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April in Arkansas.

State's Unemployment Rate Moves Above National Rate In April

In April, it was the nation's turn to upstage Arkansas, rather than the other way around.

The Arkansas unemployment rate, which seldom rises above the national rate, reached 7.4 percent in April. That's up from 7.3 percent in April 1991.

Nationally, U.S. business added 126,000 jobs, dropping the unemployment rate from 7.3 percent in March to 7.2 percent in April.

In Arkansas, 8,200 jobs were added in April, bringing the civilian labor force to 1,168,700 employees. But the addition of 5,100 people to the unemployment rolls helped offset the gain.

Total employment in March had increased by 21,000 people, a new high for the state, according to Richard Sims, administrator of the Bureau of Legislative Research's Office of Tax Research. The March unemployment rate was 7.0 percent, compared with 7.7 percent in February.

The lowest April unemployment rate was 3.9 percent at Fayetteville.

The highest unemployment rate was 10.3 percent at Pine Bluff.

The Little Rock metropolitan statistical area had an unemployment rate of 6 percent for April. Fort Smith recorded a 7 percent unemployment rate.

Sims remains optimistic despite the unemployment increase. That's because of an improvement in total gross receipts tax collections. April totals were up 24 percent from April 1991.

The April gross receipts collections included $75,525,000 from the sales tax and $10,322,000 from the state use tax.

The gross receipts category also includes the 10 percent mixed drink tax, the beverage excise tax and gross receipts permits.

Meanwhile, individual income tax collections for April were $99.5 million, 25.5 percent above April 1991.

"The bulk of |the gross receipts~ increase can be attributed to the half-cent sales-tax increase |the tax rose from 4 percent to 4.5 percent last year~," Sims says. "We also expanded the sales tax to include used cars |valued above $2,000~. Nonetheless, this is still strong growth."

Sims describes the April collections as "better than expected."

"They seem consistent with what we're seeing with the national economy," he says.

No Rush To Recovery

Sims expects Arkansas' economy to continue to improve, although not as quickly as many had anticipated when the recovery began.

"Inflation seems under control, and with the recovery being somewhat lackluster, it's expected that the Federal Reserve will further lower interest rates," he says. "That will help construction and the stock market. But we're not growing like you would expect during a period of recovery."

Sims points to an increase of between 2 and 2.5 percent in the gross domestic product, which experts say should grow by 6 percent or more during recoveries.

Still, Sims says gross receipts collections will continue to improve as Arkansans begin to have more faith in the national economy.

"The Arkansas individual income tax grew at a faster rate than the sales and use taxes, which meant consumers were cautious," he says. "Once they have confidence in the recovery, they will spend again. They've been cautious, even though their incomes have been doing rather well."

Sims says his optimism about Arkansas' economic future comes in part from the problems faced by businesses on both coasts.

"The East Coast and the West Coast are doing badly, and a lot of their businesses are coming here," he says.

Sims believes the thriving bicoastal economy, which received much publicity in the 1980s, is a thing of the past.

"We didn't go down in the recession because we're not big on cars, we're not big on textiles and we don't rely on the Bank of New England for financing," he says.

The First Four Months

The Dow Jones industrial average posted a gain of 7.01 percent in the first four months of 1992.

The Standard & Poor's 500, made up mainly of growth-oriented stocks, showed a return of only 0.48 percent for January through April.

The NASDAQ index, which measures smaller, over-the-counter stocks traded as part of the National Association of Securities Dealers Automated Quotations system, had a poor April performance. For the first four months of 1992, the NASDAQ index was down 0.95 percent.

The Department of Finance and Administration's Office of Economic Analysis and Tax Research, which released its fiscal 1993 forecast this month, expects Arkansas to reap the benefits of the recovery, specifically in the areas of employment, production and personal income.

"Since the 1981-82 and the 1985-86 recessions, the state has developed one of the most competitive and diversified industrial bases in the United States," the forecast says. "In addition, Arkansas is ranked eighth nationally for its desirable manufacturing climate. The factors determining this ranking consist of government fiscal policies, employment costs, labor costs and productivity.

"These factors helped the state escape the job losses and income declines of the 1990-91 recession, and they will ensure that the state will be among the leaders as the nation recovers from its recession."

According to the forecast, for every $7.7 million invested in the Arkansas economy, 140 jobs are created.

Existing home sales are expected by state officials to total 50,059 in fiscal 1993.

Single-family home construction is expected to increase to 9,400 houses in fiscal 1993, producing an increase of 5.2 percent in non-automobile sales taxes when combined with a 6.9 percent increase in existing home sales.

There will be a 5.1 percent increase in state personal income in fiscal 1993, according to the forecast.

The state's non-agricultural wage and salary employment level is expected to increase by 2.2 percent (21,000 jobs) in fiscal 1993, reaching a total of 971,500 jobs.
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Article Details
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Title Annotation:economic indicators
Author:Taylor, Tim
Publication:Arkansas Business
Date:May 18, 1992
Words:948
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