Support for Arkansas Week provided by the Arkansas Democrat-Gazette.

The Arkansas Times and Little Rock Public Radio.

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

In terms of the domestic news flow.

The summer months can be a bit lethargic, setting aside national politics in a presidential election year, which admittedly is setting aside a lot.

But in recent days, the economy has given the two major party tickets some competition for the headlines, a scare in the stock market, a slowdown in US hiring, though a more encouraging Arkansas report.

Interest rate angst and worries about consumer spending, inflation, consumer debt, all of that leading some to question whether that dreaded R word is about to come into play in a major way.

So to help us wade through all of that and what it means for Arkansas, Mervin, coverage of the University of Arkansas's Economic Research Center.

And here in the studio, Randy's a president and CEO of the Arkansas State Chamber of Commerce.

Gentlemen, as always, thanks for coming in.

Mervyn, let's go to you first.

What is kind of the obviously, it's sort of a mixed bag.

The economy, Arkansas and the US not always in perfect sync and and not this time as well.

Where are we?

What's going on?

I mean, I think, you know, we don't look at the headlines from the last week and a half.

We say that the economy is still in a very healthy place.

So just a few weeks ago, we got a report that the US economy in the second quarter grew a lot faster than most people were expecting, well over two and a half percent.

So what has started this scare has been the one unemployment report at the national level, which indicated that unemployment rate has climbed to 4.3%.

Keep in mind, the unemployment rate here is about a whole percent lower.

And this is just one unemployment report.

There might have been some vagaries associated with the weather here.

There are always revisions to this data.

But I think we can say maybe that the national economy is cooling.

It's not slowing, but it's certainly a little cooler than where it was last year or even at the end of last year.

Right.

Randy Zook, what do you see?

I would agree totally with Mervyn that it's a single data point.

It's no reason to go nuts or crazy.

Hiring is still strong, not as strong perhaps, as it was just a few months ago, but still positive.

There are more people hiring than not and employers are continuing to be challenged to find the people they need to meet the customer demand that they've got.

So the economy in Arkansas is still healthy, but eventually the Fed prevails.

So it's just all there is to it.

So I'm looking for some kind of continued slowing of the economy until the until the recession gives us a little clearer picture.

And that's what business people look for.

They look for certainty or at least reasonable expectations.

And knowing what the game rules of the game are.

And that's going to be determined in the national election.

So there's going to be some caution before we get there.

So but overall, good strong except for crop prices in eastern Arkansas and we're still a ag driven state.

We're a farm driven state.

And that's a that's a big question mark.

The prices of crops, even before oil, there's something important to before the November election, and that's next month.

There's a September meeting of the Fed.

What what do you see happening?

I could I can argue it flat or argue, right, Crystal ball time.

Crystal ball.

My guess is they make a move and and maybe cut by a quarter point.

I hope it's not any more than that because that would signal some sort of deeper concern on their part than I think is justified.

So I would look for a quarter point drop.

Yeah, those interest rates, Mervyn, are obviously important to Arkansas business.

Arkansas, everywhere.

What do you see?

Yeah, I mean, I think the real interest rate so that's the difference between what the federal funds rate is and the rate of inflation.

So keep in mind the rate of inflation is a lot closer to what the Fed says their target is, which is 2% on the headline personal consumption expenditures.

That's about two and a half percent right now.

On a three month average, it's a little lower.

So I think they're probably at their goal.

They've been there for a little while.

If you don't include shelter prices, which again, have some vagaries in how they're calculated.

So I think the market is pricing in a half a percent decrease.

That is probably more than what the Federal Reserve is willing to do, but it wouldn't be out of line with what we think the real interest rate should be at this point in our side.

Yeah.

Rand, is it?

I would I would agree.

You know, the market may be expecting a half.

I hope they don't go any more than a quarter, but you never know.

That's that's we'll see when we see.

Well, we would seem to have some some competing forces at work here.

Absolutely.

Take off on that.

Well, the competing forces are you know, they've got to they've got to objectives, full employment and inflation.

So they're conflicting sometimes.

And we've had cheap almost no cost money for way too long, which has caused the inflationary cycle or outburst that we're trying to work our way out of.

So they've got a tough job, but at the end of the day, they've got to make a call.

And look, I could see them making a half point move, but I hope they make a quarter point move.

What do you see inflation doing?

As Mervyn said, it's it's close to where their target is.

But if you go to the grocery store, there's a lot more inflation out there than than two or two and a half points.

And we ran up so far so fast and we're not going to come down that quickly.

Prices will not drop as quickly as they went up in most cases.

Now, there are exceptions to that.

But the price of gasoline, the price of growth fuels those.

Those are the basics that hit everybody nearly every day.

And they're the pain points.

And until you see a significant change in the production of oil and gas across the country, energy is going to continue to stay close to where it is right now.

But there are opportunities there to to move that down with increased production.

But, you know, the international stuff has got those markets just, you know, right on a razor's edge.

There's there's they're very sensitive to geopolitics right now, rightly so.

Hot spots all around the globe.

We could you know, we could be in in the ditch pretty quickly in a lot of places.

Several places.

Yeah, Mervyn.

Yeah.

I mean, I think I would expect the inflation rate to stay within 1% of where it is today.

Two and a half, 2.4, 2.6.

I don't see us getting to 2% their target any time this year.

But again, as I mentioned, that in part is because home prices are still elevated in the way it's calculated in those measures as a long lag time.

So we're still seeing some of the peak housing prices that are no longer there in large metro areas around the country.

So I think, you know, the price increases that we've seen happen over a longer period of time, those are not going away.

So the level of prices have climbed, as Randy mentioned, and groceries, gas prices, whatever they are, those are not going away.

What we care about more is the rate of change.

And that's what the Federal Reserve's paying attention to.

And that has definitely slowed.

So, yes, prices of eggs and bacon are not what they were in 2019, but the pace of change has certainly slowed and is a more normal level.

The rand is look, the Arkansas treasury continues to get a robust fresh by any any standard the tax cuts that have been enacted thus far notwithstanding.

Well, I mean, I continue to beat estimates anyway.

Forecasts anyway.

Yeah, Yeah.

Obviously collections as a whole are down.

Yeah.

Our view is as business.

I'm speaking on behalf of business owners and managers.

Lower tax rates create better business conditions and we think that's proving to be true.

Arkansas economy is very healthy right now relative to where we were back during the pandemic, of course, and even prior to that, we've got healthy growth in our population, 14th fastest growing population in the country.

Our problem there or challenge is that it's unevenly distributed across the state, but healthy population growth, healthy GDP growth rate, healthy employment, lots of jobs still available if you've got the right skills and are in the right places and are willing to go to work well, if all the components of the economy, including the Fed, can bring that baby for for the proverbial soft landing, that's that's the Holy Grail right now is the soft landing.

And so far they've been able to pull it off.

Just you just hope you hope for something, not, you know, not getting a some sort of cataclysmic event that that interrupts this process to more of a jeopardize that.

A lot of this is based on the robust consumer spending and it continues apace.

Yeah.

And I think that's what's reflected in the states treasuries collecting higher levels of tax.

And so you've seen income tax withholdings are up, corporate tax collections are up as well, another little lower than where they were a couple of years ago.

Again, the economy is not nearly as hot as it was a few years ago.

So we expected some cooling in the collections of income taxes and corporate taxes.

And we've seen that.

I think maybe the longer horizon concern is that consumers are switching over from buying a lot of goods like they were in the immediate aftermath of the pandemic to buying a lot more services like we used to before the pandemic and a lot fewer services or sales taxable than goods in Arkansas.

So when we think about collections and sales tax, a good chunk of that comes from sales tax collections.

As consumers make the switch over to services away from goods.

And that will automatically reduce sales tax collection somewhat from the state as well.

Well, to the to the to the matter of a soft landing, assuming that we can still manage one.

How tenuous is the situation now?

The stock markets obviously got a big jolt over the past several days.

There was there was a scare for about 48, 36, 48 hours there.

And I think the stock market certainly probably overreacted to the one an unemployment report.

And then a few days later, we got the initial claims, which is a measurement of how many people are making unemployment claims.

And that was very normal, not concerning.

And the stock market backtracked.

And I think some of this is international as well.

We've seen the Bank of Japan raise rates and that caused quite a bit of consternation for those people involved in the yen carry trade.

So I won't go into the details of what all that means, but there's some unwinding happening because of what other central banks are doing as well.

So I don't know that it is as concerning.

But you know, any large one day drop that we've seen certainly draws attention to Randy Sick.

We got a lot of global markets in Arkansas.

So where we do starting with our our farm farms gas, all kinds of things, aerospace products, defense contractor sales in South Arkansas.

So we're pretty sensitive to all that stuff.

But, you know, at the end of the day, the economy, we've got lots of construction going on, both vertical as well as mostly how I construction.

But the largest single capital investment in the history of the state is just about to begin to operate, namely the second U.S. steel mill and Mississippi County.

And we're we're hiring and training for that that start up.

So the Wal-Mart corporate headquarters project and Mervyn's neighborhood is is is opening, as you know, just nearly day by day with new parts of it.

And it's just an incredible project.

Beautiful thing.

And it's drawing They're getting more and more people moving in from around the country to those jobs in northwest Arkansas led by Wal-Mart.

But all over the state, there's just healthy economic conditions.

Businesses that are growing but challenged in to find the talent they need and sensitive to the interest rate.

So we need a housing.

We need to focus on housing In a lot of places we're short or we were behind the curve nationally on housing starts.

So there are a lot of upside opportunities in the economy driven by population growth, productivity growth, all kinds of positive things going on in the economy.

But they're going to be hiccups.

And in a market economy, price signals change.

Behavior and behavioral changes translate into spooky stock markets.

But the stock market was way out over its skis.

We valuations were at historically high levels.

We were overly dependent on seven stocks.

But now this is this is we were way overdue for a correction.

This is a pretty modest one that we that we've gone through.

Yeah.

A few seconds left and I want to give it to Mervyn because the few elements of the economy are as important, as crucial element and that's mortgage rates.

A bit of good news lately.

Must Marvin.

But certainly if you can take away some good news from the market scare in the last week, the yields on US ten year treasuries dropped rather dramatically and that helped push the mortgage rate that a half percent lower.

So we're in the 6 to 6 and a half range, a lot lower than the close to seven range.

That we were.

I think that helps homebuyers.

It helps some people think about selling their houses that were not wanting to move from their very low mortgage rate.

But my larger fear is that there is such a housing shortage in our major cities here in Arkansas and around the country that the lower mortgage rate just spikes.

Prices immediately got into the air because we're simply out of time.

Ervin Jabber Raj, Randy, thanks for your time.

Thanks for coming in.

And come back soon, both of you.

And we'll be right back.

And we are back.

The first to grant to you.

AMS arrived about five years ago and the National Institute of Health evidently was pleased for it has now renewed its commitment, this time to almost $32 million.

We're talking about a program involving what is termed translational research, sort of an umbrella grant that permits you, aims to underwrite a variety of clinical training and research programs.

Dr. Laura James is a central administrator of the UM's Translational Research Institute and she joins us now.

Dr. James, thanks very much for coming aboard.

Maybe you better take us to school.

What are we what what's involved here in translational research?

Great question.

Thank you for having me on today.

Translational research is really trying to take new discoveries and push them out to basically beyond academics or beyond a laboratory and push them out to communities and to people so that they will make a difference in health care.

So that's a very broad definition, but that's basically the essence of translational research.

So we're talking about but we're talking about more than research, are we not, Doctor?

We're talking about delivery of services, of clinical services as well.

Right.

But we can involve research to come up with the best way to deliver services.

So you're probably familiar with a master's programs in telehealth, which use telehealth a lot in the past to actually deliver clinical care.

Probably one of the best equipped was during COVID.

But we know that for many of our rural populations in Arkansas, telehealth may be a way it's operationalized.

Administer care.

So research questions how to do that with supply.

What is the gap here that this translational program filled, that research and services or what?

What what does it bring to the table?

Yeah, our program is all more research, but trying to figure out what are the best ways to encourage either health care systems or practicing physicians or communities to uptake new research findings.

So the traditional way that physicians are trained, they get a lot of their education.

Of course, early in their career, new medications or new approaches come out.

And we want to make sure that those new findings really get translated into clinical practice.

So it's all about bringing new things in so that they become the standard of care in clinical practice or in how we evade evaluate patients in the hospital.

It's also trying to use new approaches to teach people where they are.

So we know that particularly in Arkansas and in other southern states where we have lots of populations that live in rural areas, we know that there are opportunities to see health care providers may be somewhat limited.

So how can we take that gap, which may be excessive here and come up with new approaches that people can benefit from the latest therapies?

Telehealth sample of that, Right.

Well, that was kind of my my next question.

And are there demographic targets or geographic targets in Arkansas that this program is is particularly designed to to address great questions.

So we are really interested and our health outcomes as a state and how we can improve the health of all citizens of Arkansas.

Our emphasis is more on rural health, but we integrate that across many populations, really kind of ranging that covering the broader age span from day one to line up to our aging populations.

Well, in terms of of targeting, then are we talking, doctor, also about there are a number of chronic conditions which are chronically afflicting Arkansas have for decades a century or longer.

Is there a specific role for this program in those in addressing those ailments?

Yes, definitely.

So we specifically are not disease aligned because we want our resources to be broadly available, to be leveraged for the treatment of any type of disease.

At UMass, we have, of course, a lot of emphasis on cancer.

When you think of the Translational Research Institute as targeting, to use that word cancer diseases.

So that can be very broad from diabetes, heart disease management of hypertension, management of mental health conditions.

But so we're covering a very broad range of diseases, but we think that having more up to date approaches, for example, using electronic health records to understand more about disease patterns, that as we use existing technology, new technology, new ways of managing patients, that we can leverage that infrastructure to teach patients better in the future.

Well, but by renewing the grant, the CD, it's not the CDC, but the NIH, I guess, obviously was satisfied or pleased with what it saw in the first phase of this this program right.

Are we going to expand the program or just continue with or what?

What's going on?

What do you we're just yeah, we definitely want to expand.

And the NIH, as is giving every CTCA program across the country seven years of funding as opposed to the five years of funding.

So we were fortunate in that we received the third best competitive score when we submitted our grants.

And that's certainly a compliment to all the many fine folks at UMass, including research staff, our medical staff, people that are in other colleges such as the College of Public Health.

So what's so exciting to me about this grant is it really is a team effort.

Team science is something that we embrace in our work.

We really recognize that many of the problems in Arkansas and really across the United States require that we're working together in teams and that we're pulling in people that may have been trained a different way or have a different mastery of skills that represent a different discipline.

But we really need all of those great approaches and people coming together to solve some of these more challenging conditions.

You mentioned diabetes and how can we better detect diabetes?

How can we treat it better?

How can we make sure that those patients that have diabetes really have access to health care services?

We know that in many of these rural areas we just don't have enough physicians there.

So it's trying to address those very challenging medical and social problems so that people are really getting better health care.

Looking back at the program thus far, doctors are there saying, well, you mentioned diabetes and kidney ailments.

Are there some specific things that you would point to with special satisfaction or pride event?

And yeah, I think that we have really come a long way in medicine and in Arkansas in recognizing how important it is to work with folks in the community.

We can't just come in and say we have you have the solution for how to fix this problem.

We really need to do that.

And patient with community members.

We call that community engagement and we're see that you need more of our research programs across UMass, Mass are recognizing the extreme value of that and working with communities to understand their name and what support it's available, and then partnering together to come up with strategies.

And are they straight disease ultimately, and probably have to stay in a state where it.

Dr.

Doctor, Dr. Laura James, we thank you so much at UMass.

We thank you so much for your time.

Thanks for coming aboard.

Come back soon.

Thanks so much.

All right.

And that does it for us for this week.

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

Support for Arkansas Week provided by the Arkansas Democrat-Gazette, The Arkansas Times and Little Rock Public Radio.