Last year’s recession is a reminder the business cycle has not been repealed. In the midst of the COVID-19 crisis, the National Bureau of Economic Research (NBER) declared that a national recession began in February.
The nonprofit NBER, based in Cambridge, Mass., is the arbiter of the U.S. business cycle. Its business cycle chronology shows there have been 34 recessions since 1854. Yet there is a silver lining: each recession has been followed by a new expansion.
The study of economic history reveals another dimension: new business enterprises emerge to provide goods and services to consumers. This dynamic aspect can be observed by examining the histories of Arkansas public companies. Fact is, some of our state’s largest public companies were founded in periods defined by the NBER as recessions. These include Murphy Oil (1907), Tyson (1931), Dillard’s (1938), Wal-Mart (1945), and J.B. Hunt (1961). The counties where these firms and their goods and services launched are varied, and include Union, Washington, Howard, Benton and Arkansas counties.
Fort Smith’s economy also provides examples of this idea at work. The metro Fort Smith economy includes Sebastian and Crawford counties.
ABF Freight is part of another Arkansas public company, Fort Smith-based ArcBest that operates a transportation network in short- and long-haul North American markets. The firm traces its history to early 1923 and the eve of a 14-month recession (May 1923 to July 1924). Van Buren-based USA Truck, Inc., another public company, emerged in 1983 shortly after a three-year period marked by two recessions (January to July 1980, July 1981 to November 1982).
One theme that emerges when studying these Arkansas firms is how small they were at their founding in troubled times.
Another Fort Smith firm employed 12 people when it launched in the early 1930s near the end of the Great Depression. It grew into the OK Foods Inc., family, which “includes more than 3,000 team members” producing chicken products, the site explains. The Mexican poultry firm Bachoco bought the firm a decade ago.
Only a handful of Arkansas’ 75 counties are home to a public company. Metro Fort Smith is part of this small group. But a niche characteristic of Fort Smith’s economy, to this non-resident observer, may be its ability to create new enterprises in recession’s depths. It’s possible another entrepreneur was launching an important business last year during the recession, though we may not know for another decade.
Cultural factors, including Fort Smith’s history as a manufacturing town prone to the business cycle’s boom-and-bust process may play a key role. There’s a certain resilience in a culture where it’s recognized, ‘this too shall pass.’
Acknowledging Fort Smith’s economic history could lead to identification of other factors.
Editor’s note: Economist Greg Kaza is executive director of the Arkansas Policy Foundation, a nonprofit Little Rock think tank founded in 1995.