And hello again, everyone, and thanks very much for being with us.

A lot of Arkansas crops are already harvested, but that means a lot are still in the fields.

And between the price of diesel and commodity prices that have not kept pace, the ag sector is sagging even with bigger than expected yields.

And of course, the urban driver is paying more at the pump as well, and at the grocery and at the shoe store, etc.. In a moment, an update on the overall Arkansas economic outlook.

But first, we're down to a month now.

Election day fast approaching, early voting even faster, and the political landscape in the closing weeks of the campaign is our subject tonight.

If all politics is indeed national now, how much will national politics affect the races in Arkansas?

So we are joined by some old friends, including two political science emeriti, Hal Bass of Washington Baptist University and Doctor Jay Barth of Hendrix College.

And by Richard Bearden, political strategist, former executive director of the Arkansas Republican Party.

Gentlemen, thanks for coming aboard.

Hal, it would seem to me, I think it's fair to say that much of the political buzz in in races this year, there's one state road race and that's the well, there's several state, right.

But it's the Senate race that's getting a little buzz.

And the second Congressional District that's getting the buzz.

So why don't you start us off?

Yeah, sure.

And the surprise is the buzz in that when the campaign season begin, people were not thinking much about Arkansas as a battleground state.

But we have seen in, as you mentioned, the Senate race and the second Congressional District race.

Democratic challengers making a run on what has been a pretty established Republican domination of those seats, those territories, for over ten years.

Now it's Halley Schaffner in the Senate race against Tom cotton, and it's Chris Jones in the second district race against the incumbent French Hill.

And again, I don't think the fundamentals have changed all that much from the beginning of the year.

But the enthusiasm generated by the Democratic candidates and their followers is is substantial by 21st century Arkansas standards.

Yeah.

Richard, look, I think there is a lot of buzz in these two races.

No, no doubt about it.

I think you have to look at a couple of things though.

Number one, where are these races, the Senate race and the second district race rate among the national polling organizations and the national party's right.

There is no national, I mean, crystal ball or any of those type of the Cook Political Report.

None of those races have been shifted to show by any national pundit that these races are in play.

That's number one.

No national group has number two.

Where is the money?

Right.

I don't I don't see Chuck Schumer pack playing here.

I don't see the Democrat Senatorial Committee playing here.

The CC is not playing here.

I think if those races were in play beyond the buzz, you would see substantial dollars here.

And right now today, those dollars are not here.

Yeah.

So the buzz is locals.

Yeah.

Crystal ball did shift the second district to to to to likely to likely.

So there has been some some attention there.

And I think you know going into this cycle if there was going to be a close race, I think the second district was the one people were looking to.

You know, even though the district has changed because redistricting, you know, that is the last place there's been action in 2018 and 2020.

But the Senate race, I think is the big surprise.

I think that that, the, the kind of stability of Hallie Schaffner as a candidate raising enough money, not tons of money.

She's certainly not competitive with, with with Tom cotton or his outside money.

She's not getting outside money herself.

And I think you're right, Richard, on that.

And I think that's been a source of some frustration for that campaign.

But in an odd way, it has helped her, you know, keep her campaign localized, which was her goal.

I mean, this is very much a, you know, old, you know, David and Mark Pryor style Arkansas comes First campaign while twisting it to say he's staying national.

He's gone national.

He's gone to Washington and he's not come home.

And I think it's been very effective.

I think you're right, Richard, that there is a real challenge, especially in these closing weeks, as attention does begin to focus.

The money gap, I think, is going to be significant.

It looks like she's got enough money to get her message out on television and through other means that she's used social media, particularly effective the whole campaign.

But I do think it it's going to be an interesting race.

It's still not getting much much of national play.

But we'll see where it goes in the closing way.

I think in the broad scheme of things, the real question is what will disaffected Republicans do in this midterm election season?

It strikes me there's there's three choices.

They can buy their tongues and go with party loyalty.

They can go with the libertarians or they cannot vote.

I don't see much party switching in the in the books here.

Richard I'm sorry.

Well, agree.

It's a midterm after all of them fall off.

So.

That's right.

And look, I think to put an historical context and, and you two could probably speak to this better than I, you know, since the, I mean, Franklin Roosevelt election in the early 1930s, every party out of power, with exception of 2 or 3 times, has lost races, right?

I mean, after nine over 11, the Republicans gain a few seats.

But other than that, Bill Clinton lost races.

Barack Obama, two very popular.

President Donald Trump's going to lose seats.

I don't think any of those losses are going to take place in Arkansas.

They may take place in Pennsylvania and New York, California.

That's not going to take place here.

I think the other thing and and Jay's right, there is a lot of social media buzz.

And I think she's generated that with with some limited dollars.

But today, the last FEC reports, Senator Tom cotton has a 10 to 1 money advantage.

What is that money buying.

Right.

It's buying a ground game.

And we can talk about that in a little bit.

It's buying the TV spots, radio spots, mail, all of the things you need to get that message out to those dis maybe enfranchised Republicans right now or independents.

This is why that race is important.

If you look at the second district race, it's even a bigger gap.

I think for Intel's got $4 million cash on hand and Chris Jones has 250,000.

You know, he generated a lot of buzz for governor.

He has not seemed to generate a lot of buzz on what could be seen by some as a maybe competitive congressional race.

I just don't think it's there.

Well, we see this every two years, and that's in the second Congressional District.

It's because Pulaski always votes Democratic.

But it is.

It's not subsumed.

It's just offset almost entirely by the by the other counties in the district.

That donut around there.

Yeah.

And that's what, you know.

So talk business in Hendricks.

The poll that came out a few weeks ago before really the campaign began.

You know, Jones was running pretty well in those in those suburbs.

And it is important to say that especially the northern part of Saline County has changed dramatically.

It's now a much more diverse set of communities.

Bryant.

And there's other communities around it.

And it's it's a different place.

I think we will see it's changed a little bit in the last couple of cycles.

I think Saline County is the one where the change is maybe going to happen more quickly than Faulkner County, where I think everybody expected the change to happen because of the college communities in this, in this county.

So I think that's going to that is still one to watch.

What we did see in 2020, the last time there was a competitive race.

We saw some early polling that showed that that Joyce Elliott was running pretty well in those suburbs.

And then the money really came in and, and, and just really created problems for her in the last few weeks.

And she ended up losing by, I think 9 or 10.

I think the, the that's the problem is does that money advantage, which I think is very real and actually more meaningful, I would argue, in the second district, does it have that same effect in exactly those places you identify?

I think one thing to watch is how the money is going to be positioned here.

We talk about campaigns and voters in terms of retrospective voting.

Looking back, this is what we've done.

Reward us, our punishment.

We look at prospective voting.

This is what we're going to do.

What I've seen so far out of the Cotton County in particular is essentially negative perspective.

Slant on it.

Be afraid of what a Democrat will do is the is the thrust of the ads that I've noticed.

I can't you see, as the money is spent, whether it will be that will continue or some other approach will come forward.

National issues.

We've got an unpopular war.

We've got, you know, inflation at what, three nine interest rates going up.

How much is that national scene.

This is an off year election.

So how much is the national issues driving local.

How much impact.

I think I think I think President Trump and his unpopularity even in Arkansas.

I mean, he is under why I think nobody would question whether he's an underwater in Arkansas.

He's less underwater in Arkansas than he is in many other states.

But he's he's in trouble.

And it's because of exactly those things, the war and its connection to the war, the tariffs and the connection to to prices.

I mean, and and the prices are what really is bringing it home.

I mean, the pocketbook issues, it's I mean, it's costly to go to the grocery store.

It's costly to fill up a tank.

And that is that's what's driving a lot of these dynamics.

I think what what Schaffner has done better than any of the other candidates is still emphasize that I'm one of you.

Without hitting him hard, she has not said Donald Trump's name at all in her campaign, which has been very smart to emphasize.

I'm a local candidate now.

I think you know, your I think your questions are appropriate.

Richard, I don't know.

You know, there's going to be some movement.

And she's emphasizing that in her advertising campaign, those those Trump voters who are moving to her, does she get enough of those in reality to, to to get over the hump?

That's the big question, Richard.

Well, I live in Pulaski County.

If you're driving the heights you live in, you drive through some of our favorite restaurants in Hillcrest.

There's a lot of softer signs.

I was just in Russellville the other day there.

Nunn County, you know, is the different county in central Arkansas.

It is a heavy, heavy Democratic county.

But I think when you take the state as a whole and I went back and looking, I don't agree.

J. Donald Trump's numbers have dropped here.

He he beat a Harris here 2 to 1 64 to 33 if he's down ten points.

Tom cotton riding a a disinfected economy and all that is going to be Haley Schaffner by a comfortable margin as will French Hill as will the governor, etc.. Again, if we were in Pennsylvania, Illinois, Michigan, I think the president's popularity hurting Ohio, hurting the ticket, it's not going to matter here.

Yeah.

And I and I do think at the end of the day, you know, you're right, Doctor Bass.

Republican voters have a choice.

You stay at home, do nothing.

You go out and vote or you vote for the Democrat.

I don't see a lot of switches.

Some maybe, but not enough to to move the needle.

Yeah.

I do think that as this conversation begin, we were talking about the national influence.

I think we've got to recognize that unlike the old days, when Arkansas voters did appear to be at odds with the national, setting, we've joined the union.

We we are very much like folks like us across the nation.

We look like farmers in Arkansas.

Think like farmers in Iowa.

Think, workers.

What what makes Arkansas Republican state right now is the socioeconomic foundations, the demographic foundations, and the ideological foundations cultural of the of the electorate.

And those trends are clearly favoring the Republicans in the 21st century in in Arkansas.

The question is, is this a deviation from those norms, or is something brewing that is more substantial than that?

And I think the place to watch in this campaign is going to be those two counties in northwest Arkansas, in Benton County and Washington County.

You know, those are the places the campaign is targeting those counties, which is super smart.

I mean, Democrats have let them have ignored them and hope for the best.

And that is now.

And we've seen change in Washington County.

But now the question is really, is there more change in Washington County?

Is there a change in Benton County?

Because those are those are transient folks, many of them not from Arkansas.

How?

And so they don't carry many much of those, you know, those attributes that you describe something, Steve, I could just go back to, to to money because, I think those are two very important counties.

The, the, the turnout in Pulaski County is going to be important.

So what's the money advantage mean?

I know that the Republican Party, the cotton campaign, the Governor Sanders campaign have invested a substantial sum of money and a ground game.

And what's that ground game look like?

They have identified 100,000 plus Trump voters that don't normally vote in the off election cycle, which we're in.

And they've found them.

They're mailing them, they're knocking on their doors.

And I was told yesterday they they're getting a good response.

Motivating those people to understand it is important you vote.

And so again that's where that I think money is going to balance out some of this, this infection or disinterested voter out there who's mad if if they're being told it's important you go vote for these reasons.

And I think right now the Republicans have a massive cash advantage that it's going to be able to turn the tips there.

Again, we'll see if if the National party's come into play here.

We're three weeks out from early voting and we haven't seen it yet.

Yeah, of course, that cash advantage is nowhere more visible than it is in the race for governor.

There's our segue anyway.

But here's another.

Is it, you know, economic kitchen table versus cultural issues.

And it's instructive, I think, that the latest ad from Governor Sanders is seeking a second term has to do with it's a bathroom bill or a boys and girls.

Yeah.

Trans trans athletes.

Yeah.

Bill, it's a it's a particularly it's I'm sure it's effective.

Sure sure it focus group tests.

Well it is I think it's it's kind of a mean ad and it's meant to be I think somewhat comical, but I think, you know, it's, it's, it's kind of it's a bit over the top.

I think we will look back at it historically, and it will be a sign of kind of this moment and cultural history where this issue that is very much not an issue in, in communities in Arkansas has been made an issue because of a handful of events in other states.

And and so that's clearly the issue that she that the governor is using to try to, to, to rouse, cultural conservatives, to say it's important to get out and vote, to pick up on on Richard's theme.

And I think, you know, that's clearly where, where we are.

And it's, it's it's it's not the prettiest ad of all time.

But it probably has some effectiveness.

Richard.

Overkill.

Look, she's got a lot of different messages.

I mean, it's somewhere.

You know, Jay, use focus groups.

That might have been a focus group.

It was a poll somewhere that.

That's a mover among moms and grandmothers.

And and so there's an ad about it, you know, to be honest.

I mean, I looked I think the last report, Senator Fred Love had maybe $10,000 in the bank.

It is a non race.

Right.

When you've got the advantage of cash like that, I think you can look at.

Does this ad affect certain percentage of the voters out there?

Let's run that ad next week.

It's going to be something else in the week after that it's going to be something else.

Again, that cash advantage it gives the Republican candidates, including the governor, the opportunity to appeal to a lot of different groups, you know.

Again, I've seen it once or twice.

I think you're going to see another ad that comes up in a couple of weeks, maybe as soon as next week.

That focuses on another issue that appeals to a certain group of voters that will also move them in the electorate.

And I think, you know, she's clearly trying to have an impact elsewhere on the ticket.

Sure, sure.

That's where she realizes her race is is is done.

You know, the question is the margin, but her margin matters in terms of the the Senate race and the second congressional race.

And I think that's where the where the the margin also matters in terms of our own political future, both as governor in a second term and what other aspirations might, might arise as we go forward.

One thing I think is worth watching going forward is how is the protest vote against the governor distributed between the Democratic nominee and the libertarian nominee?

And that is another option this time around for the economic conservatives, who might be unpersuasive by the cultural messages that are being sent and and those who want to send a message on certain issues, especially the prison and Franklin County and some other discrete, discrete issues.

But I do think that the difference between the governor, besides money and, and these other candidates, says she has the ability to, to get earned media.

And I think she has done a very good job in the last few weeks in terms of getting earned media, making the learns act, take away some of the questions about the Learns act, and I think there are very real questions out there about it.

But with the new test scores and then some other issues where she's used, you know, going out to the, to the podium and the in the outside, the governor's office and making a difference with some, some earned media.

There is a little more, a little less reluctance in the legislative branch, Richard, to take her alone to, to break ranks.

Well, if gently.

Well, no I agree.

And again look, she's she's a popular governor.

Just your point, J. I saw she was just up at Petit Jean, you know, not one campaigning up there.

She was announcing a new and upgraded facilities and.

She was being gubernatorial.

She was, but she she she has the, you know, she has a luxury being gubernatorial.

She, she took out.

She does these capitals for the day, you know, I think and we talked a little bit about legislative races.

There could be some races that maybe you're in play.

There could be some races that in Central Arkansas, there could be some races in play.

But Northwest Arkansas.

But I mean, the overall structure of the Senate and the House are going to change very little, maybe a seat or two potentially.

And again, and the same thing, all of the one competitive Senate race in central Arkansas and the House races here and the House race in northwest Arkansas, the Republican incumbents all have well won a challenge race here.

They all have massive sums of money advantage over their Democrat challengers.

And so I think if at the end of the cycle, if we were to do another story, I think the story is going to be did that did the Democratic Party of Arkansas miss an opportunity by not raising funds to help these legislative candidates be competitive?

And again, at three weeks out, the Republicans already have the money in the in the bank and they're sending out mail, knocking on doors.

They're on social media ads.

And there's very little being heard from the, you know, the local Democratic candidates right now, they just don't have the funds to compete.

The maybe we can say with all respect that districts one, three and four are probably secure for the Republicans.

So we can take a look.

Maybe it's some other issues on the ballot, including ballot issues and one particular.

Yeah, I think there is only one one ballot measure where there's much activity.

And that's issue three.

That is the economic development issue.

There's not much there is some organized opposition.

Interesting.

The issue three is a little bit of a horseshoe issue in that it brings together some on the far right who question the loss of local control that could arise with these new economic development districts that would be created or could be created through issue three.

And then from the far left, who I think who have concerns about a variety of issues, including data, data centers, which have which have kind of come together and some environmental issues that people have some concerns about on the, on the left.

And so that's where that's where that is.

The money is clearly on one side.

Money is clearly on the pro issue.

The three side, they're running ads.

I think they've got a series I don't know how many, how many ads are going to run.

But I do think that that if money matters, if money drives it, then I think the the pro side is advantaged.

I do think that there are some kind of natural populist doubts about issue three that will will come to the surface and then the natural if I don't really understand it.

And there's a lot of mystery in issue three, then the easiest thing and the safer thing is to vote no.

I think it's going to end up being a fairly close vote on issue three.

But I do think there's an advantage to the pro side just out of.

Yeah.

Seems to be of a I'm sorry.

It's would seem to be of a piece of we see this across the country, a citizen of a kind of a populist uprising against big business or big tech.

Yeah.

Two two things that I think is absolutely untargeted and that the data center controversy is going to bleed over into this particular race in a way that probably wasn't anticipated when all the formulation was going, going on.

And I, I do think that there is a broad middle here that probably nods and thinks it's a good idea to focus on economic development more effectively here in the state, while having some frustration effect that would push us voting no for the sake of voting no here.

So I'm with Jay.

I think it's gonna be a close race with I think it would pass, but it wouldn't be by a huge, huge margin.

Yeah.

Richard, look, it's an economic driver issue.

I think a lot of times.

You know, when you get in there and it's got the ballot title on the longer ballot title.

People, they don't know a lot about it.

I think it's going to take the advertising to push that message through this, this, this particular issue was drafted by Senator, former Senator Jonathan Dismaying and Representative Howard Beatty, both the pretty middle of the road Republicans.

Both with the financial and job creating backgrounds.

So, you know, I think sort of the fear and the concern that's out there might not be there, but again, it's going to take the advertising to push through.

I will note, I think a lot of times people think again, they look at these issues they don't know and 100% agree.

They just don't vote it.

I think issue one is only US citizens can vote, which these two distinguished gentlemen can tell you.

You might already be in the United States Constitution.

And issue two is the right to bear arms, which I think is also in the United States Constitution.

I think bill passed.

So one and two.

So if you vote for one and two, you might just come down and vote for three.

That that might be the another boost for it.

I do think that this episode here that this, this iteration of the referenda and the in the initiatives illustrate that those two processes put heavy, heavy demands on the individual voter that are difficult to, be successful in.

They ask a whole lot of the voter in terms of getting ready because he don't have a party label to kill you.

You don't necessarily have the signals that you ordinarily look to and make making voting decisions.

And again, the the default decisions to shrug your shoulders and not vote.

So we're going to see this more of this more more more of this.

Populist I hate to say uprising, but I mean, well, I think Arkansas engagement.

I think Arkansas has been doing it pretty well for, for generations.

But I do think at the ballot box, yes, I think we are going to see it more.

I think the big question is, does direct democracy actually stay alive in Arkansas?

You know, obviously the the ballot measure that was was out there that that didn't make the ballot, would have potentially enshrined in the Constitution a much more clear way.

I think it would have passed easily because Arkansans want control of their their processes, despite, as Howell said, the onus of their places on voters.

But sometimes they don't always feel confident to to use.

So it's a very interesting but it's a very Arkansas thing.

It's a distinctly Arkansas thing when you look at the South.

Arkansas has done direct democracy and has not always performed as the elites would have, would have wanted.

When it comes to a lot of these economic development measures, in particular in the current political environment of Republican preponderance of power, the The Citizens Initiative offer liberals their best prospect of policy successes in the in the political arena.

Yeah, yeah.

The the the the energy that that seems to be have arisen over the tech issues, especially all politics is local.

Maybe not, but yet on there are some there are some exceptions J all of it.

I mean, you may not know who's running for governor, but you know who's running for sheriff.

Yeah.

And I think we do have some, you know, really interesting local races around the state, especially, you know, county judges, judge races.

That's a that's a powerful office.

Still not as powerful as it once was, but it's a powerful office.

And we've got the three biggest counties where we've got really interesting things going on with county judge.

We sadly have a very sad situation in Benton County where the the the county judge elect, is his his ability to serve is is a question because of criminal activity, the Pulaski County where, as you suggest, the data center issue really has come to dominate that race because, widow of Judge Wendell Griffin, who is the Democratic nominee, has taken it upon himself to kind of push that issue.

And this week, there finally was a a legislative quorum court action on that.

And that is now a competitive race.

I mean, the business community in Pulaski County has begun to come, you know, become a kind of Republican opponent.

And then we have Washington County, this very quick changing county in northwest Arkansas where, you know, there's still a Republican officeholders up and down the ballot.

But the question is, can they hold on?

And there's a well-funded Democrat in that race and an attractive Republican candidate who had who beat the incumbent.

It was very troubled in the spring primary.

So we've got three really interesting races around the state for county judge, along with a lot of other local races that I think are super interesting, including here and there, interesting sheriff races and things like that.

Yeah, there's still some juice.

You know, again, you're right, all politics is local.

You know, I think you're 100% right that the data centers have driven a lot of local interest.

You know, I think for the most part, the two that are already in play are already set.

Right.

The quorum courts action could affect future data centers.

For those two things are set.

You know what's interesting?

If you do go south in Grant County, they don't want data center down there either.

But in West Memphis, they welcomed, Google over there.

So, I think they'll welcome up, up in Johnson County.

So I think some of that is, is is driven by the local concerns or the local activists that come out.

Maybe opposed to these things, but so in some areas of the state, it's been a big issue and others that really hasn't, you know, I know in Washington County, it is as it has become a more competitive county in the last couple of cycles.

The incumbent Republican judge was beat.

There's a pretty handily, by the way, in the primary.

So we'll see where that race sort of singles out.

You know, Pulaski County, Pulaski is still a very heavy Democrat County.

I we'll see where that sort of plays out to.

The really interesting one is Benton County, you know, for the record, also, McCollum should resign.

He should resign tomorrow.

But what's going to happen is the 15 person county quorum court is going to pick the next county judge.

The people at the end of the day, the people will not vote on who their county judge is.

15 elected officials will.

And so we'll see where that is.

How do you get the last word?

Last word?

I think it's fascinating with this conversation, is going to look back on the inversion of the geographic character of party politics in Arkansas, when the Democrats are making strides in Northwest Arkansas.

And East Arkansas is such a solid phalanx for the Crawford campaign.

Things have changed.

Yeah.

Got Andrew, because we're out of time.

All right.

We've got bath, Bearden and Bass.

We'll see him again at a later time, maybe right after the voting, and we'll be right back.

And we are back.

With persistent inflation and the prospect of petroleum prices pushing it higher still, the Federal Reserve a few days ago did what a central bank can be expected to do.

How much costlier credit will slow economic growth?

That's already begun to slow.

Employment numbers are still pretty good, but the numbers on the Treasury and mortgage rates aren't moving in the preferred direction.

And of course, there's a shooting war in the Middle East and trade wars around the globe.

So wither the Arkansas economy at the desk with us, Doctor Jeremy, all of the University of Central Arkansas and up in Fayetteville, doctor Mervyn of the University of Arkansas.

Gentlemen, as always, thanks for coming aboard.

Jeremy, we'll start with you.

What's our outlook here?

In the near term, we're captives of larger forces, obviously.

Yeah.

There's always a lot of things going on in the world outside of our control, but those things do have a direct impact on local businesses and families.

So I think that, you know, there's lots of numbers we can talk about.

But I think for for most people and for economists observing it, the most important things are we seeing that wages are growing slower than inflation.

And that's been true for most of 2026.

So even though the inflation rate is not as high as it may have been back 3 or 4 years ago, wage growth has been slow.

And I think people are starting to feel that some of it's due to higher gas prices.

But but really it's due to slow wage growth going along with these these stubbornly high prices.

Yeah.

Looking at the numbers that are available right now, what's what have they portend?

You want to take a shot at that?

Yeah.

Yeah I think that in the in the near term, you know, we expect inflation is not going to come down until the, the the Iran conflict winds down.

I think every time there's an indication that the conflict might be ending soon, prices fall and then they ratchet back up when that doesn't seem to be true.

So I think we're in this kind of waiting game now to see when that happens, you know?

But with diesel prices being as high as they've been, diesel prices now are even higher than they were in the peak in 2022.

That that's going to start feeding into consumer prices as well down the road.

A lot of that will get baked in to the prices because that's a major cost for businesses and shippers.

So I think that in the near term, you know, a lot of those high diesel prices are going to be pushing through regardless of what happens with the war in Iran.

But over the longer term, you know that winding down sooner is better for the economy, whatever we might think about the geopolitical aspect of it.

Yeah, yeah.

Mervyn, obviously, you know, it's the impact on consumers at every level is pretty profound, especially noticeable, I would think, in a corporate sense up in Northwest Arkansas where you've got Ark best, you've got JB hunt, you've got Walmart.

All of them use more than one gallon of diesel a day.

Yeah, I mean, I think the higher prices have hit all of them at the same time.

And you know, when you think about the trucking industry, they've been through some sort of a doldrums, for a long period of time.

So, higher gas prices, higher diesel prices in particular are shock to their system in that sense.

And it will push through to consumer prices a lot quicker than we would expect.

So we'd seen some discounts from major retailers because they got those tariff refunds from the federal government.

But those are going to be quickly dwarfed by the higher prices that we've seen for diesel, especially in September.

And it looks like there's no hope in sight for a reduction in prices yet.

Yeah.

Well, across the business landscape, the price of petroleum, particularly diesel, makes it almost impossible to plan.

Yeah.

You know.

Yeah.

I mean, in the past week, we saw some hopes around the United Nations meetings about maybe some sort of deal.

But, you know, again, with Jeremy mentioned, we've talked about deals and deals, and yet one has yet to materialize.

So there's been more fighting today in the Middle East and prices are higher.

So I think until we get a handle on that, we're going to be in for World of Pain, which is why I think the Federal Reserve.

Yeah.

Raised rates.

Yeah.

And in the meantime, we could expect I assume consumer credit is going to be, well, noticeably higher anyway.

Well, certainly consumer credit costs have gone up.

And you look at the interest rate consumers are paying both for credit cards, auto loans.

Mortgages are now north of 7% for a 30 year mortgage.

Those have all moved up in line with the ten year Treasury, going up to around 5% in the past couple of weeks.

So that is tied to the price of oil and the war in the Middle East.

But it's also tied to all the investments in artificial intelligence we've seen, and sort of the very large debt burden that the United States government is carrying at this point.

Yeah, Jeremy, we feel mortgage rates on a wide swath of the economy really keeps close on on mortgage rates.

And they're higher.

Yeah.

And they're well over 7% now for average 30 year mortgage.

I think also what we've seen in the housing market recently is there's just a lot more houses on the market than there are buyers.

Buyers are not coming to to scoop into these with the deals that are out there.

And I think that, you know, there's only one possible thing which will clear that market.

And that's for prices to fall, unless somehow some other factor changes.

So I think that the housing market is, has been, you know, in a very strange spot for the past couple of years.

And the higher mortgage rates aren't going to help that that inventory clear anytime soon.

So number of sellers, something like three times as many as there are potential buyers on the on the national housing market right now.

And so that is something which, you know, we're kind of waiting to see.

And we thought like with other rates, mortgage rates were going down a little bit a year ago maybe, but not anymore.

Now they've gone very far in the other direction.

And that is really putting a strain on that particular market.

I guess it's no, it's not a big leap to suspect that we haven't seen.

Well, the fed is likely to kick it again.

Yeah I think the fed is right now trying to keep inflation under control.

They don't think that is something which you know, a lot of it is due to the diesel and other energy prices.

But I think that that's something which they see that is a political factor rather than economic factor, but they still need to move in that direction.

They at this point don't see much risk to slowing down the economy, but I think that is something which they could change their mind on.

If if we start to see economic growth numbers slow down.

Now, early estimates for the third quarter, which were kind of concluding very soon, are actually showing.

The third quarter looks pretty good.

But that's early data.

We don't have the official data now for another month.

But you know, until the fed sees some weakening of the labor market or GDP growth, I think they're going to continue saying fighting inflation is our main job right now.

And that's going to mean further rate increases.

But you know how that plays into treasuries and mortgages and other interest rates is not in a good direction for where this economy is right now.

Yeah.

Mervyn.

Crystal ball on interest rates.

Well I mean I think the fed more or less indicated that they're going to raise rates at least one more time this year.

Whether they do that two times this year is I guess the only open question.

So you know, we haven't hit 2% inflation.

It didn't for a while there.

At the end of 24 or early 25, we looked like we might be headed in the right direction, but we're heading in the wrong direction at this point.

And, you know, the Federal Reserve might try to look through various supply shots, but they've been trying that since 2022 and inflation hasn't come back down to 2%.

So now it's really a matter of credibility for the new Federal Reserve chairperson as well as the entire board, whether they can deliver 2%, deliver on the 2% inflation target.

And, you know, I haven't found an economist that predicts that inflation will be 2% at the end of 2027.

Even so, we're a long ways out.

Okay.

Well, you know, with with a with a succession of income tax cuts in Arkansas.

The state treasurer state government really is the sales tax.

Retail sales tax becomes, it would seem, ever more important.

So do you have a not look on the in the retail segment of course is such a huge part of the economy here as elsewhere, you want to make a prediction on retail sales in the near term.

I think meaningfully, when gas prices go as high as much as they have, then you expect consumers to spend a little less money on other items.

But, what we've seen through retail data through August of this year, consumers are still going out and spending money.

So yes, gas prices are higher.

Wage growth is not as strong as it has been.

But back to school spending was excellent this past summer.

People are going out to restaurants and bars, so I think consumers are still going out and spending money now of gas prices stay as high as they have been in the past couple of weeks.

We would expect that to push through on retail sales in other categories, but I don't expect a dramatic decline in sales tax collections for the state.

Yeah, Jeremy, so far it's been a little confusing.

You know, there are these ominous signs and yet people keep spending.

Yeah, I mean, to kind of tie all these threads together, I think that we're seeing, yes, increasing consumer spending in real terms, but also falling incomes in real terms this year.

And that ties into debt.

Where does it come from if your income is falling but your spending is going up?

That's that's indication consumers are going more into debt.

And now the cost of that debt is going up too.

So I think that this this is something where this is how it could all come together, is that we have a crunch in the credit markets when people are, you know, now having those bills come due that they've been financing on credit and that may cause problems which will all of a sudden cause that retail spending and consumer spending is slowdown once they have to pay those bills.

So that's where this could all come together.

And not in a good way.

Yeah.

And of course we have the we've talked about the unpredictability of petroleum prices gas, diesel.

But we have these trade wars that are ongoing both in the North American continent.

And we haven't talked about China and they're crucial factors.

Yeah, I mean, that's that's the great uncertainty hanging over the import export, great uncertainty for the businesses involved in it, but also for consumers, if if the trade wars continue, then the products that are affected by those will continue to stay high.

So I think that right now consumers are at a point where they also can't plan in the same way that businesses can't plan based on the uncertainty with all these prices.

So, you know, the both the the real shooting wars and the trade wars, the longer those go on, I think the harder it is for any of the actors in the economy to to make any good long term decisions about where their spending levels should be relative to their income.

Yeah, yeah.

Mervyn will give you the last word on this trade tariffs in every hemisphere.

One thing or both.

Yeah.

One thing that we haven't talked about in particular is the renewal of us.

The United States declined to, authorize the automatic 16 year renewal.

The agreement is somehow still in effect, even though its provisions are being flaunted more by the United States than Canada or Mexico at this point.

But that is a very important trade agreement, not just for the United States as a whole, but for our state here in Arkansas as well.

So, you know, those negotiations with Canada are going nowhere at this point.

We seem to be making better progress with Mexico, but, making sure that agreement remains in force is going to be very important for Arkansas businesses and across the country.

Yeah.

And we have Canada flirting with the with the EU.

Now, how much is that a bluff or what do we know?

I mean, I think at this point they view this as rather unreliable trade partners.

So if they have an opportunity to become an affiliate member of the European Union, I think that is an opportunity that they might take.

It is, you know, in terms of size that will help replace sort of the US economy for Canada in any future scenario where we're not the reliable trade partner trends.

We will continue to watch.

Mervin and Jeremy, thank you both for coming abroad.

We'll see you again soon.

And a closer look at the farm economy in Arkansas in a moment.

It is a huge segment of the Arkansas economy.

And for a closer look at how the farm sector is situated as autumn begins.

We're joined by Doctor Ryan, law economist with the University of Arkansas Agriculture Division, Doctor Louis.

Welcome back.

From everything we read, it is not situated especially well this year.

Yes.

And I believe that it's, you know, the last time I was on, we were discussing this and, you know, really there hasn't been significant changes in terms of the outlook since then as well.

And so, you know, we have some, you know, increase in commodity prices as we get towards harvest, which is kind of unusual compared to how the usual price, how you prices usually move throughout the year.

We've seen some uptick on that.

But as the same time, we've seen some uptick in commodity prices.

We've seen that margin continue to dwindle for farmers because of the increase in input costs.

And as of recently, the increase in the fed funds rate, which will directly influence their operating notes throughout the year.

Well, I mean, it's part of the irony is that yield, at least in some areas and in some crops yields are up appreciably.

That's correct.

Yes, it's actually a very favorable, you know, growing year, even given the drought that we've had this summer.

And across the board there very favorable year for yields.

And again you know as we kind of near the end of harvest here, we're looking at higher prices than we've seen in least in the last 2 or 3 years.

But again, it's it's not making as big of an impact that we hope it would because of the cost side of the budget.

Yeah.

Well the input costs particularly of course diesel and fertilizer and related supplies.

But the big the big driver has to be I guess right now has to be diesel at better than six a gallon.

Yes, sir.

That's completely correct.

You know, farmers you know, can book diesel ahead of time, you know, for the planning for the growing season.

And that's typically what they do on farm.

But even the booking opportunities earlier this year were at an elevated level.

Add the drought on top of that where irrigation, you know, probably had to occur more frequently.

Higher diesel usage and you're left paying higher, much higher diesel prices than what was expected as you start to harvest and deliver your commodity to the river or to the elevators.

And so, again, you know, farmers are dealing with just a significant price squeeze when it comes to the input side, mainly driven a lot from the Iran conflict in terms of diesel prices.

And, you know, just the expectations for the petroleum market as a whole.

But also at the beginning of the season, it was a difficult to pre-book any sort of input, such as urea and other fertilizers, which again, all, you know, a lot of them pass through the Strait of Hormuz.

And when the expectation is uncertain as to what that supply is going to be, costs are going to skyrocket.

And farmers had to face that this year.

A big reason, a big reason why we had such a significant shift off of rice.

Rice is a very intensive crop.

And so we had a significant shift to soybeans, one of the biggest shifts to soybeans across the country, actually.

And again, when we're looking at, you know, low to negative margins the last few years, farmers have to look at the crop that's less input intensive and on paper may actually pencil this year.

Well, let's talk about that for a second because we did have some growers, some farmers who were who were choosing alternative crops.

Well, they I think sometimes they would grow in where they would ordinarily grow beans.

They went to corn.

Yes, sir.

That also occurred as well.

And so, you know, corn and soybeans, big shifts towards them this year.

You know, soybeans, a much more dramatic shift, but corn as well.

Again, when you think about, you know, if you if you're on a crop rotation and you maybe planted soybeans in that field a year before and you plant coin, right, corn right after it, it kind of lessons that nitrogen usage that you would have, because the soybeans will at least fix some to the soil kind of lesson that cost a little bit more.

But when we're talking about, you know, rice, the amount that has to be irrigated and all the inputs that go into it compared to soybeans or corn was very significant.

And again, a big reason why producers had chosen to shift off of rice this year.

Well, and in terms of the finances, the just the sheer raw financing of pharmacy last year, we had I think Arkansas was at the top or near the top in the number of farm bankruptcies would you expect?

Yeah.

Would you expect to see more of that?

How many are that close?

Well, that's a good question.

And in the data, when you look at the chapter 12 bankruptcies and completely right, you know, 2025, we led the nation with 33 bankruptcies coming into this year so far.

You know, we when we start to look at, you know, chapter 12 bankruptcies, which is really just it's meant for farms.

So when we look at the data, we know, you know, that that is a farm that we're that's being counted here.

And so far this year, we're on a very similar trajectory and rate of change every quarter that the numbers come out to be on track to hit last year's number, if not surpass it.

And from that standard, almost certainly be at least you know, the top state, if not one of the top states in farm bankruptcies last year.

We were top in this year, almost certainly we would be in that top sector as well.

And again, it's it's due to a lot of we have a lot of rented land in the Delta.

Motor farmers use rented land.

And if you don't have the land that asset base, it's difficult to kind of, you know, get out of situations like this where you've had to burn working capital cash on hand to get through to the next year.

You maybe have more carryover debt than you ever have carry over debt.

You know, accrues interest very rapidly, and increasing in the interest rates into next year is not going to help with that either.

And so when we have when we have less of an asset base in agriculture, you know, the farmers will have to assets on farm.

And it's really difficult to get out of, you know, debt.

And that needs to be restructured.

And that's the whole point of chapter 12, right.

You know, if, if it if somebody goes through a chapter 12 filing successfully, they'll continue to farm.

And so it's not a liquidation one.

And it's more about debt restructuring, getting back on your feet and kind of cleaning the slate, so to speak.

Yeah.

Row crops I know are a specialty of yours.

But let's take let's take a quick look if we can at animal protein ranching and, and, you know, hogs, cattle, a shortage of beef across the country this year.

Yeah.

So, you know, beef prices have been extremely high.

Yeah.

And yeah.

Yeah.

Have been up.

You know, beef prices have been up.

And when we when we think about why that is well it's it's, it's a, it's a supply side of looking at that.

You know our herd is at all time lows.

But it's very difficult to, you know, incentivize the herd expansion when you have such high input costs and such uncertainty in the markets in terms of what imports may be coming in the expectation, you know, due to New World, screw worm and things like that.

It's very difficult to look at expanding rather than holding on to what you have in a way to look at it.

And so, you know, again, on the beef side of things, it's, it's, it seems like it's going to remain elevated in terms of the prices you see at the store.

On the other hand, if input prices, you know, were to normalize and not be as elevated as they are, you know, this is a this is good for the livestock farmers, right?

Because they can get a higher price for their beef and those sorts of things.

But again, on the retail side, for for folks like me, you know, paying that high price for beef and, you know, not not a whole lot of no pork production here, I can't, I don't I can't really speak to that so much.

But again, you know, poultry and beef in the state, again, you know, we had an egg supply issue earlier that, you know, elevated the egg prices.

Those have normalized and come down a bit.

But when you look at the beef prices overall and the retail demand for those is that consumers are still showing that they're willing to pay that high price for beef.

And so however long that maintains and how long it takes for herd expansion, you know, still still is going to have time to tell in terms of what happens in that sector.

And now my glance at Washington, a farm bill.

Yes, sir.

You know, the farm bill.

Deadline.

You know, September 30th, I believe it was, September 30th.

The farm bill extension expires.

You know, and the the expectation is to hopefully pass one.

This is still an extension of the 2018 farm bill.

Right.

So we've just continued to play this game of leapfrog and extend it.

But in in in good news, especially with the row crop.

You know, farmers that that I work with the farm bill this year, if there was to be extended or if there's a new one that's passed, at least the light at the end of the tunnel we can look at is to say that the one big, beautiful Bill act had a lot of the provisions that, row crop farmers are that, that are impacted by directly.

So such as increase in reference prices, you know, crop insurance coverage, Ark and PLC, all those commodity titles are at least taking care of through the OB three.

Not to say that a farm bill, you know, passing one is extremely important for Snap benefits and other parts of the agriculture sector as well.

But the row crop guys, while the farm bill needs to be passed, they can at least look at it and say that a lot of the provisions that are going to help them get through this, we're passing the OB three and at least will remain regardless of where the farm bill stands.

Yeah, Doctor Love, we got to leave it there because we're simply out of time.

Come back again soon and we'll get an update.

Yes, sir.

Thank you so much for having me.

You bet.

Doctor Ryan Law at the UAE's AG Division.

And that does it for us for this week.

As always, we thank you for watching and we'll see you next time.