Region's economy slowdown aligns with country's woes

Job growth in the region is off about 25 percent from its 5-year average. Almost all the state's new job growth can be attributed to the Fayetteville shale play in central Arkansas, Deck said

While hospitality and service sectors remain strong employment sectors, manufacturing has taken a hit. Last year, more than 8,000 manufacturing jobs were lost in the state, primarily in rural areas where factories closed and moved operations overseas. Northwest Arkansas was marginally affected with a loss of about 100 jobs.

"The good news is we continue to see core sectors of our (local) economy continue to lead the way, but we're down from the stratospheric levels of the past," she added.

Area leaders said that numbers may be down, but the glass is still half full.

"The bad news is that we're not experiencing the same growth as we were two years ago. The good news is our growth is still greater than the rest of the country," said Rich Davis, vice president of economic development at the Bentonville Chamber of Commerce. "We're still adding jobs and population."

Rising food and fuel costs have consumers closing their pocketbooks to discretionary spending, and the housing crisis has been increasingly felt in Northwest Arkansas. Foreclosures and pre-foreclosures peaked in October at about 1,500, and closed out the quarter at less than 1,200, according to RealtyTrac, which touts the country's largest, most comprehensive foreclosure database.

Arkansas ranks 22nd in the nation in the number of foreclosures.

"Arkansas is in the middle of the pack on per-capita foreclosures, so it's not as dire as we hear on the coasts," Deck said.

And there's plenty of vacant real estate waiting to be filled. By Deck's estimate, it will take almost four years to fill the residential lot inventory in active subdivisions. There were 2,210 newly complete, but unoccupied house in Washington and Benton counties in the fourth quarter.

And fewer homes are being built. There were 352 residential building permits issued in the fourth quarter, down from 725 in the prior year period.

Commercial and multifamily building permits were also down, indicating fewer new projects. Office vacancy rates were 20.9 percent, and retail vacancy rates were 12.5 percent.

"We have simply overbuilt both in office and residential," said Steve Rust, director of the Fayetteville Economic Development Council.

Rust, like other city officials, remains optimistic about area developments like the Arvest Ballpark in Springdale, Crystal Bridges Museum of American Art expected to be completed in 2010, and continued development of the Pinnacle Promenade in Rogers.

"There's a lot of exciting things here, so in the long haul, we'll do just fine. We've got a lot going for us," Rust said.