just an everyday story.

It tells me that they're getting ready.

They're getting ready for an economic downturn, a significant economic downturn that may last a while.

Because people have to eat.

You know, that's the bottom line, and so if they're not eating out, they're going to be going to the grocery store and buying more hot pockets are kind of a cheap food item, and so it looks like there are.

If you read some of the tea leaves out there, we could be in for a very prolonged economic downturn.

Well, tab, you have written about this and lectured on this extensively, and I know Mervin you have as well, and it's something that George just touched on that Jonesboro Paragould SMSA is just booming.

It's just doing Dandy.

Elsewhere in the first Congressional District, E Arkansas, it's losing population and South Arkansas.

The same is true with the exception maybe of a couple of areas there.

A couple of more.

And the social implications are and the tax and governmental implications are really profound.

Very proud basically.

The impression I got was listing to the anecdotal evidence of talking to people talking to the college is talking to the people who were being recruited into industries.

Is it the growth of the Conway area back when I was mayor of Conway, and it seems like it's replicated around our region as well.

Other growing cities, suburban, an urban, is that they're coming from the population of the rest of the state.

And while it's a boon to those cities, it's it's.

Detriment to those areas and we being such a sales tax driven.

Your local community?

Yeah, looking at City of Conway it was about 60% of all the revenue that was available to the City of Conway was collected through sales tax.

And if you don't have the populations, you're not going to sustain the businesses to collect the sales taxes and you get into that spiral George was talking about.

So it is devastating and until economies come back until people come back into many of those areas and you know what drives that?

I'm not sure.

Then it is going to be a depressing tale.

Continuing through those areas and then George is exactly right with them and Marvin.

Everyone knows that Amazon is building this mammoth facility in in Central Arkansas, and who?

Surely quite likely, it may not be the last of its type, and of course I'm getting it E Commerce, which is which is shape.

Shifting with at warp speed, the nature of Commerce around the world, but certainly in Arkansas.

I think so very much you know initially in the pandemic people didn't have an idea of how long this would persist and so people were.

Participating in E Commerce at greater levels than they have ever done before, and if we had a very short pandemic period, maybe they would have gone back to some of the older behaviors.

But now it's, you know it's very soon going to be a year now, since the initial shutdowns and closures and stuff like that that people started doing more online shopping from, and they've kept up that pace this entire time, so it's unlikely at this point that we will see a complete return to some of those bricks and mortar type places now.

The one thing the state was lucky in doing was that.

Right before the pandemic, not right before the pandemic.

Within the year before the pandemic happened, we'd started collecting sales taxes on online sales as well, especially from bigger retailers like Amazon and so that has helped the cities across Arkansas tide over some of those issues.

While people were buying goods online.

But you know, when we talk about future real future tax taxes that they would collect from sales taxes.

You know there's a lot of behavior that happened specifically because of the pandemic, so initially early on people got money, large checks that they went out and spent on making their homes nicer because they're spending a longer period of time at home.

It's not entirely clear what people are going to do with additional money at this point, 'cause you know when you buy furniture like that, you typically going to keep that for a period of time, so additional money is not necessarily immediately going to translate into additional good services, especially when the service side of the economy is not.

Likely to see additional customers until enough of the population has been vaccinated and also in addition to.

Brick and mortar retail.

You have brick and mortar office space.

A hundreds of thousands of square feet.

Not to mention parking lots that have been for much of the last 10 months.

Idle or comparatively idle tab townsell you concerned about whether we're going to see what are we going to do with that space?

Will there be a return to office work as we have not think that's one of those long long lag impacts that we don't know.

But there is the strong possibility that indeed you'll see the rental property worth go down.

The rental prices go down, vacancies where you know we really don't need vacancies.

So that is a critical issue that we want to watch because it does, you know, churn in through the economy throughout our Metropolitan Metropolitan areas.

And so, yes, we don't know.

That's a huge question Mark, but my guess is, as Marvin was saying, there are some aspects of this genie that's never going to fit quite back in that bottle before the pandemic, and that may be one of 'em to dramatic effects, say inside downtown Little Rock.

And you know, the major.

Our rental property and office spaces around around our state, yeah, including that Jonesboro SMSA George Absolute.

Yeah, you know I talked to Mr Copus.

You know the CEO over Nabholz recently and he told me his feeling is is that a lot of this, especially this office type space is going to go away.

You know a lot of especially for professionals you know, like attorneys, Cpas, whatever, you know, they've figured out that they can work from home.

It's cheaper, they don't have to pay for that space.

And so there's going to be a rearrangement of the way you know.

Like commercial properties, you know that sector of the economy.

He told me though that he thought that there was some hope for some growth.

He said that you know, like warehouse space, you know people are ordering more things from Amazon or online.

They still have to get those items, so they'll have to be an infrastructure infrastructure built to accommodate that type of those types of items being taken to peoples houses.

So warehouse space will probably be on the rise, you know, entertainment venues.

Once we get through the COVID-19 pandemic, you know probably there's going to be a surge of people who want to be entertained.

You know, do these things go to concerts?

Go listen to people playing music, go to theater stuff like that.

So venues like that will probably.

They'll probably be a high need for that, you know, kind of in this part of the state too.

I will mention this.

You know we're in close proximity to Memphis, and so there's been a lot of you know they've spent well over 100 million dollars developing the downtown in Memphis and that kind of has a bleed off effect into the into the Delta, you know, as far as creating jobs and creating opportunities in our.

Entertainment opportunities and stuff like that so you know the kind of the feeling was before the pandemic hit was that there was going to be kind of a revitalization of downtown Memphis, which would actually help to revitalize, you know, the Delta region, and so there's a lot of those projects are still ongoing, but until we're able to go back to full capacity, we won't know what those impacts will be from an economic perspective.

OK Melvin, I'm going to give you the last word here.

The legislature is sitting now writing a budget.

If you could give the legislature and the executive.

As some advice, in 15 words or less regarding a budget for the fiscal year, what would it be?

I think we need direct grants in support to small businesses, especially in the leisure and hospitality sector that have had imposed on them.

Capacity restrictions or curfews or things like that.

So you know, for the long term sales tax future of the city of Cities an for the state people are going to stop shopping as much in grocery stores.

Eventually, when this pandemic is passed, but they won't have restaurants and bars to go to if we don't make sure that those restaurants and bars make it.

Through this pandemic, gotta end it there because gentlemen, we are simply out of time.

We thank you for yours.

Thanks for being part of the program.

And come back soon.

Thank you as always for watching.

See you next week.

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