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Arkansas unemployment down, but less spending expected

While more people are going back to work, less people are expected to shop this holiday season. It all has to do with pandemic changes.

LITTLE ROCK, Ark — While more people are going back to work, less people are expected to be shopping this holiday season.

It doesn't seem to add up, since you would think more people would be headed back to the stores now that they are making more money.

But it all has to do with changes in the pandemic.

"People, when they look at the pandemic, there's an assumption that we probably struggled financially in the state, and that's simply not the case," said Scott Hardin, Department of Finance and Administration.

Arkansas was one of the few states that came out on top during the pandemic, setting a record-high of positive spending.

"We closed out the last fiscal year, which ended in June of this year, with about a one-billon dollar surplus," said Hardin.

Part of that is because of the pandemic help Americans received.

Now that the extra COVID stimulus and assistance is gone, spending is headed to a more normal rate.

"But at this point, the support from federal stimulus programs will be lacking, so we'll have to see some leveling off of consumer spending as we move forward," said Dr. Michael Pakko, Arkansas Economic Development Institute Chief Economist.

Dr. Pakko estimates spending will start going down even though our unemployment has returned to pre-pandemic levels at around 3%.

"It may seem that with more people working we'd have more income and spending, but the fact of the matter is incomes have been well supported by some of the pandemic relief and stimulus programs over the course of a year and a half," said Dr. Pakko.

So without extra stimulus cash in the bank account, families will not spend as much money.

And for those that left their jobs during the pandemic, which has been coined as "The Great Resignation," they may be seeing other opportunities... some even better than their former employment.

Holiday shopping is still estimated to bring in a lot of revenue to the state, even with the changes to consumer trends during this stage of the pandemic.

Governor Hutchinson is expected to call a special session before the year ends to cut taxes since Arkansas ended in a budget surplus.