Region’s jobs data lagging, Fed says
Economic growth feared imperiled
Companies in Arkansas and across the region continue to have problems attracting workers even as business and economic activity picks up, according to a report released Wednesday by the Federal Reserve Bank.
Materials and supplychain logistics also are a challenge to the continued economic growth of the region, the Fed outlined in its September Beige Book report.
“Demand is robust and really strong,” Charles Gascon, the Fed economist who covers Arkansas and the sevenstate region, said Wednesday. “Businesses are not short on customers; what they are short on is workers and supplies.”
In Arkansas, manufacturing activity is producing mixed results since the last Beige Book report in July.
“Firms in both Arkansas and Missouri reported upticks in new orders and production, although the rate of growth has slightly declined,” the report said, “Supply-chain-related cost pressures and product shortages remain high, and manufacturers in the area expect these difficulties to continue for several months.”
The spiking pandemic, led by the damage left behind by the delta variant of the coronavirus, also is creating instability and endangering economic growth.
“That just exacerbated many of the challenges, both on the labor side and the supply side,” Gascon said. “That’s led us to a place where growth overall is pretty consistent with what we’ve seen in previous reports but there has been some slowing in the pace of hiring, particularly in the leisure hospitality sector and those sectors that have been most affected by the pandemic in the past.”
To overcome the worker shortage, businesses have increased wages, offered more flexibility and lowered work requirements, the Fed reported.
As the delta variant spread, workers again became cautious as some manufacturing operations closed temporarily and restaurants cut back on opening hours and limited serving capacity.
“There has to be some stability that’s really required overall in the economy and in people’s lives to get them back in the labor force,” Gascon said. “That’s really the piece that continues to be missing. And every time we feel like we reached a point with some stability, we see another rise in covid cases.”
Workers, Gascon said, are looking for the reliability of consistent working hours and the confidence that business operations will not be interrupted.
In other areas, the Fed reported residential real estate sales remain strong, industrial real estate is robust and office and retail rental activity has improved.
Consumers have increased spending, with retailers, auto dealers and hospitality businesses all reporting strong activity, the report said.
The Beige Book, published eight times a year, summarizes economic conditions for the 8th District, which is based in St. Louis and covers all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.