Though economists are predicting nationwide recessionary gloom, there are some silver linings in Arkansas, though these economy-watchers do admit things may get worse before they get better.

“I am afraid that’s going to be a long tunnel. This economic slowdown might not be real deep, but I’m afraid it will be long,” said Bill Tedford, executive vice president and fixed-income strategist with Stephens Capital Management in Little Rock. Tedford believes that a “grinding decline” in the perception or reality of home values will discourage consumer spending.

The housing sector is not the only looming issue; wages simply are not keeping up with the inflation rate. Increasing food and energy prices push this rate higher each month. Also, the credit crisis could make it difficult for lenders to stimulate commerce, job numbers are starting to decline, negative gross domestic product growth is predicted for the fourth quarter of 2007, the value of the dollar is falling fast, and we are most likely in a recession. So, where’s the silver lining?

Kaza, a Michigan native, has definitely seen an advantage of living in Arkansas: the relative low cost of living compared to major metropolitan areas on the coasts. Though this is of little relief to those working in areas where their wage growth is stagnant, it will cushion many Arkansans.

Part of the lower cost of living was provided by the 3 percent reduction in the state’s sales tax on groceries during the previous legislative session. The Arkansas Policy Foundation estimates that the average family of four spending a weekly $150 on groceries will save a yearly $234 from this tax reduction, which, according to Kaza, will help some people when faced with higher food prices.

Recession-proof corporations based in Arkansas will also cushion the state in the event of an economic downturn. Several companies that are often “countercyclical” to economic trends are based in Arkansas. Bentonville-based Wal-Mart Stores Inc., El Dorado-based Murphy Oil Corp. and Springdale-based Tyson Foods were named by Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas, and Kaza as companies that will perform well during the recession. Even recessions don’t eliminate consumer need for energy (Murphy Oil), food (Tyson Foods) and home essentials (Wal-Mart), said Kaza.

Arkansas has been fortunate to have several new job and job expansion announcements in the past year. 300 people will be employed at India-based Man Industries Ltd.’s Little Rock plant, while Welspun Gujarat Stahl Rohren Ltd. Will build a $100 million manufacturing plant at the Little Rock Port Authority and initially employ 300 workers. In November, Mars Pet care U.S. announced a multimillion pet food facility to be built at Fort Smith Chaffee Crossing that will employ 200 workers. In addition, Wal-Mart plans to expand its information technology operations in Bentonville, though they did not confirm the number of new jobs.

Employment and state revenues also remain stable. There is no talk of cuts in state services or employment according to Deck. Employment in Arkansas, though not record-setting, has leveled out at roughly a 0.5 percent growth rate. Deck believes that “employment is the whole key.”

There is no anticipation of a “wild rise” in Arkansas home prices either. Between 1955 and 1995, the growth in home prices nationwide matched that of inflation, meaning price growth was moderate and manageable, according to Tedford. After 1995, however, home price inflation increased more than 45 percent above inflation. The elimination of this false home equity is largely responsible for the economic downturn. Average home prices in Arkansas were up 11.9 percent between 2004 and 2007. The National Association of Realtors suggests that central Arkansas home prices are undervalued, but in higher home price ranges, that’s probably not the case.

Because of the relatively modest home price increases here, real estate investments will benefit buyers. The Arkansas housing market could be a bright spot! The market offers (or will soon offer) good deals for those with good credit who have available cash or who were sensible in their previous real estate purchases to possess equity in a home or property.  In northwest Arkansas, where the oversupply of homes and declining number of potential buyers has resulted in the state’s “most distressed” housing market, Realtors launched a “Buy NWA Now” campaign to flaunt the benefits of buying a home in an oversupplied market.

“What we know right now is that mortgage rates are low, and we know that sellers are in a position to do more to attract buyers than they had to do a few years ago,” said Ethan Nobles, director of media relations with the Arkansas Realtors Association.