Unemployment in Arkansas is predicted to skyrocket to 17% this summer, climbing into double digits for the first time since the early 1980s, according to a statewide economic forecast.
The state’s joblessness rate, however, should remain just below the 19.6% national unemployment forecast, according to a study by Arkansas economist Michael Pakko.
The forecast predicts April’s unemployment rate in Arkansas will leap to about 12.5%, up from 3.5% a year ago. April figures are scheduled for release May 22.
“The economic impact of the COVID-19 pandemic continues to be more rapid and more severe than initially expected,” Pakko said in his report for the Institute for Economic Advancement at the University of Arkansas at Little Rock.
Just a month ago, Pakko estimated unemployment in Arkansas would peak at 9.3% this year because of the shattering effects of the pandemic. Since then, economic data indicates employment, income and spending patterns will continue to plummet for several more months.
“The situation is developing so quickly and the data just keeps showing precipitous declines in key areas,” Pakko said. “It’s just astounding to see the economic situation turn so quickly and severely.”
Arkansas last experienced double-digit unemployment at the end of 1982 and in the first months of 1983, when the joblessness rate climbed above 10%. During the financial recession of 2008-2009, unemployment hovered around 9%.
The economic outlook for Arkansas is patterned after the IHS Markit national forecast released Monday. That forecast predicted gross domestic product falling at nearly a 37% annual rate in the second quarter (April-June), from earlier predictions that GDP would decline 26.5%.
Consumer spending also was forecast to reach a low point for the year over the same time period, driven by workers losing their jobs and reduced spending.
Arkansas is projected to lose more than 240,000 jobs in the pandemic, the forecast said. April appears to be a bruising month, with about 160,000 lost jobs, according to Pakko. “I never would have anticipated that large a [change] in unemployment in such a short period of time,” he added.
State officials said more than 193,000 Arkansans have filed for unemployment insurance payments since the crisis began, though updated figures will be reported today and are expected to increase.
In addition, 19,230 workers have filed for pandemic unemployment assistance, which is paid to self-employed or individual contractors who have not previously received state unemployment payments. They are now eligible to receive at least $600 a week under federal rules if they have lost work because of the pandemic.
Pakko noted that the joblessness rate is only a prediction based on current information, and it could shift in a more positive direction.
Economic development officials are hopeful the projections fall short, and note that Gov. Asa Hutchison’s decision to not force complete shutdowns of businesses will be an economic benefit as the state economy restarts.
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