Institute for Economic Advancement

Arkansas Personal Income – 2016:Q2

By , September 28, 2016 4:28 PM

New data from the Bureau of Economic Analysis shows total personal income in Arkansas increasing by 1.1% in the second quarter, up from a growth rate of 0.6% in the first quarter (revised).  The second quarter growth rate slightly exceeded the national average of 1.0%, and represented the 16th highest growth rate among the 50 states.  Compared to a year earlier, Arkansas personal income was up 3.1%, compared to 3.2% nationally.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The second quarter increase represented gains in all major income categories:  Wages and Salaries increased by 1.3%; Proprietors’ income was up 0.8%, Dividends, interest and rent rose 1.1%; and Personal current transfer receipts increased 1.7%.

A breakdown of earnings by industry shows gains in most of Arkansas’ sectors.  One clear exception was mining, which has been impacted by low oil prices.  The BEA report noted that lower earnings in mining was the leading contributor to below-average earnings growth in several of the slowest growing states (which are also significant oil-producing states).  Earnings growth was also negative in Construction, Educational services, as well as in the leisure and hospitality services sectors.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Today’s report incorporated annual revisions to the personal income data.  For Arkansas, the revisions represented fairly substantial downward adjustments to income.  As illustrated in the figure below, Arkansas personal income was revised down by 1.5% in 2013, by 0.5% in 2014, and by 2.2% in 2015.  The revisions were primarily attributable to new figures for Proprietors’ income, as well as Dividends, interest and rent.  The BEA reported that nonfarm proprietors’ income, in particular, was subject to substantial revision due to methodological improvements that were implemented with this revision.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The data revisions had a particularly noticeable impact on measured income growth in 2015.  As previously reported, the data showed a growth rate of 3.6% from 2014:Q4 to 2015:Q4.  The revised data now show that increase to be only 1.5%.

Metro Area GDP – 2015

By , September 27, 2016 4:55 PM

New data on metropolitan area GDP were published by the Bureau of Economic Analysis last week.  For the metro areas in Arkansas, the news was decidedly mixed.  Only one of Arkansas’ metro areas — Fayetteville-Springdale-Rogers — had GDP growth in excess of the national average for metro areas:  Growth in Northwest Arkansas was reported at 4.4%, compared to 2.5% for the aggregate of all U.S. metro areas.  At 2.4%, Jonesboro’s growth rate was near the national average.  At the other end of the scale, GDP was reported to have contracted in three metro areas, with losses in Hot Springs and Pine Bluff reported at -3.0%.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The data for a single year do not always reveal the underlying growth trend.  As shown in the figure below, for example, the contraction in Hot Springs interrupted a series of years with relatively robust growth.  Even after declining 3% in 2015, GDP in Hot Springs was up 12.7% from it’s pre-recession level in 2007.  Over the same period, Fayetteville was the fastest-growing metro, with cumulative growth of 28.5%.  At the other end of the scale, GDP in Pine Bluff was down nearly 14% from its 2007 level.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Another caveat to the interpretation of the latest data:  The figures for 2015 are considered to be “advance estimates,” subject to considerable future revision.  The data release last week included revisions to the data for 2014, which were sizable in some cases.  In fact, for four metro areas (Hot Springs, Little Rock, Memphis, and Texarkana) even the direction of GDP change in 2014 has now been revised.  The update to Texarkana data is particularly large: having been originally estimated at -1.0%, GDP in 2014 is now reported to have increased at a 1.6% rate.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The revisions to 2014 data show that the new data for 2015 should be interpreted with caution.  The multi-year trends in the data are revealing, but the latest reading on annual growth rates may look quite a bit different when the data are revised a year from now.

Arkansas Employment and Unemployment – August 2016

By , September 20, 2016 12:59 PM

The Arkansas unemployment rate was unchanged at 3.9% in August.  The number of unemployed was up slightly (+267) and the number of employed was down (-1,520); however, these changes were not enough to cause the unemployment rate to budge more than a tiny fraction of a percentage point. August was the third consecutive month in which employment and unemployment moved in the “wrong” direction.  If these three month trends continue, the unemployment rate will tick up to 4.0% in September.  Despite the recent slowdown in household employment, Arkansas has shown significant improvement over the past 12 months.  The decline of 1.2% in the state’s unemployment rate since August 2015 is the largest decline in the country, matched only by Tennessee.

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

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

Payroll Employment
Arkansas nonfarm payrolls increased by 3,400 in August (seasonally adjusted). Employment in goods producing sectors was down, while most service-providing sectors expanded.   Particularly strong gains for the month were seen in Wholesale and Retail Trade, as well as Leisure and Hospitality Services.

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

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

Over the past year, employment is up by 16,700 jobs.  However, the pace of growth has slowed considerably since a year ago. From December 2014 through December 2015, Arkansas payroll employment expanded by 27,100 jobs — a growth rate of 2.3%.  So far in 2016, cumulative employment growth has totaled only 2,400 jobs, representing an annualized growth rate of only 0.3%.

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

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

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*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 Employment and Unemployment – July 2016

By , August 31, 2016 5:02 PM

Unemployment rates in the state’s metro areas showed mixed changes in July.  On a year-over-year basis, all eight of the metro areas covering parts of Arkansas showed declines.  The largest declines over the past 12 months occurred in Pine Bluff (-1.6%), Hot Springs (-1.5%), and Jonesboro (-1.4%).

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

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

Seasonally adjusted data shows that changes from June to July varied from -0.3 percent in Pine bluff to +0.2% in Texarkana.  Unemployment rates ticked up in Memphis and ticked down in Fayetteville and Hot Springs.  Rates were unchanged in Fort Smith, Jonesboro and Little Rock.

Source: Bureau of Labor Statistics, Seasonally Adjusted Metropolitan Area Estimates

Source: Bureau of Labor Statistics, Seasonally Adjusted Metropolitan Area Estimates

Unemployment rates are below the statewide average of 3.9% in Fayetteville, Jonesboro and Little Rock.  The latest decline in Pine Bluff knocked that metro area out of the unenviable position of having the highest unemployment rate in the state, with that dubious honor now belonging to the Memphis metro area (which includes only one county in Arkansas).

Source: Bureau of Labor Statistics, Seasonally Adjusted Metropolitan Area Estimates

Source: Bureau of Labor Statistics, Seasonally Adjusted Metropolitan Area Estimates

Payroll Employment
The data on nonfarm payroll employment showed that the two fastest-growing metro areas continued to surge, with Fayetteville up 0.6% and Jonesboro up 0.7%.   Compared to a year ago, both the Northwest and Northeast corners of the state have seen employment gains in the neighborhood of 4%.  In contrast employment declined from June to July in Hot Springs, little Rock, Memphis, Pine Bluff, and Texarkana.  Only two metro areas had employment lower than a year earlier:  Pine Bluff and Texarkana.

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

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

Arkansas House Prices – 2016:Q2

By , August 30, 2016 12:12 PM

The most recent data from the Federal Housing Finance Agency (FHFA) show that house prices in Arkansas continue to rise, albeit not as rapidly as the nationwide average. According to the FHFA’s Expanded-Data Indexes, house prices edged only slightly higher in the second quarter of 2016 (+0.02%) but are up by 3.3% compared to a year earlier.  The data for the U.S. showed a quarterly increase of 1.3%, with a cumulative increase of 3.8% from 2015:Q2.  Since house prices bottomed-out in 2011:Q2, prices in Arkansas have risen 16.1%, compared to a 30.3% increase nationwide.  House prices in Arkansas are now slightly higher than before the housing-market crash of early 2007, but remain more than 3% below that baseline for the U.S.

Source:  Federal Housing Finance Agency

Source: Federal Housing Finance Agency

Using the slightly less comprehensive All-Transactions Indexes we can see that house prices rose in most areas of the state during the second quarter, with the exception being Hot Springs, where prices declined by 1.2%.  The largest quarterly increase was in Texarkana, where house prices were up by 5.5%.

Source:  Federal Housing Finance Agency, Seasonally Adjusted by the Arkansas Institute for Economic Advancement.

Source: Federal Housing Finance Agency, Seasonally Adjusted by the Arkansas Institute for Economic Advancement.

Since prices began rising five years ago, the markets that saw the largest declines between 2007:Q1 and 2011:Q2 have shown substantial recoveries:  In particular, the 5-year price increase in Northwest Arkansas has been 19.8%.  Nevertheless, house prices remain below their 2007 peaks in in Northwest Arkansas, as well as in Memphis and Hot Springs.  After the large increase in 2016:Q2, house prices in Texarkana are now more than 20% higher than the nationwide house-price collapse.  Note, however, that prices in Texarkana showed no significant decline in the post-2007 downturn.

Source:  Federal Housing Finance Agency, Seasonally Adjusted by the Arkansas Institute for Economic Advancement.

Source: Federal Housing Finance Agency, Seasonally Adjusted by the Arkansas Institute for Economic Advancement.

Given the vigorous demand for housing that is evident in home sales data, continued upward pressure on house prices is expected to continue.

Arkansas Employment and Unemployment – July 2016

By , August 19, 2016 4:27 PM

The Arkansas unemployment rate was unchanged in July, remaining at a (revised) rate of 3.9%.  Some of the weakness evident in the employment report for June carried over into the July report.  After a long string of extremely strong reports from the household side of the survey, the July data showed the number of employed declining and the number of unemployed increasing for a second consecutive month.  Employment contracted by 2,700 and unemployment edged upward by 270, leaving a net decline in the labor force of 2,430.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics LAUS.

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

Although the June and July reports represent a departure from the consistently upbeat trends of recent months, the overall situation remains undeniably positive.  The unemployment rate in Arkansas is a full percentage point lower than the national average, and the 12-month decline of 1.3% is the largest drop in the nation (tied with Tennessee).

Source: Bureau of Labor Statistics.

Source: Bureau of Labor Statistics.

Payroll Employment
The payroll side of the employment report continues to show much weaker job growth than the household survey.  Nonfarm payroll employment contracted by 2,000 jobs in July (seasonally adjusted), leaving total employment down 900 from the level of December 2015.  July’s job losses were concentrated in Manufacturing, Retail Trade and Leisure & Hospitality Services.  Small declines were also registered in Wholesale Trade, Transportation & Utilities, and Professional & Business Services.  One strong sector was Construction, which increased by 1,100 jobs for the month.

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

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

Although payroll employment growth has been essentially zero for the first 7 months of 2016, employment is up by 16,700 jobs compared to a year ago.  Most of the year-over-year job gains have been in the service-providing sectors, particularly Professional & Business Services and Education and Health Services.  Employment in manufacturing continues to languish, down 1,500 jobs from a year ago and down 5,500 jobs from the employment trough of February 2010.

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*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 Employment and Unemployment – June 2016

By , August 3, 2016 4:35 PM

Unemployment rates ticked up in Arkansas metro areas in June, but rates remain far lower than a year ago.  Today’s news release from the Bureau of Labor Statistics noted that unemployment rates were lower than a year earlier in 285 of the nations 387 metropolitan areas, and all 8 metro areas that cover parts of Arkansas were in that total.  Year-over-year changes ranged from -0.7% in Fort Smith and Texarkana to -1.6% in Pine Bluff.

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

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

From May to June, not-seasonally adjusted unemployment rates increased by 0.3 to 0.5 percentage points, but most of those gains were typical seasonal changes.  After seasonal adjustment, unemployment rates increased by only 0.1 percentage point in most metro areas.  Rate increases were larger for Fort Smith and Memphis, and unemployment was unchanged in Texarkana.  As previously reported, the statewide unemployment rate (seasonally adjusted) was unchanged at 3.8% in June, while the national unemployment rate increased by 0.2 percentage points from 4.7% to 4.9%.

Source:  Bureau of Labor Statistics, Local Area Unemployment Statistics and Seasonally Adjusted Metropolitan Area Estimates

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics and Seasonally Adjusted Metropolitan Area Estimates

Payroll Employment
Nonfarm payroll employment changes were mixed  From May to June, payrolls declined in Little Rock, Pine Bluff and Fort Smith but were up in the state’s other metro areas.  Employment in Hot Springs was up 0.8%.  From June 2015 to June 2016, employment in three metro areas increased at a higher rate than the statewide average of 1.7%:  Hot Springs increased 3.8%, Fayetteville was up 3.7%, and Jonesboro rose by 3.5%.  Since the employment trough of February 2010, the northwest and northeast corners of the state have seen the strongest job growth (23% in Fayetteville and 16.4% in Pine Bluff).  At the other extreme, employment in Pine Bluff is nearly 10% lower than in February 2010, and is down 12.3% from pre-recession levels.

Source:  Bureau of Labor Statistics, Current Employment Statistics

Source: Bureau of Labor Statistics, Current Employment Statistics

The chart below illustrates the divergent employment trends among the state’s metro areas since the 2008-09 recession.  Fayetteville, Jonesboro and Little Rock are the only three metro areas to have higher employment now than at the end of 2007.

Source:  Bureau of Labor Statistics, Current Employment Statistics

Source: Bureau of Labor Statistics, Current Employment Statistics

 

Arkansas Home Sales – June 2016

By , July 28, 2016 4:44 PM

According to the Arkansas Realtors® Association, Arkansas home sales in June were up 7.9% from the previous year.  This represents the 22nd consecutive month of positive year-over-year changes.  The average growth rate over that 22-month period has been 10.2%.  The sales total for June was down slightly from the previous month, but the two-month total was the highest May-June combination since 2006.  Year-to-date sales were up 12.0% from the first six months of the previous year.

Source:  Arkansas Realtors® Association

Source: Arkansas Realtors® Association

Quarterly seasonally-adjusted data smooth out the seasonal fluctuations and some of the month to month volatility.  As shown in the figure below, home sales in 2016 have reached a pace about equal to 2006, prior to the onset of both the collapse of the national real-estate bubble and the onset of recession.

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

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

 

Arkansas GDP Growth – 2016:Q1

By , July 27, 2016 4:41 PM

The Bureau of Economic Analysis reported this morning that Arkansas GDP expanded in the first quarter at a 3.9% annual rate — the highest growth rate in the nation.  At least in part, today’s report provides additional evidence of a strong Arkansas economy in the first part of 2016.  However, the BEA news release pointed out that Arkansas’ growth rate was boosted by an extraordinarily strong growth in the sector of Agriculture, Forestry, Fishing, and Hunting. “This industry contributed 2.21 percentage points to the 3.9 percent growth in Arkansas.”  In other words, overall growth would have amounted to only 1.7% had it not been for the contribution of agriculture.

Source: Bureau of Economic Analysis, Gross Domestic Product by State

Source: Bureau of Economic Analysis, Gross Domestic Product by State

From the first quarter of 2015 to the first quarter of 2016, Arkansas GDP grew by 3.6% — a notable increase from the trend growth rate of approximately 2% that had prevailed in recent quarters. Agriculture was not as significant a factor in the year-over-year growth rate, contributing only 0.6 percentage points to overall growth.  So in the absence of agriculture, the state’s GDP growth would still have been 3.0%.

Source: Bureau of Economic Analysis, Gross Domestic Product by State

Source: Bureau of Economic Analysis, Gross Domestic Product by State

Besides the agricultural component, several sectors contributed to Arkansas GDP growth.  In general, the strongest sectors in Arkansas were the same as those driving growth on the national level, including Construction, Retail Trade, Information, and Health Care.  Nondurable goods manufacturing also contributed to growth for both the U.S. and Arkansas, while durable goods manufacturing contracted in the first quarter.

Source: Bureau of Economic Analysis, Gross Domestic Product by State

Source: Bureau of Economic Analysis, Gross Domestic Product by State

Arkansas Employment and Unemployment – June 2016

By , July 22, 2016 12:22 PM

The unemployment rate in Arkansas remained unchanged at 3.8% in June.  After declining by a full percentage point in only 6 months, it is not surprising that we see a pause in its rapid descent.  Nationwide, the unemployment rate increased by two-tenths of a percent in June.  So at 4.9%, the U.S. unemployment rate is more than a percentage point higher than Arkansas’ rate.  Over the past 12 months, the Arkansas unemployment rate has fallen by 1.5%, the second largest drop in the nation (surpassed only by Tennessee’s 1.6% decline).

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The changes in employment and unemployment that underlie the unemployment rate calculations were not particularly striking in their magnitude, but do represent a departure from recent trends.  The number of employed declined by more than 3,100 after a string of 29 consecutive months of growth.  The number of unemployed increased by only 344, but it was the first monthly increase in the number of jobless Arkansans since February 2011.

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

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

Payroll Employment
Nonfarm payroll employment increased by 400 in June (seasonally adjusted) and the figure for May was revised upward by 300.  Nevertheless, the level of payroll employment in June was essentially unchanged from December 2015.  The sharp contrast between payroll employment growth over the past 6 months (-100) and the employment gains measured by the household survey (+33,657) is striking.  It is not unusual for the two separate data sources to diverge, but such a large and persistent gap raises questions about measurement problems.  Both employment series are subject to future revision, but the payroll statistics are generally considered to be the more accurate of the two measures.  Combined with the fact that the increases in household employment took place in an unprecedented three consecutive months of 10,000+ increases (January through March), we remain somewhat skeptical of the validity of recent unemployment rate statistics.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

A breakdown by sectors shows that payroll employment shows gains in most sectors, particularly the service-providing sectors.  A prominent exception was Education & Health services, which declined by 1,300 jobs after expanding 7,400 in the previous 12-month period.  Retail Trade was another sector showing a setback from previous growth trends.  Professional & Business Services continues to be the fastest growing sector, increasing by over 28,000 since the employment trough of February 2010.  Growth in Professional & Business Services has accounted for over one-third of all job growth during this economic expansion.

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

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

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*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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