The Year

2008 will be remembered as a year of turmoil in financial markets and in the real economy. In the first two quarters of the year, the United States economy managed positive gross domestic product growth, but experienced a weakening employment situation. By the third quarter of 2008, economic growth turned negative and by September, over a half million jobs had been lost in the nation. The housing sector continued to provide a drag on growth.  The Case-Shiller home price index showed average declines of more than 19 percent, over 750,000 houses had foreclosure filings in the third quarter, and housing starts fell to less than half of their year 2000 levels.  Significant monetary and fiscal stimulus was applied to the national economy in order to unfreeze credit markets and encourage the resumption of normal economic activity. The Federal Reserve cut the federal funds target to 1 percent to provide liquidity during the recent credit crunch. Even with these actions, slower economic growth is expected for the United States and the rest of the world through the end of 2008 and into the first half of 2009.

The Arkansas economy performed well in 2008 in comparison to the whole United States.  Employment growth remained positive for the entire state, in large part because employment growth in Northwest and Central Arkansas continued to outpace national averages. According to the U.S. Bureau of Labor Statistics, year-on-year growth in non-farm employment from September 2007 to September 2008 was 0.9 percent in the Fayetteville/Springdale/Rogers area, 0.3 percent in Little Rock/North Little Rock/Conway, and 0.2 percent in the Fort Smith region. The combination of continued employment growth and restraint in new construction provides the potential for a return to balance in the state's real estate sector. In 2009, the Arkansas economy is likely to experience continued slow growth, as the wounded national economy weighs strongly, but the state's metropolitan areas show relative strength.