Institute for Economic Advancement

Category: Income

Arkansas Personal Income – 2016:Q4

By , March 28, 2017 4:46 PM

Arkansas personal income increased by 0.8% in the fourth quarter of 2016, a slightly slower pace than the nationwide growth rate of 0.9%.  From the fourth quarter of 2015 through the end of 2016, income growth in Arkansas was 3.2%, compared to 3.7% nationwide.  Since the beginning of 2010, incomes in Arkansas have been rising at a 4.1% annual rate, slightly below the 4.3% U.S. pace.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Annual Data
The personal income report from the Bureau of Economic Analysis featured data based on 2016 annual averages.  From 2015 to 2016, personal income in Arkansas grew at a 3.2% rate — a growth rate that ranked 27th among the 50 states.  Across the country, growth rates ranged from -1.7% in Wyoming to 5.9% in Nevada.

PI-2016Q4-map

Total earnings by place of work expanded at nearly identical rates in Arkansas and the U.S. in 2016 — 4.05% and 4.06%, respectively.  The table below reports a breakdown of earnings by industry.  For both Arkansas and the nation, the sector contributing the most to earnings growth was Health care and social assistance.  Several other service sectors showed relatively strong growth as well.  The weakest sector for earnings growth was Mining — reflecting the ongoing slump in fossil fuel prices and extraction activity.  A surprisingly strong sector was Construction, which grew at a 7.3% nationwide and 5.2% in Arkansas.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Per Capita Income
With a population growth rate of 0.3 from 2015:Q5 to 2016:Q4, personal income per capita in Arkansas grew at a 2.9% rate.  U.S. population growth over the same period was 0.7%, resulting in a per capita income growth rate of 3.0%.  In the fourth quarter of 2016, U.S. per capita income stood at $50,207, while Arkansas’ was $39,725.  As a percent of the U.S., Arkansas’ per capita income ended the year at 79.1%, down slightly on net from a year earlier.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

 

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Arkansas Personal Income – 2016:Q3

By , December 20, 2016 3:43 PM

Personal income increased by 0.9% in Arkansas in the third quarter, a slightly smaller increase than the nationwide gain of 1.1%.  Percentage changes among the 50 states fell within a relatively narrow range, from +0.4% in Oklahoma to +1.4% in South Dakota.  Arkansas’ growth rate ranked #41.  Over the most recent four quarters, Arkansas personal income increased by 3.3%, compared to a 3.5% increase for the U.S.  Over the course of the current economic expansion (from 2010:Q1), Arkansas income growth has averaged 4.2% while the U.S. average has been 4.3%.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Net earnings rose 1.1% in Arkansas and 1.3% for the U.S.  This morning’s report from the Bureau of Economic Analysis noted that earnings “was the leading contributor to growth in personal income in most states.”  Income from dividends, interest, and rent was also an important contributor for Arkansas, as has been the case throughout the current expansion.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Earnings by sector:  Earnings growth in the third quarter was strongest in service-providing sectors, although growth was spread fairly evenly across sectors.  The categories of Farm income, Mining, and Forestry were the only sectors with negative income growth.  Income in the construction sector showed an encouraging 1.1% rate of increase in Arkansas.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

On a per capita basis, Arkansas personal income increased 0.8% in the third quarter, a slightly smaller increase than the U.S. average of 0.9%.  At $39,602, per capita personal income was 79.7% of the U.S. average ($49,681), down one-tenth of a percentage point from the 79.8% reading in the second quarter.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

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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%.

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Real Personal Income – 2014

By , July 8, 2016 4:22 PM

The Bureau of Economic Analysis released new figures on real personal income for states and metropolitan areas yesterday.  The data contain a wealth of information on incomes, prices and standards-of-living.  They are based on a relatively new dataset calculating “regional price parities,” (RPPs) which measure differences in the prices levels of goods and services across states and metropolitan areas.  Essentially, RPPs serve as a measure of relative price levels among states and metro areas.

The newest data, which apply to 2014, show that the cost of living in Arkansas is the second-lowest in the nation.   The RPP for Arkansas was 87.5, down from 87.7 in 2013.  This number can be interpreted as saying that the cost of living was 12.5% below the national average in 2014.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Because prices in Arkansas are among the lowest in the nation, the purchasing power of incomes in Arkansas is far closer to the national average than nominal (dollar-denominated) incomes would suggest.  In 2014, per capita personal income in Arkansas was only 82% of the national average–ranking the state #43 among the 50 states plus D.C.  After adjusting for differences in the cost of living, however, real per capita income in Arkansas was 93.9% of the national average–implying a ranking of #34.

The slight down-tick in the RPP for Arkansas (from 87.7 in 2013 to 87.5 in 2014) can be interpreted as indicating a lower rate of inflation in Arkansas than the national average.  The U.S. inflation rate in 2014 (as measured by the Personal Consumption Expenditures Price Index) was 1.4%.  The implied regional price deflator for Arkansas increased by only 1.2%.  Hence, the state’s 3.7% growth rate of nominal personal income translates to a real (inflation-adjusted) growth rate of 2.5%.  For the U.S., the nominal growth rate of 4.4% implied a real growth rate of 2.9%.

The composition of Arkansas’ low RPP is typical of other low cost-of-living states:  Prices for goods are near the national average, but the prices of services — especially rents — are far below the norm.  This is not surprising, of course.  Goods can be transported and sold with little marginal expense.  Services are not so transportable.  In fact, in the jargon of international trade, services are often classified as “non-tradables.”  Statewide, the RPP for goods in Arkansas was 95.1%, implying that prices of goods were only 4.9% below the national average.  The RPP for non-rent services was 93.5, while the RPP for rents (which also proxy for home prices) was only 62.5.

As shown in the table below, there is considerable variation among RPPs in Arkansas metropolitan areas.  Overall RPPs range from 91.9 in Memphis to a low of 82.0 in Jonesboro.  The cost of living in Jonesboro–18% below the national average–is the fifth-lowest in the nation.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

While there is variation in RPP price-levels around the state, all RPPs in Arkansas are below 100, implying below-average costs.  This also translates to higher purchasing power.  As shown in the table below, the Fayetteville-Springdale-Rogers metro area is the only part of the state where dollar-incomes are above the national average, with incomes in Pine Bluff at less than two-thirds of the norm.  After RPP adjustment, incomes in all parts of the state (other than Northwest Arkansas) are closer to the national average.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Changes in RPPs for different metro and nonmetro areas around the state also differ, implying variation in inflation rates.  In economic terms, it is the real inflation-adjusted growth rates of income that matters.  The table below shows both nominal and real income growth for the metro and nonmetro areas of Arkansas.  Note that the differences between total income growth and per capita income growth reflects changes in population.  Much of the total income growth in Northwest Arkansas represents population growth that has accompanied general economic expansion.  On the other hand, total real income growth in Pine Bluff was negative, but the losses in income reflected declining population.  In per capita terms, real income in Pine Bluff remained approximately unchanged from the previous year (+0.1%).

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

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Arkansas Personal Income – 2016:Q1

By , June 22, 2016 4:10 PM

Arkansas personal income expanded 1.2% in the first quarter of 2016, outpacing the national average of 1.0%.  The highest growth rate in the nation was Washington state (1.5%), with Arkansas’ growth ranking the sixth-highest among the 50 states.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

All major components of Personal Income showed positive growth in the first quarter, led by a 17.1% increase in Farm proprietors’ income.  Wages and salaries grew at a 1.4% pace, while Dividends, interest and rent expanded by only 0.3%.

Total earnings expanded 1.7% — a higher growth rate than any other state except Washington.  The table below shows the growth rates of total earnings by industry, showing that  Arkansas’ strong performance was largely attributable to the gain in Farm income.   Mining (including oil and natural gas extraction) was the weakest sector for both Arkansas and the total U.S.  The news release from the Bureau of Economic Analysis noted that mining income had experienced its 5th consecutive quarterly decline, falling 15.8% nationally since the fourth quarter of 2014.  Over the same period, mining income in Arkansas contracted by 17.4%.  Arkansas’ growth outpaced the nations in most sectors, particularly in service-providing sectors.  However, earnings in durable goods manufacturing declined slightly in Arkansas, in contrast to a small gain nationwide.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

 

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Personal Income – 2015:Q4

By , March 24, 2016 12:52 PM

New data on state personal income shows that incomes in Arkansas grew by 0.5% in the fourth quarter of 2015, compared to an increase of 0.8% for the U.S.   From the fourth quarter of 2014 through the fourth quarter of 2015, personal incomes rose by 3.4% in Arkansas and by 4.0% nationwide.  Inflation, as measured by the price index for personal consumption expenditures, rose by 0.5% over the year, so real (inflation-adjusted) incomes rose by 2.9% in Arkansas and 3.5% nationwide.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

On an annual average basis, personal income rose by 3.9% in Arkansas, somewhat lower than the nationwide growth rate of 4.4%.  Arkansas’ growth rate ranked number 26 among the 50 states.

Total earnings by place of work, which excludes Dividends, Interest & Rent; and Personal Current Transfer Receipts, expanded by 3.2% in Arkansas and 4.2% for the U.S.  The table below breaks down the growth rates of earnings by industry.  Farm incomes were down in Arkansas, but declined by much less than the national average. Earnings in the mining sector were down all around the nation, reflecting low oil prices.  Earnings in durable goods manufacturing were also down slightly in Arkansas, in contrast to a 2.0% nationwide growth rate.  Areas of strength–particularly in Arkansas–included Forestry, Fishing, and Related Activities; Accommodation and Food Services; and Construction.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Arkansas’ per capita income in 2015 was $39,107, representing about 82% of the U.S. average of $47,669.  Arkansas ranked 41st among the 50 states in per capita personal income.  As shown in the figure below, per capita income in Arkansas was less than 80% of the U.S. average during the early stages of the economic recovery, rose to 82% during 2011 and 2012, and has remained at approximately that relative level since then.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

 

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Local Area Personal Income – 2014

By , December 1, 2015 3:24 PM

The Bureau of Economic Analysis released new data on local area personal income for 2014 last week.  As shown in the figure and table below, per capita personal income increased in all 8 of the metro areas that include parts of Arkansas, with increases ranging from 1.6% in Pine Bluff to 4.1% in Fort Smith.  As measured by the price index for personal consumption expenditures, the general level of prices rose by 1.4% in 2014, so all 8 metro areas saw positive growth even after adjusting for inflation.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The data release also included revisions of estimates from previous years, reflecting information from “source data that are more complete and more detailed than previously available.”  For the most part, the revisions to metro area per capita income were negative.  For 2013, the revised data lowered measured income just slightly in the Memphis metro area, but by larger amounts in the state’s other metros. Other than Memphis, the smallest downward revision was for Texarkana (-5.7%) while the largest was for Hot Springs (-9.6%).  In contrast, the 2013 level of per capita income for the Fayetteville-Springdale-Rogers Metro Area was revised upward by 30%.  A closer look at revisions to data from individual counties shows that the change was primarily attributable to increased estimates of income in Benton County, with the 2013 revision amounting to 63.7%. (Madison county was also revised upward by 13.2%).

A full list of per capita income by county in 2014 — both in terms of dollars and as a percent of the U.S. average — as well as the 2013-14 growth rate is presented below:

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

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Arkansas Personal Income – 2015:Q2

By , September 30, 2015 3:36 PM

New data on personal income by state for the second quarter show an increase of 0.8% in Arkansas, compared to 0.9 for the United States.  Over the past four quarters, income has expanded 3.1% in Arkansas and 4.1% nationwide.  Today’s report also included a sharp downward revision to first-quarter income growth for Arkansas:  Originally reported at 1.0%, first quarter growth is now reported to have been only 0.2%.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The table below reports growth rates for some of the major components of personal income.  For both Arkansas and the U.S., farm income contributed negatively.  On a year-over-year basis, farm income in Arkansas was down 17.7%, although that is a smaller decline than the 34.7% drop for the U.S.  Arkansas Proprietors’ income was flat in the second quarter and was down 2.1% on a year-over-year basis.  However, that component of income had previously shown much higher growth in Arkansas than for the nation as a whole:  From 2010:Q2 to 2015:Q2, proprietors’ income in Arkansas was up by a total of 56.1% (9.3% annual rate).  For the same five-year period, U.S. proprietors’ income rose 34.1% (6.0% annual rate).

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The breakdown of earnings by industry shows strengths and weaknesses in Arkansas that mirror the national averages.   Earnings growth was negative in Farming, Forestry & Fishing, and particularly in Mining.  Durable goods manufacturing was negative as well.  Most of the earnings growth was attributable to a subset of service-providing sectors.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

 

 

 

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Maps from AADO Presentation

By , August 31, 2015 8:00 AM

As part of my presentation to the Association of Arkansas Development Organizations (AADO) on August 26, I presented a series of maps showing demographic and economic variables for Arkansas’ 75 counties.  Some general observations about the maps are discussed in a commentary in this week’s Arkansas BusinessFinding Patterns in Counties’ Statistics (Michael Pakko Commentary).

The maps and correlations among variables are available here:  Pakko-August2015-maps.pdf.

The entire set of slides from the presentation is available here:  Pakko-August2015-pdf.

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Arkansas Personal Income – 2015:Q1

By , June 22, 2015 3:26 PM

Personal income in Arkansas increased by 1.0% in the first quarter of 2015, outpacing the national average 0.9%.  Arkansas’ growth rate ranked 25th among the 50 states.  The 1st quarter increase in income comes on top of an upwardly revised figure of 1.9% growth in the 4th quarter (previously reported at 1.2%).  Over the past four quarters, incomes have increased by 4.9% in Arkansas, compared to 4.4% for the entire U.S.  Relative to the previous cyclical peak (2008:Q2), incomes have risen 22.6% in Arkansas.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Farm income and proprietors’ income more generally were down, both in Arkansas and nationally.   On the other hand, personal current transfer receipts were up sharply, reflecting several special factors including a 1.7% cost-of-living adjustment to social security benefits.

Earnings was up 0.7% and accounted for 44% of total personal income growth.  As shown in the following table, earnings growth was relatively strong in Utilities, Construction, Management of companies and enterprises, and Accommodation and food services.  In addition to the decline in farm income, earnings from Manufacturing and Mining were also negative.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

 

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