Arkansas Economic Development Institute

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Arkansas Taxable Sales – 2017:Q3

By , December 13, 2017 4:11 PM

Arkansas Taxable Sales (ATS) declined 2.1% in the third quarter following increases of 0.4% and 1.8% in the first two quarters of the year.  Gasoline prices were up slightly in the third quarter, averaging $2.166 compared to $2.110 in the second quarter.  As a result, spending on gasoline was up 2.1% and a broader measure of retail spending, Arkansas Taxable Sales Including Gasoline (ATSIG) declined by only 1.9%.  Compared to a year earlier, both ATS and ATSIG were up slightly, 0.3% and 0.7%, respectively.

Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Arkansas Economic Development Institute.

Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Arkansas Economic Development Institute.

Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Arkansas Economic Development Institute.

Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Arkansas Economic Development Institute.

Revenue reports from the department of Finance and Administration attributed some of the decline in third quarter sales tax collection to reduced spending on automobiles, along with general weakness in some categories of taxable business spending.  One factor mentioned in the October revenue report was relatively low tax collections from the utilities portion of the sales tax, which was held lower by cooler weather during the summer billing months.  Although taxable sales growth has been slower than anticipated throughout the current economic expansion, recent weakness is at least partly attributable to temporary factors.  Fourth quarter growth will be dependent on the robustness of the holiday shopping season, which is expected to be relatively strong.  Our forecast models suggest year-over-year growth of close to 3%.

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Arkansas Taxable Sales (ATS) is calculated by the Arkansas Economic Development Institute 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 monthly and quarterly data is available here: Arkansas Taxable Sales 2017:Q3 (Excel file).

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Arkansas Economic Outlook Presentation

By , December 1, 2017 12:35 PM

Thanks to all who attended this morning’s Little Rock Regional Economic Briefing, where I presented my forecast for the Arkansas economy.

Special thanks to the Little Rock Branch of the Federal Reserve Bank of St. Louis for co-sponsoring and hosting the event, and particularly to President James Bullard for his presentation on monetary policy and the national economic outlook.

Here is a copy of handouts for my presentation:  Pakko Forecast 2017.

Dr. Bullard’s presentation can be found at https://www.stlouisfed.org/from-the-president.

 

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Arkansas GDP – 2017:Q2

By , November 21, 2017 9:43 AM

Arkansas’ contribution to the nation’s gross domestic product expanded at an annual rate of 3.5% in the second quarter of 2017, outpacing the U.S. average of 2.8% and ranking as the 15th highest growth rate among the 50 states.*  This morning’s report from the Bureau of Economic Analysis also revised estimates for Arkansas GDP growth in the previous two quarters.  Originally reported as 1.3%, the (annualized) growth rate in the first quarter of 2017 was revised upward to 4.0%.  For 2006:Q4 the figure was revised from 0.5% to 4.8%!  For the period 2016Q2-2017:Q2, Arkansas GDP growth is now estimated to have grown by 2.4% – slightly higher than the national average of 2.0%.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Revisions to previously published data went back to 2014:Q4.  The figure below illustrates the effect of these revisions for Arkansas.  Although the level of economic activity was revised upward for most of the period, the cumulative effect on growth from 2014:Q1 through 2016:Q3 was essentially nil.  But the substantial revisions to the next two quarters had the cumulative effect of increasing GDP estimates by 1.8%, with the new data for the second quarter adding another 0.9% (not annualized).

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Breaking down the data by sector, the composition of growth in the second quarter was similar for Arkansas and the U.S.*  Sectors contributing to the higher growth rate in Arkansas included nondurable goods manufacturing and wholesale trade.  Those two sectors were also the largest contributors to the overall growth rate in Arkansas, together accounting for more than a full percentage point.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

These new readings on Arkansas GDP growth, while subject to future revision, provide an auspicious view of recent developments in the Arkansas economy.  To find out how this affects the outlook for 2018 and beyond, be sure to attend my presentation of the Arkansas forecast on December 1!

LR Ec Brief 2

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*Data for U.S. values used in this report differ from the national income and product accounts because the state accounts exclude federal military and civilian activity located overseas that cannot be attributed to a particular state.

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Arkansas Employment and Unemployment – October 2017

By , November 17, 2017 12:38 PM

The latest report on state-level employment and unemployment contained mixed signals on the state of Arkansas labor markets.  The household survey presented a relatively weak picture:  For the third consecutive month, the number of unemployed Arkansans increased, causing the unemployment rate to tick up by one-tenth of a percentage point (to 3.6%).  The associated household employment figures showed a decline in both the number employed (-1,870) andthe size of the labor force (-1,191).

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

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

Even with the slight uptick, the unemployment rate remains exceptionally low.  The national unemployment rate dropped by one-tenth of a percent in October, to 4.1%. Hence, the rate in Arkansas remains one-half of a percentage point lower than the U.S.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Employment
The report on payroll employment was more favorable overall, but it also contained hints of weakness for some sectors.  From September to October, total nonfarm payroll employment increased by 3,100.  Employment growth from the previous month was also revised higher:  Originally reported as +1,100 the August-September change was revised up to +1,600.  Over the past 12 months, payrolls have expanded by 23,500 – an increase of 1.9%.  Over the same 12-month period, nationwide payroll employment grew by 1.3%.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Goods-producing sectors continued to show job gains in October:  Employment in Construction rose by 800 jobs and Manufacturing was up by 1,000.  For Manufacturing, October represented the fifth consecutive monthly gain.  In contrast, some service-providing sectors continued to show uncharacteristic weakness.  Financial Services, Education & Health Services, and Leisure and Hospitality Services all showed monthly employment declines.  In the cases of both Education & Health and Leisure & Hospitality, year-over-year changes remain positive but the declines in October represent a third consecutive month of contraction.

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

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

Overall, the longer term trends remain intact:  Manufacturing employment remains nearly 30,000 below the level registered prior to 2008-09 recession, while most job growth has been in service-providing sectors, particularly Professional & Business Services and Education & Health Services.

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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 here:  Table-Seasonally Adjusted NFPE.

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Economic Briefing December 1 – The Outlook for Arkansas

By , November 16, 2017 1:40 PM

Little Rock Regional Economic Briefing

DATE:  December ‌1, 2017

LOCATION:  Clinton Presidential Center Great Hall (map it)

REGISTER HERE

Join us as St. Louis Fed President James Bullard and Michael Pakko of the Arkansas Economic Development Institute give updates on economic conditions and the outlook for the state and the nation. Dr. Pakko is chief economist and state economic forecaster with the institute. The Little Rock Branch of the Federal Reserve Bank of St. Louis and the institute, which is at the University of Arkansas at Little Rock, are hosting the event. The program also will include:

  • A welcome from Robert Hopkins, senior vice president and regional executive of the Little Rock Branch;
  • Q&A sessions after President Bullard’s and Dr. Pakko’s presentations;
  • Adjourning remarks from James Youngquist, institute executive director.

The program will be of particular interest to business leaders and others who want to keep up on current economic conditions. A hot buffet breakfast will be served. The event is free, but register soon, because space is limited. The deadline is Nov. 28.

Questions? Please contact Julie Kerr at 501-324-8296 or julie.a.kerr@stls.frb.org.

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Metro Area Employment and Unemployment – September 2017

By , November 1, 2017 4:52 PM

Unemployment rates in Arkansas metro areas continue to show year-over-year reductions, with the decline in rates ranging from 0.3% in Fayetteville to -2.2% in Memphis.  Statewide, the unemployment rate was down 0.5% from a year earlier (not seasonally adjusted).

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

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

Seasonally adjusted estimates for September show that unemployment rate changes from August to September were mixed.  Rates ticked up 0.1% in Little Rock and Pine Bluff, but declined in Fort Smith, Texarkana and Memphis.  The drop in the unemployment rate for Memphis was particularly notable – down 0.4%.

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 showed increases across most of Arkansas’ metro areas, with the exception of Memphis (-0.2%).  Jonesboro (+1.1%), Fort Smith (+0.8%) and Little Rock (+0.6%) were up significantly, with Hot Springs, Pine Bluff and Texarkana also showing increases (all +0.3%).

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

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

Employment growth over the past year has generally been consistent with longer term trends, with Fayetteville and Jonesboro leading the pack.  Hot Springs has experienced above-trend growth over the past 12 months, +2.4%.  Fort Smith, Little Rock and Memphis have all shown relatively small changes in employment, while employment in Pine Bluff and Texarkana continues to decline.

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

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

 

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Arkansas Home Sales – September 2017

By , October 31, 2017 5:29 PM

The latest statistics from the Arkansas Realtors® Association show a small increase in Arkansas home sales in September.  Sales of new and existing homes were 3,103 for the month, up 0.1% compared to the previous year.  For the first 9 months of the year, sales totaled 27,106, up 4.4% compared to same period in 2016.  As shown in the figure below, September marks the start of the end-of-year slowdown in home sales.  If sales during the remaining three months of the year turn out to be unchanged from 2016, the end-of-year cumulative total for 2017 would still be up by over 3%.

Source: Arkansas Realtors® Association

Source: Arkansas Realtors® Association

After seasonal adjusting the data and aggregating from monthly to quarterly data, the underlying trends are more readily observed (see below).  Although the seasonally-adjusted third quarter figure represents a decline from the first half of the year, there is no clear evidence of a persistent slowdown.  Nevertheless, with the sales pace having recovered to pre-2007 levels, it would not be surprising to see some leveling-off of sales growth in the near future.

Source: Arkansas Realtors® Association.  Seasonally adjusted by the Arkansas Economic Development Institute.

Source: Arkansas Realtors® Association. Seasonally adjusted by the Arkansas Economic Development Institute.

 

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Arkansas Employment and Unemployment – September 2017

By , October 20, 2017 12:56 PM

The latest monthly report on employment and unemployment in Arkansas was a fairly strong report.  Both the household and payroll surveys showed employment gains for the month.  And while the number of unemployed was up for a third consecutive month, the unemployment rate was unchanged at the very low level of 3.5%.  The U.S. unemployment rate dropped 0.2% to 4.2% in September, remaining significantly higher than the Arkansas rate.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The increase in the number of unemployed over the past three months has totaled about 2,300, but this increase has not significantly affected the unemployment rate, which has held steady as the number of labor market participants has grown proportionately.  Over the past 12 months, the labor force has grown by over 43,000, with most of that increase occurring in the first six months of 2016.  While we expect that figure to be eventually revised downward, the positive momentum is clear.

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

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

Payroll Employment
Data from the establishment survey reinforces the evidence of solid employment growth.  Arkansas nonfarm payroll employment was up 1,100 in September, and the figure for August was revised upward by 1,600 jobs.  September is a month with significant seasonal influences:  The not-seasonally adjusted statistics showed an employment increase of 15,500, but most of those gains were in State and Local government (public schools) and Education Services (private institutions).  The seasonally adjusted figures in the table below adjust for these predictable patterns.  Goods producing sectors performed well in September, with Construction up 1,100 and Manufacturing up 1,300.  The seasonally adjusted statistics actually show a decline in total service-providing employment, with losses particularly evident in Leisure and Hospitality sectors.

AR-NFPE-0917-tab

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

Compared to a September 2016, total nonfarm payroll employment is up 24,400 jobs in Arkansas — a rate of 2.0%.  Over the same period, nationwide employment has expanded by 1.2%.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

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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 here:  Table-Seasonally Adjusted NFPE.

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Personal Consumption Expenditures – 2016

By , October 5, 2017 4:41 PM

The Bureau of Economic Analysis reported yesterday that Personal Consumption Expenditures (PCE) rose by 3.9% in Arkansas in 2016.  Nationwide, the growth rate was 4.0%.  PCE is not adjusted for inflation, so after accounting for a 1.2% increase in prices from 2015 to 2016, Arkansas real PCE increased by about 2.7%.  As shown in the figure below, Arkansas PCE has been increasing at a slower pace than the national averages since 2012.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The fastest-growing components of PCE in Arkansas included Health care (+7.0%), Other nondurable goods (+6.8%), and Food services and accommodations (+5.6%).  The only category of spending to decline from 2016 to 2016 was Gasoline and other energy goods, which was affected by declines in gasoline prices.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Per Capita PCE
One of the reasons for the slower growth in Arkansas PCE relative to the U.S. average is the relatively slow population growth rate in Arkansas.  Population growth in Arkansas was approximately 0.3% in 2016, while the comparable growth rate for the U.S. population was 0.7%.  Accordingly, on a per capita basis, Arkansas PCE increased by 3.5% in 2016, slightly exceeding the national average growth rate of 3.2%.

The table below displays spending levels and expenditure shares for per capita PCE in 2016.  Overall, per capita spending in Arkansas was $31,117 — 78.5% of the national average.  It is not surprising that spending per capita is relatively low in Arkansas:  income per capita is below the national average and prices also tend to be well below the national average.  Figures from the Regional Price Party data show that prices are approximately 12.6% lower in Arkansas than the national average, with housing costs particularly low — about 36% lower than the national norm.  These price patterns show through to the per capita spending figures, with expenditures on housing nearly 34% lower than the U.S. average.   For two categories of spending, per capita PCE in Arkansas exceeds the national rate:  Motor vehicles and parts, and Gasoline and other energy goods.  At the other extreme, spending on Transportation services amounts to less than one-half of the per capita level nationwide.

Per Cap PCE 2016

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Arkansas Personal Income – 2017:Q2

By , October 3, 2017 5:13 PM

Last week’s news release on personal income included new statistics for the second quarter of 2017, along with data revisions for the period 2014-present.

The latest update showed personal income increasing 0.6% in the second quarter, slightly below the national growth rate of 0.7%.  Data from the first quarter were revised to show an increase of 2.0% for Arkansas, up from the 1.0% rate previously reported.  For the four quarters from 2016:Q2 to 2017:Q2, Arkansas’ growth rate was 3.0%.  For the same period, the nation’s income growth rate was 2.9%.  After adjusting for an inflation rate of 1.6% (as measured by the price index for personal consumption expenditures), the real year-over-year growth rates of personal income for Arkansas and the U.S. were 1.4% and 1.3%, respectively.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The breakdown of personal income growth in the second quarter reveals that nonfarm income rose 0.9%, while the more volatile farm income component decreased by 15.2%.  Among the major sources of income, both Dividends, Interest, and Rent and Wage and Salary Disbursements increased 1.2%.  On a year-over-year basis, Arkansas’ 3.0% growth rate reflected a surge in Proprietors’ Income (+7.8%).  Arkansas’ growth rate also outpaced the nation in Earnings by place of work (3.3% compared to 2.9% nationwide).

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Overall, the annual revisions to the personal income data for 2014-16 raised estimates of Arkansas incomes.  The revisions had the effect of raising total personal income by 1.0% in 2014, by 2.0% in 2015 and by 1.0% in 2016.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The bulk of the revisions were attributable to Dividends, Interest and Rent.  Cumulatively, that component was revised upward by 10.7%. Personal Current Transfer Receipts were revised upward for 2016 (by 1.0%), but for all other categories of income (including Wage and Salary Disbursements), the cumulative effect of revisions was negative.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

We had previously noted that while personal income growth in Arkansas has roughly kept pace with the national average in recent years, its growth has been skewed in favor of the Dividends, Interest and Rent component while Wage and Salary income has grown more slowly than the national average.  The new data revisions exacerbate that differential.  As shown in the table below, Wage and Salary income has accounted for just over one-half of national personal income growth over the course of the economic expansion.  Here in Arkansas, however, Wages and Salaries account for less than 40% of total income growth.   In contrast, Dividends, Interest and Rent accounts for over one-third of Arkansas income growth and only 26% at the national level.  The other component that has been contributing a relatively large share to Arkansas income growth is Personal Current Transfer Receipts.  The growth rates of transfer payments have been roughly the same for Arkansas and the U.S., but that component represents a larger share of total income for Arkansas.

Source: Bureau of Economic Analysis and author's calculations

Source: Bureau of Economic Analysis and author’s calculations

Arkansas per capita personal income in the second quarter was $40,893, representing 81.3% of the national average per capita income of $50,308.  As a percent of the national average, the recent data revisions improved Arkansas standing:  Before the revisions, per capita income stood at 79.4% of the national average (in the first quarter).  It was the cumulative effect of data revisions for 2014-16 that raised estimates for Arkansas back above the 80% line.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

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