Fort Smith Banks and Businesses Open Up to the Fed about Local Economic Conditions

The Federal Reserve Bank of St. Louis sponsored an Economic Forum with Fort Smith bankers and business leaders on July 17 to discuss conditions and trends in the local economy. The overall consensus by the participants is that the local economy will maintain growth at a steady pace.

In a pre-event survey, more than half of the respondents indicated that local businesses plan to maintain or increase staffing levels and expect capital spending to increase. Fewer than half of the respondents indicated that local business conditions are stronger today than they were a year ago and that profits will increase over the next year.

Discussions during the meeting indicated that new business growth is steady. Attendees said that while the media focuses on layoffs in the region, overlooked is the continual growth in the hiring of workers in smaller numbers. This labor replacement has balanced out the loss of jobs and has kept the region’s unemployment rate aligned with the rest of Arkansas. Participants cited area institutions of higher education as a key strength to the regional economy. Major developments affecting the local economy include construction of I-49 and the expansion of the Sparks Regional Medical Center.

Most of the participants concurred that the local economy will continue to experience growth, though some concerns were noted. Many reported it difficult to keep college graduates in the area because of a lack of opportunities for highly skilled workers. Similarly, finding qualified workers with technical skills is challenging. “Like many communities in our District, Fort Smith is working through a transition in which job growth is increasingly coming from service sector industries rather than from manufacturing," said Fed Economist Mike Pakko, who also attended the forum. Most of the participants agreed that there is a need for diversification in industries; namely, they would like to see more manufacturing jobs added to the region’s economy. Bankers cited a rise in non-bank competitors, along with an increase in the number of small banks, as pressuring an already over-banked market. Another concern was the volume of home equity loans coupled with declining housing prices, which may strain consumer spending.

Four to six economic forums are held throughout the District each year as a way for the Fed to become familiar with its local market.

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