Arkansas Personal Income – 2014:Q2 and Revisions

By , October 6, 2014 8:47 AM

New data on personal income that came out last week included first-published data for the second quarter of 2014, along with revisions going back as far as 2001.  The news on personal income for Arkansans was generally quite positive, but also highlighted some areas of weakness in the state’s economic expansion since the 2008-09 recession.

The news for the most recent quarter was certainly upbeat:  Personal income in Arkansas rose 1.9%–above the national average of 1.5% and ranking Arkansas as the 7th fastest growing state for the quarter.  A revision to the data for the first quarter of the year was also good news:  Previously reported as a decline of 0.2%, the revised data for 2014:Q1 showed an increase of 0.8%.  The update to the first quarter data was largely due to a substantial upward revision to estimates of farm income (which accounted for much of the weakness in the first-published report).  As shown in the chart below, Arkansas personal income is 18.5% higher than at the previous cyclical peak of 2008:Q2.  Over the same period, U.S. personal income is up 17.4%.  On the basis of overall personal income, Arkansas’ cumulative recovery is faring slightly better than the nation’s.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The past revisions to the data for Arkansas were also positive.  As shown in the chart below, the data for 2012 and 2013 were revised upward substantially — averaging 2.3% over that two year period.  The spike in income during the fourth quarter of 2012 was subject to a particularly large revision.  Recall that this spike was attributable to income-shifting associated with changes in income tax laws that went into effect at the beginning of 2013 (see, Arkansas Personal Income – How Policy Has Affected Growth).  It is therefore not surprising that the revision for 2012:Q4, in particular, was primarily attributable to an upward revision of the Dividends, Interest, and Rent component of overall personal income.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

In fact, the entire revision was attributable almost exclusively to the Dividends, Interest, and Rent component.  Of the total average upward revision for 2012 and 2013, Wages and Salaries accounted for approximately 1% and Proprietors’ Income accounted for about 19%.  Transfer Receipts and Employer Contributions for Pensions and Insurance were revised downward.  After those downward revisions in other components, the Dividends, Interest, and Rent component was left to account for 114% of the total revision.

The revision to Dividends, Interest, and Rent reflects a realization that recent earnings on returns to wealth were larger than previously recognized.  But the small revision to Wages and Salaries suggests no improvement in the record on labor compensation during the business cycle expansion in Arkansas.  And even before the data revisions, the pattern was skewed — the new data highlight the imbalance.

The two charts below (using the newly revised data), show how the two components have fared in Arkansas relative to the national average.  The first shows Wages & Salaries, which comprise about 55% of total income in Arkansas.  While the data show that the recession did not impact Wages and Salaries in Arkansas as much as the rest of the nation, the pace of recovery has been slower.  Compared to the peak quarter of total personal income, Arkansas has seen a cumulative increase of 13.0%, while the U.S. increase has been 13.8%.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The second chart shows Dividends, Interest, and Rent, which accounts for about 21% of total personal income in Arkansas.  After a downturn of the same magnitude as the U.S. average, this component has shown remarkable growth in Arkansas.  Relative to 2008:Q2, this component has shown a cumulative increase of  27.5% in Arkansas, while increasing a total of 13.3% nationwide.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The relative strength of growth in Dividends, Interest, and Rent — in spite of its relatively small share in total income — fully accounts for the fact that Arkansas personal income growth has exceeded the national average during the economic expansion.  The relatively sluggish performance of the Wages and Salaries component highlights the weakness that appears to be holding back the recovery of the state’s labor markets.

Arkansas Home Sales – August 2014

By , October 2, 2014 12:09 PM

The Arkansas Realtors® Association announced this morning that home sales in August were down 3.4% from a year earlier.  This was the first year-over-year decline since last November, but that shouldn’t come as a surprise.  The summer months of June, July, and August are typically the peak months of the year, but the peak can come in either July or August, depending on the number of closings that take place before or after Aug 1.  In 2013, the peak month was August, whereas this year the highest-sales month turned out to be July.  Comparing this year’s July/August total with last year’s, we see an increase of 3.4%.  Year-to-date, home sales are up 5.1% over last year.

ARA_0814_NSA

After seasonal adjustment, it is clear that while the August sales figure represents a slight down-tick from the previous month, it provides little evidence of any change in the upward trend of home sales over the past two years.

Source:  Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement

Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement

Metro Area Unemployment & Employment – August 2014

By , October 1, 2014 5:06 PM

This morning, the Bureau of Labor Statistics (BLS) released new information on unemployment and employment in metropolitan areas.  The BLS News Release reported that unemployment rates were down from a year earlier in 322 of the nations 372 metropolitan areas.  All eight of Arkansas’ metro areas were included in that total, with the year-over-year declines ranging from 0.9% in Fayetteville to 1.8% in Pine Bluff.

The not-seasonally adjusted data show that the unemployment fell rather sharply from July to August, but that is a typical seasonal effect.  (For example, over the past 10 years, the not-seasonally adjusted unemployment rate for Arkansas has, on average fallen by 0.57% between July and August, while the seasonally adjusted average was +0.03% for the same monthly change.)  Data from the Smoothed Seasonally Adjusted Metropolitan Area Estimates show that there was little change in metro-area unemployment rates after taking account of the usual seasonal swing:  Unemployment rates declined by one-tenth of a percentage point in Fort Smith and Pine Bluff, increased by one-tenth in Memphis, and were unchanged in the remaining metro areas.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Over the past several months, we have noted a sharp decline in labor force participation in Arkansas.  In the report on statewide unemployment in August, we saw a slowdown of that trend.  As shown in the figure below, most of the state’s metro areas have shown a similar downward trend in the size of their labor forces since March 2014.  The weakening of the downward trend is also evident in most of the state’s metro areas (with the notable exception of Memphis).

There is no clear explanation of why we have seen such a sharp downward trend since spring.   One pattern that appears to generally hold in the figure below is the relationship between cumulative labor force contractions and the more recent weakening of the downward trend.  In particular, the metro areas that have experienced the largest cumulative reductions in labor force participation during 2013 and 2014 continue to trend downward.   The weakening of the downward trend is more apparent in metro areas that have only recently been subject to a declining labor force.  In fact, the labor force in Jonesboro — where cumulative increases over the past two years have been the largest — edged slightly higher in August.

Source:  Bureau of Labor Statistics (Smoothed Seasonally Adjusted Metropolitan Area Estimates)

Source: Bureau of Labor Statistics (Smoothed Seasonally Adjusted Metropolitan Area Estimates)

Payroll Employment
Statewide payroll employment growth was essentially zero in August, with metropolitan areas showing a wide range of changes.  From July to August, employment was down in four metro areas (Little Rock, Memphis, Pine Bluff and Jonesboro) and was up in the remaining four (Fayetteville, Texarkana, Fort Smith and Hot Springs).   Over the past year, only Pine Bluff has seen a net reduction in payroll employment (-1.4%), with increases in other metro areas ranging from +0.5% in Fort Smith to +1.9% in Jonesboro.  Compared to pre-recession employment levels, only Jonesboro and Fayetteville have seen net increases.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

 

Arkansas Employment and Unemployment – August 2014

By , September 19, 2014 10:26 AM

The Arkansas unemployment rate ticked up one-tenth of a percent in August to 6.3%.  This was the first increase in the state’s unemployment rate since July of 2013, when the rate increased from 7.6% to 7.7%.  The higher unemployment rate was driven by an increase in the  number of Arkansans unemployed and a decline in the number employed.  The shrinkage of the labor force continued, but it was the smallest decline since a sharp downturn began in April.  Compared to a year ago, the number of unemployed is down by over 20,000 and the unemployment rate is down by 1.4%.  However much of that decline is associated with the contracting labor force, which has fallen by 34,400 since March of this year.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Employment
Nonfarm payroll employment was essentially unchanged in August (+100 jobs, seasonally adjusted).  Compared to August of 2013, payrolls have increased by 17,600; however, that increase took place almost entirely in the second half of 2013.  Since January of this year, payroll employment has changed little on net (+400).

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Changes in the components of payroll employment were mixed.  Jobs in wholesale trade increased by 1,400 and jobs in Government were down 1,100 — primarily local government employment, which declined by 1,000.  Before seasonal adjustment, local government employment increased by 1,400 due primarily to the start of the school year.  The fact that seasonally-adjusted employment declined shows that the increase in school-related employment was smaller than would typically be expected.

Most sectors were up from a year earlier.  Year-over-year increases in Construction and Manufacturing are particularly encouraging, given the ongoing weakness in those two sectors.  Strong employment gains in Education & Health Services, and in Leisure & Hospitality services are also prominent in the breakdown of job growth.  Three sectors have shown small year-over-year declines:  Information Services, Financial Services, and Government.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

# # #

*Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format compatible with the monthly news release from the Arkansas Department of Workforce Services, can be found hereTable-Seasonally Adjusted NFPE.

Metro Area GDP in 2013

By , September 16, 2014 11:44 AM

New data on GDP growth in metropolitan areas was released this morning by the Bureau of Economic Analysis.  The data show robust growth in Northwest Arkansas, but rather sluggish growth in other parts of the state.  In June, data on real GDP growth by state showed that Arkansas’ economy grew at a rate of 2.4% in 2013, well above the national average of 1.8%.  The metro data show that growth to be concentrated in the Fayetteville-Springdale-Rodgers Metropolitan Statistical Area (MSA), which grew at a 5.6% rate.  Fort Smith and Hot Springs grew slightly faster than the national average for metropolitan areas, while Jonesboro and Little Rock expanded at growth rates of less than one percent.  Memphis, Pine Bluff and Texarkana each showed negative growth from 2012 to 2013.  Out of the total of 381 MSAs in the United States, only Fayetteville, Fort Smith and Hot Springs ranked above the median growth rate.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Although the metro GDP data are based on the best information presently available, the figure for 2013 will be subject to future revision.  As shown in the table, data for 2011 and 2012 were revised substantially since the last metro GDP report a year ago.  Data for Northwest Arkansas were subject to particularly large revisions.  Previously published data had shown growth rates of 0.1% and 0.5% in 2011 and 2012.  The revised data show growth rates of 4.4% and 1.9%.  At the other end of the scale, growth rates for Texarkana were revised downward rather sharply.

The new data also report on GDP per capita, which might be considered a better indicator of economic performance (because it accounts for differences in population growth).  Statewide, GDP per capita in 2013 was $39,111 in 2013 (inflation-adjusted 2009 dollars) — amounting to 79.6% of the national average.  As shown in the chart below, there are some significant differences in GDP per capita among the state’s metro areas.  Little Rock is the only metro area with GDP per capita exceeding the national average in 2013 (102%).  Memphis and Fayetteville stood at 90% and 80% of the national average, respectively.  The lowest per capita GDP was for Hot Springs:  the 2013 figure of $34,918 amounts to only 59 percent of the national average GDP per capita.  Since the recession trough in 2009, real GDP per capita has increased substantially in Fayetteville (+13.8%) and Hot Springs (+12.3%). It has increased more slowly in Fort Smith (+6.0%),  Jonesboro (+4.7%), Pine Bluff (+3.5%) and Memphis (+0.4%).   Little Rock and Texarkana have seen negative growth in real GDP per capita since 2009 (-2.0% and -1.5%, respectively).

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Arkansas Taxable Sales – 2014:Q2

By , September 4, 2014 3:46 PM

Newly compiled data on Arkansas Taxable Sales (ATS) suggests a slight slowdown in spending during the second quarter of 2014.   After surging 1.3% in the first quarter, ATS fell 0.3% in the second quarter (seasonally adjusted).  Compared to a year earlier, ATS was up only 0.2%.  A broader measure — Arkansas Taxable Sales Including Gasoline (ATSIG) — was also down 0.3% for the quarter.

Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

In the five years since the trough of the recession (2009:Q2), ATS has increased 15.6% and ATSIG has increased by 17.8% — corresponding annual percentage growth rates of 2.9% and 3.3%, respectively.  It is worth noting, however, that the taxable sales statistics are not adjusted for inflation.  Using the price index for personal consumption expenditures, we can express ATS and ATSIG in real (inflation adjusted) terms.  As shown in the figure below, real measures of ATS and ATSIG remain below their previous cyclical peaks.  Since the recession trough, real ATS has increased by only 5.9% (a 1.1% annual rate), while real ATSIG has increased by 7.9% (a 1.5% annual rate).

Sources: Department of Finance and Administration, Oil Price Information Service, U.S. Bureau of Economic Analysis, Institute for Economic Advancement

Sources: Department of Finance and Administration, Oil Price Information Service, U.S. Bureau of Economic Analysis, Institute for Economic Advancement

# # #

Arkansas Taxable Sales (ATS) is calculated by the Institute for Economic Advancement to serve as a timely proxy for Arkansas retail sales. The series is derived from sales and use tax data, adjusting for the relative timing of tax collections and underlying sales, changes in tax laws, and seasonal patterns in the data.  Arkansas Taxable Sales Including Gasoline (ATSIG) incorporates data on the state motor fuel tax and gasoline prices from the Oil Price Information Service.

A spreadsheet of the data is available here: Arkansas Taxable Sales 2014:Q2 (Excel file)

Arkansas Home Sales – July 2014

By , August 28, 2014 1:47 PM

We received another strong sales report from the Arkansas Realtors® Association (ARA) this morning.  Last week, the ARA revealed a year-over-year sales increase of 10.3% in June.  In July, sales were up 10.8% from the previous year.  Two back-to-back reports of double-digit increases — coming during the peak sales season of the year — represent a clear indication that home sales are on the upswing.  As shown in the chart of not-seasonally adjusted data below, the July 2014 sales total was not only well-above the level of a year ago, but it also surpassed last year’s peak sales month (August).  As a matter of fact, the July sales figure of 2,875 was the highest single-month total since 2007.

Source:  Arkansas Realtors® Association

Source: Arkansas Realtors® Association

The peak sales months of the year are typically June, July and August.  Although their relative ranking can differ from year-to-year, sales during those three months usually account for about 30% of the annual total.  Applying standard seasonal-adjustment methods to the data, the upward trend is apparent:

Source:  Arkansas Realtors® Association; Seasonal adjustment by the Institute for Economic Advancement

Source: Arkansas Realtors® Association; Seasonal adjustment by the Institute for Economic Advancement

Because last year’s peak sales month came in August, it is quite possible that the next report from ARA will not appear quite so strong.  But it has already been a good summer for home sales.

Metro Area Unemployment and Employment – July 2014

By , August 27, 2014 12:54 PM

Unemployment rates continued to trend downward in most of Arkansas’ metro areas in July.  However, as with the statewide data, unemployment rates are falling against a backdrop of sharp declines in the labor force.

The typical summer spike in unemployment continued to drive month-to-month changes in the not seasonally adjusted data.  Compared to the July 2013, however, unemployment rates were down by more than a full percentage point for all metro areas except Memphis.  The largest year-over-year declines were in Fort Smith, Jonesboro, and Pine Bluff, all showing declines of 1.7 percentage points.

Adjusting for the predictable summer effect, data from the Smoothed Seasonally Adjusted Metropolitan Area Estimates showed unemployment rates generally falling from June to July.  Rates declined by 0.1 percentage pointes in Fayetteville, Hot Springs and Little Rock; and were down 0.2 percentage points in Jonesboro and Pine Bluff.  Rates in Fort Smith and Texarkana held steady, while the rate in Memphis increased by 0.3 percentage points.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

In the context of the statewide unemployment report, we have noted that the number of employed and the civilian labor force has been declining sharply this summer.   Over the past four months, employment has fallen by 21,632 (-1.7%) and the labor force has contracted by 32,374 (-2.4%).  As shown in the table below, the declines are also reflected in most of the state’s metro areas.  The largest percentage declines are in Fort Smith and Hot Springs.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Employment
Monthly changes in payroll employment were mixed across Arkansas MSAs.  Employment declined in Pine Bluff, Texarkana and Fort Smith.   Small increases were reported in the state’s remaining metro areas.  The declines in Fort Smith and Pine Bluff represent continued weakness:  Employment is down from a year ago in both of those metro areas.  Compared to pre-recession employment levels, Fayetteville and Jonesboro remain the only metro areas in the state that have seen positive net job growth.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Arkansas House Prices – 2014:Q2

By , August 26, 2014 4:36 PM

New data from the Federal Housing Finance Agency indicate that house prices in Arkansas increased modestly in the second quarter.  According to the FHFA “Expanded-Data Indexes,” prices of Arkansas homes increased 0.2% from the previous quarter, and were up 1.6% from a year ago.  Prices in Arkansas have been increasing at a significantly slower pace than the nationwide average.  For the U.S., house prices rose 1.3% in the second quarter, and were 6.2% above the levels of 2013:Q2.  Generally speaking, the areas of the country that experienced the largest house-price declines from 2007 through 2011 are the areas where we are seeing the largest price increases today.  On average, house prices did not decline dramatically during the market decline, and so recent price increases have been more muted.

Source:  Federal Housing Finance Agency

Source: Federal Housing Finance Agency

The expanded data indexes are not available for metro areas, but the FHFA does publish “All-Transactions Indexes,” which included data from home sales and refinancing appraisals (but without additional information from county property recorders’ offices).  As shown in the table below, prices have been increasing more slowly than the national average in all of Arkansas’ metro areas.  Compared to a 5.7% year-over-year increase for the U.S., prices have increased only 1.6% statewide.  The largest increases were in Memphis (3.7%) and Fayetteville (2.7%), each of which experienced above-average price declines during the 2007-11 period.  House prices have declined over the past year in Pine Bluff and Texarkana, and have risen only slightly in Hot Springs and Jonesboro.

Source: Federal Housing Finance Agency; Seasonal Adjustment by the Institute for Economic Advancement

Source: Federal Housing Finance Agency; Seasonal Adjustment by the Institute for Economic Advancement

Additional data on metro-area house prices is available from CoreLogic®, a data and analytics company.  In the past 12 months (through June), the CoreLogic house price data confirms home-price weakness in Arkansas.  The statistics from CoreLogic also present the influence of distressed sales (foreclosures and short sales) on home prices.   The FHFA data are based on conforming loans, so do not included distressed sales.  In general, the inclusion of distressed sales continues to put downward pressure on home prices.  An exception is Texarkana, where price declines have been more pronounced in the sample that excludes distressed sales.  One possible interpretation of this pattern is that distressed sales where having an even larger depressing effect on market prices a year ago than they do now.

Source:  CoreLogic®

Source: CoreLogic®

Arkansas Home Sales – June 2014

By , August 22, 2014 12:32 PM

New data from the Arkansas Realtors® Association (ARA) show continued strength in home sales.  New and existing home sales were up 10.4% compared to June of 2013.  The sales total of 2,708 was the highest total for the month of June since 2007.   For the first half of the year, cumulative sales were up 6.3% from the previous year.

Source:  Arkansas Realtors® Association

Source: Arkansas Realtors® Association

The steadily improving trend in home sales can be seen more clearly when the data are aggregated by calendar-quarter and seasonally adjusted.  As illustrated in the figure below, sales in the second quarter of 2014 were up by more than 3% from the previous quarter, and were nearly as high as the peaks in late 2009 and early 2010 that were associated with Federal home-buyer tax credits.

Source:  Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement

Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement

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