When a senior editor at New York-based SmartMoney magazine addressed an economic forecast conference here in November, he opened by joking about how nice it was to come to a place where people weren't jumping off buildings because of financial distress.
It was a perfect icebreaker, largely because it rang true. In Little Rock and in several other corners of the country, the financial crash has been more of a fender-bender — at least so far.
Layoffs and foreclosures are on the rise and some business investments are on hold, but unemployment rates remain well below the national level in Arkansas and several other states, including Wyoming, North Dakota, Wisconsin and West Virginia. New companies are moving in and some are expanding, adding a few hundred jobs here and a few hundred there.
In December, Forbes named Little Rock one of the best middle-class housing markets because median home prices were rising while the national market was plummeting.
Those small successes are magnified in a dismal economic climate, especially when they play out in states that have never been economic high-flyers or big population gainers. "Arkansas never really experienced extreme highs or extreme lows," says Jim Youngquist, director of The Institute for Economic Advancement at the University of Arkansas at Little Rock.
This unassuming, steady-as-it-goes growth pattern is why places that did not enjoy dizzying highs before the recession are experiencing a gentler fall now.
"We're gratified that ... we've kind of withstood it," Arkansas Gov. Mike Beebe says. "But we're not immune from it."
"Heading into this recession, from Texas up to Montana, the upper Great Plains and mountain states have been doing much better in 2007 and into 2008 and starting out 2009," says Jim Diffley, managing director of regional services for IHS Global Insight, an economic analysis firm.
Many states "did not participate in the housing boom and bust, and households have not seen their wealth evaporate," Diffley says. At the same time, some regions benefited from a boom in commodities prices such as oil, minerals and agriculture. That edge is slipping as prices drop, and states that have been spared so far will feel the pain, he says. They could recover faster, however, because they're diversified and not overwhelmed by the mortgage meltdown.
The feverish housing boom that sent prices soaring in states such as Arizona, Nevada and Florida never landed in places such as Little Rock. Nor did the subsequent meltdown that collapsed prices and triggered a wave of foreclosures.
Unemployment rates in several metropolitan areas in Arkansas are well below the national average. The number for the Little Rock area is 4.9%.
Wisconsin, which is faring better than other Midwestern states decimated by hemorrhaging in the auto industry (6.2% compared with 10.6% in Michigan, 8.2% in Indiana and 7.8% in Ohio), never enjoyed big jumps in wages, says Joel Rogers of the Center on Wisconsin Strategy.
"Wisconsin was not booming and had not been booming for some time," he says.
Diversifying a key strategy
Whether it's in the South or Midwest, diversification is vital to an area's ability to weather the financial crisis: