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

Quarterly GDP

By , August 21, 2014 4:16 PM

The Bureau of Economic Analysis has released yet another “prototype” data set for state-level statistics.  Earlier this month we saw, for the first time, estimates of personal consumption spending by state.  Yesterday, the BEA introduced state-level statistics on quarterly GDP.  For some time, we have had estimates of annual GDP for states, but annual averages can only reveal so much about the short-term ups and downs that characterize an economy.  Access to quarterly estimates provides additional detail for assessing the economy’s dynamics.

The chart below compares quarterly growth rates for U.S. GDP with the new quarterly measure of Arkansas GDP.*  The quarter-to-quarter changes for Arkansas show more volatility than the national average.  This is partly due to statistical measurement issues, but also due to the fact that the U.S. average is naturally smoother as increases in one region tend to offset decreases in others.  Overall, as with other measures of economic activity, Arkansas economy has followed a trajectory similar to the U.S. as a whole.  The data also corroborate some previously established patterns:  Arkansas experienced a sharp recovery from the recession in late 2009 and early 2010, but then fell into a pattern of relatively sluggish growth.   There were even two episodes — late 2010 and mid 2012, where Arkansas experienced two consecutive quarters of negative output growth.  The pace of the expansion picked up in 2013, particularly early in the year.

Source:   Bureau of Economic Analysis*

Source: Bureau of Economic Analysis*

The most recent observations released as a part of the new prototype series were for the fourth quarter of 2013.  In Arkansas, fourth quarter GPD increased at a seasonally adjusted annual rate of 3.0% — slightly higher than the U.S. average of 2.8%.  Among the 50 states, Arkansas growth rate ranked #22.  As shown in the table below, growth was positive in most sectors.  Output in manufacturing — especially non-durable goods — showed particular strength.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

# # #

Note:  Data used to generate historical growth rates use an interpolated estimate for the fourth quarter of 2007.  Payments associated with the purchase of Alltel Communications distort the quarterly personal income statistics which are used to calculate quarterly GDP estimates.  The adjusted GDP data is substituted to smooth out what would otherwise look like an excessive growth/contraction pattern at the end of 2007 and beginning of 2008.

Arkansas Employment & Unemployment – July 2014

By , August 18, 2014 10:34 AM

The Arkansas unemployment rate was 6.2% in July, down slightly from a revised 6.3% rate in June.  Unemployment rates for Arkansas and the U.S. have once again converged — the national unemployment rate was also 6.2% in July.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Looking in more detail at the components of the unemployment rate, the number of unemployed was down in July for the 11th consecutive month (-626), but it was the smallest decline since last September.  The number of employed continued the sharp downward trend that has prevailed since April.  In July, the number of employed declined by 7,166, bringing the four month cumulative total to -21,632.  With both the number of employed and unemployed falling, the labor force was down by nearly 8,000 in July, and has dropped by over 32,000 over the past four months.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Data
The survey of employers showed an increase in Arkansas nonfarm payroll employment in July.  Compared to the previous month, employment was up 2,200 (seasonally adjusted).  [The not-seasonally adjusted data highlighted by the Arkansas Department of Workforce Services showed a sharp decline, but all of those losses were attributable to the summer closure of public schools and universities.]  As shown in the table below, several sectors showed small employment declines in July, but these were offset by gains in Retail Trade, Other services and Government.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The seasonally adjusted data show a year-over-year increase of 15,200 jobs, with gains in every sector except Information Services.  However, most of those increases took place in the second part of 2013.  Total nonfarm payroll employment has declined, on net, by 1,100 jobs since January of this year.  Payroll employment remains 18,700 below the level that prevailed just before the onset of the 2008-09 recession.

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.

Personal Consumption Expenditures

By , August 8, 2014 3:16 PM

The Bureau of Economic Analysis launched a new data program yesterday, Personal Consumption Expenditures by State.   The new data set only covers the period through 2012, but it provides a source of new information about consumer spending at the state level that was unavailable before.

The chart below compares consumption growth rates for Arkansas and the U.S.   The data are not adjusted for inflation, so the growth rates reflect changes in both prices and quantities.  The data show that consumption spending in Arkansas slowed slightly more than the U.S. average during 2008 — the first year of the recession — but did not contract as sharply as U.S. consumption in 2009.  In the subsequent 3 years consumption grew at an average rate of 4.5% in Arkansas compared to 4.2% for the U.S.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

In the most recent year available, 2012, consumption growth in Arkansas was 3.9%, slightly below the national average of 4.2%.  However, that comparison partly reflects the fact that population growth in Arkansas has been running slightly below the national pace.  In per capita terms, consumption growth in Arkansas was 3.5% in 2012, compared to 3.3% nationwide.

The per capita level of consumer spending in Arkansas in 2012 was $28,366, the second-lowest in the nation and approximately 80% of the U.S. level of $35,498.   This is a function of the relatively low level of income in Arkansas — consumption spending is ultimately constrained by disposable income.   Among categories of expenditure, the BEA press release noted that Arkansas was among the lowest per capita spending rates for housing and utilities, as well as for food and beverages.

The measure of consumer spending that we have relied upon here at the Arkansas Economist up to now, Arkansas Taxable Sales Including Gasoline (ATSIG), showed a sharper decline during 2009 than the new PCE measure, and its recovery has not been as robust in subsequent years.   ATSIG contracted by over 6% in 2009, and its growth averaged only 3.8% from 2010 through 2012.  There are several differences between the two that might help account for the discrepancies.  One difference ATSIG covers only items that are subject to sales tax.  Since many services are not taxable, ATSIG underrepresent the importance of spending on services in a household budget. This doesn’t seem to help explain the difference between ATSIG and PCE, however.   The data on PCE spending on services shows less variability than the goods component.

Three other differences might help explain:  First, Arkansas’ sales taxes apply not only to final consumption expenditures, but to many business-to-business transactions as well.  To the extent that inter-firm transactions have been suppressed by the relatively slow economic recovery, some of the weakness in ATSIG might be separate from trends in consumer spending.   The other two differences have to do with the location of spending.  The taxable sales measure necessarily focuses on spending that takes place in Arkansas, whether it is from Arkansas residents or not, whereas PCE measures spending by Arkansan’s, whether or not the spending takes place in-state.  A related issue is the proliferation of online shopping.  Internet commerce is growing rapidly, and to the extent that many internet purchases by Arkansan’s are not taxed by the seller, the state often does not collect the tax revenue, nor is it recognized in ATSIG.  So it seems likely that the relatively slow growth rate of ATSIG is related to some combination of slow business-to-business spending, lower spending in Arkansas by nonresidents, and more spending by Arkansans to internet vendors and other out-of-state sellers.

 

 

Metro Area Employment & Unemployment – June 2014

By , July 30, 2014 3:06 PM

New statistics on employment and unemployment in Arkansas’ metro areas shows continuing declines in unemployment rates.  However, concerns about statewide labor force participation are also apparent in the metro area data.   As shown in the table below, not-seasonally adjusted unemployment rates have fallen sharply over the past 12 months.  The declines range from -1.2% in Fayetteville, Little Rock and Texarkana to -1.9% in Pine Bluff.  The most recent monthly changes show slight upticks.  However, the change in unemployment from May to June is subject to predictable seasonal increases.  After adjusting for recurring seasonal effects, the seasonally adjusted data show that the unemployment rate declined in June for every metro area except Memphis.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

In the statewide data for June, we noted that the unemployment rate was declining against a backdrop of a declining labor force — particularly over the past three months.  As shown in the following chart, the declining labor force from March through June is distinctive for most of the state’s metro areas as well.  Over the past three months, we see sharp labor force participation falling in every metro area except Memphis.  In some cases (Little Rock, Fort Smith, and Pine Bluff), the downward trend has been ongoing throughout 2014.  Relative to January 2013, the only metro area that has experienced a net increase in its labor force is Jonesboro.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Data
Information from the survey of employers shows one-month declines in employment for five of Arkansas’ metro areas.  Compared to a year ago, however, only Fort Smith has seen a decrease.  Although net employment has been increasing since February 2010, the cumulative percentage increase for the state has only been 3.1%, and employment in Fort Smith, Pine Bluff and Texarkana has declined, on net, over that period.  Compared to pre-recession employment levels, only Fayetteville and Jonesboro have moved into positive territory.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Arkansas Employment and Unemployment – June 2014

By , July 18, 2014 10:33 AM

The unemployment rate in Arkansas dropped two-tenths of a percentage point in June, falling to 6.2%.  The change matches a similar decline in the U.S. unemployment rate, which stood at 6.1% in June.  The underlying data from the Bureau of Labor Statistics and Arkansas Department of Workforce Services showed a 10th consecutive monthly decline in the number of unemployed — down nearly 2,600 to approximately 81,600.  As recently as October of last year, the number of unemployed Arkansans remained above 100,000.  Over the past 12 months, the number of unemployed has fallen by over 19,000.

However, the other component of the unemployment rate, the number of employed, continues to be a source of concern.  The household-survey measure of employment fell by 6,700 in June, bringing the cumulative 3-month decline to nearly 14,500.   As a result of these changes, the labor force fell by 9,300 for the month, and has fallen by more than 24,600 over the past three months.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Recent data demonstrate that a decline in the unemployment rate cannot always be interpreted positively.  If, in fact, the decline in the number of unemployed reflects discouraged workers dropping out of the labor force, then the falling unemployment rate might be a misleading signal.  For example, suppose that the decline in unemployment over the past three months was entirely attributable to the discouraged-worker effect:  If we assumed that those 10,234 Arkansans remain unemployed in a true sense of the word, then the measured unemployment rate in June might be more appropriately calculated as 7.0%.   The sweeping assumption that unemployed workers are giving up on their job searches is surely an exaggeration, and the data are subject to future revision.  But as it stands now, the sharp contraction of the Arkansas labor force that we’ve seen over the past three months is a cause for concern.

Payroll Employment
Data from the survey of employers reinforces concern about weak employment growth.  Nonfarm payrolls were down 3,300 in June (seasonally adjusted).  Payroll employment remains more than 14,000 higher than a year ago, but most of those gains occurred during the latter part of 2013.  Over the first 6 months of this year, employment has increased by only 1,700.

As shown in the table below, employment declines hit every category of service-providing sectors.  The largest declines were in Professional & Business Services and Education & Health Services — two areas that have previously been showing strong growth trends.  The news was more positive in the goods-producing sectors.  Manufacturing employment surged by 1,700, and employment in Construction increased as well.  Despite recent gains, employment in both Manufacturing and Construction remain lower than they were at labor market trough in February 2010, and together those two employment categories account for cumulative job losses of over 41,000 since the start of the 2008-09 recession.

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 Unemployment and Employment – May 2014

By , July 1, 2014 1:26 PM

Unemployment rates in Arkansas’ metro areas continue to trend downward.  For the period from May 2013 through May 2014, not-seasonally adjusted data from the Bureau of Labor Statistics show declines ranging from 0.9 percentage points in Fayetteville and Little Rock to 1.7 percentage points in Memphis.  Statewide, the unemployment rate has fallen 1.1 percentage points over the past 12 months.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

On a month-to-month basis, the not seasonally adjusted data indicate that unemployment rates moved higher in May.   However, this is a typical seasonal effect.  Unemployment rates usually rise in the early to mid-summer — in part due to effects related to the end of the school year.   After adjusting for these recurring seasonal patterns, unemployment rates declined in May for all eight of Arkansas’ metro areas.  The Smoothed Seasonally Adjusted Metropolitan Area Estimates show declines of 0.2 percentage points in Jonesboro, Pine Bluff and Texarkana; and declines of 0.1 percentage points in the other five metro areas.  A graph of the smoothed seasonally-adjusted estimates (below) illustrates the downward trend that has prevailed across all of Arkansas’ metro areas since late last summer.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Employment
In the other half of the metropolitan area report, payroll employment continued to be disappointingly weak across the state.  Total employment was down in six of the eight metro areas, with small increases in Fayetteville and Memphis.  Compared to a year ago, employment is higher in all metro areas except Texarkana — but the gains are relatively small.  Year-over-year employment growth has been positive but less than one percent in Fort Smith, Memphis and Pine Bluff.  Payroll employment is still lower than its pre-recession peak an all metro areas except Fayetteville and Jonesboro.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Arkansas Personal Income – 2014:Q1

By , June 24, 2014 3:43 PM

New figures came out this morning showing that Arkansas personal income declined by 0.2% in the first quarter.  Data for the fourth quarter of 2013 were also revised downward to show a 0.2% decline in that quarter as well.  Compared to the first quarter of 2013, the new data indicate year-over-year growth of 1.0%.  The weakness in Arkansas income was concentrated in farm income.  The report from the Bureau of Economic Analysis noted that first-quarter farm earnings declined by more than $1 billion in each of several agricultural states, including North Dakota, Minnesota, Iowa, Arkansas and Nebraska.  The report noted that the declines reflected falling crop prices.  Nonfarm income in Arkansas increased 0.9% in the first quarter, and was up 2.8% from the first quarter of 2013.

PI-2014Q1-map

The declining income in Arkansas over the most recent two quarters contrasts with modest but positive growth in personal income nationwide.  For the U.S. as a whole, personal income was up 0.8% in the first quarter following a (revised) 0.5% increase in the fourth quarter of last year.  The most recent data puts U.S. personal income 14.8% higher than its pre-recession peak.  For Arkansas, first quarter income was 13.6% higher than the previous cyclical peak.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Over the past four quarters, the price index for personal consumption expenditures increased by 1.1%.  Hence, on an inflation-adjusted basis, real incomes in Arkansas have fallen 0.1% over the past year.  For the U.S., real income increased by 2.5% over the same period.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The table below shows the critical role that declining farm income played in the first quarter report.  Total earnings (which includes wages and salaries, supplements to wages and salaries, and proprietors income) contributed -.42% to the quarterly decline in Arkansas personal income. The contribution of farm income to that total was more than a full percentage point.  All other sectors combined contributed +0.65% to personal income growth.  Some sectors showed notable growth, including Construction and Nondurable goods manufacturing.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

 

Arkansas Employment and Unemployment – May 2014

By , June 20, 2014 12:44 PM

The Arkansas unemployment rate declined another two-tenths of a percent in May, falling to 6.4%.  The unemployment rate has fallen for eight consecutive months, and is now 1.1% lower than it was in May of 2013.  The Arkansas rate has been declining along with the national unemployment rate, which stood at 6.3% in May. URATES-AR&US-0514

For the second consecutive month, however, the unemployment rate drop was accompanied by a sharp decline in the labor force.  The number of unemployed dropped by 2,637 in May, and was down 7,649 since March.  But we have not been seeing a commensurate increase in the number of  employed Arkansans.  Rather, the number of employed has declined by 7,776 over the past two months.  As a result, the labor force declined by 15,425 during April and May.  The declining labor force is something of a puzzle.  With labor market trends appearing to be on an improving trend, we would expect to see discouraged job-seekers re-enter the labor force, boosting participation rates and unemployment rates.  Instead, we’re seeing the reverse.  It might be the case that some job-seekers are leaving the labor force out of frustration, but it might also be the case that job seekers are leaving the Arkansas labor force in favor of finding jobs elsewhere.  The declining labor force might also reflect a cohort of newly retired baby-boomers dropping out of active labor force participation.  Two months is not long enough to establish a trend, but this development is worthy of monitoring closely over the next few months.

Source:  Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

Payroll Employment
The separate survey of employers showed nonfarm payroll employment down by 400 in May (seasonally adjusted).  Sectors losing jobs in May included Construction, Manufacturing, and Retail Trade.  Employment was down in most service sectors as well.  A notable exception was Education and Health services, which increased by 2,500 jobs.  Over a longer span of time, payroll employment is maintaining a respectable growth rate.  Since May 2013, total employment is up by over 14,000 jobs, and we’ve seen the creation of nearly 39,000 jobs since the trough of February 2010.  Nevertheless, Arkansas employment remains more that 18,000 jobs lower than it was before the recession began in December 2007.

Source:  Bureau of Labor Statistics, Current Employment Statistics (CES)

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

Considering the employment gains of the past 12 months, there are two distinct subperiods.  During the latter part of 2013 we saw significant job growth, with an increase of nearly 15,000 jobs in the period from May 2013 through January 2014.  So far this year, however, job growth has stalled.  From January through May 2014, total payroll employment has declined slightly.  Some of the slowdown is likely associated with harsh winter weather that we experienced in the first part of the calendar year.  More recent weakness in payroll employment growth parallels the reversal of employment gains that we’ve seen in the household survey.

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.

 

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