Arkansas Economic Development Institute

Arkansas Personal Income – 2010:Q3

By , December 17, 2010 7:21 PM
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While a great deal of attention today was focused on the state employment/unemployment report, another key set of economic statistics also came out:  The Bureau of Economic Analysis reported that Arkansas personal income increased by 1.0% in the third quarter (seasonally adjusted).  For the U.S. as a whole, the growth rate was 0.7%.   Arkansas’ above-average growth ranked among the ten states with the fastest growing incomes in the nation. 

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For U.S., the third quarter increase represents the fourth consecutive quarter of growth. For Arkansas, the run of positive growth had now gone for five quarters.  The chart below compares the pattern of personal income growth for both the U.S. and Arkansas, relative to their common cyclical peak in 2008:Q2.   Total personal income in Arkansas didn’t decline as sharply as the U.S. during the recession, and it has increased slightly faster during the recovery.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

As discussed in a previous article, the BEA definition of personal income includes transfer receipts (social security payments, unemployment insurance, etc.).  During recessions transfers tend to rise, serving as a buffer that protects total income from sharp declines.  A better measure of the underlying strength of the economy omits transfers: Personal Income less Transfer Receipts.  By this measure, incomes peaked in the third quarter of 2008 and declined sharply through the second quarter.  U.S. income less transfers declined for another quarter, while in Arkansas the recovery in income growth began rising and has outpaced U.S. growth since then.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

In the third quarter, Personal Income less Transfer Receipts rose by 0.7% in Arkansas and 0.5% for the nation as a whole.   Transfer Receipts increased by 1.5% in Arkansas and by 1.3% nationwide.  Hence, part of Arkansas relatively high growth rate was due to an relatively larger expansion of transfer payments.  But even after accounting for this factor, Arkansas personal income grew at a faster rate than the total for the U.S.

The third quarter personal income report suggests that the economic recovery is ongoing, and that Arkansas continues to emerge slightly ahead of the rest of the the nation.

Arkansas Employment and Unemployment – November 2010

By , December 17, 2010 12:39 PM

Data on employment and unemployment were released this morning by the U.S. Bureau of Labor Statistics and Arkansas Department of Workforce Services.   The headline news is that the unemployment rate increased by yet another 0.1 percent to 7.9 percent.   The number of unemployed workers rose by 1,678  and the number of employed increased by 4,671.  Hence the labor force expanded by 6,309.   The labor force has been expanding quite rapidly since September, suggesting that unemployed workers who had previously been dropped from the statistics as “discouraged workers” are now returning to the labor market.  This tends to result in higher measured unemployment rates, even as employment is expanding.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

After a substantial increase in October, the report for November shows that nonfarm payroll employment continued to rise, albeit at a slower pace.  Revised figures for October show an increase of 14,100 jobs rather than 17,400 as originally reported.  On net, total payroll employment rose by another 100 jobs from October to November.  

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Seasonally adjusted increases were reported for Manufacturing; Trade, Transportation and Utilities; and Education and Health Services.  Together, these three super-sectors account for nearly half of the state’s total employment.  Seeing job growth in these sectors is particularly encouraging.  Gains were also recorded in Mining and Logging; Information Services; Other Services; and Government.  Over the past 12 months, approximately 11,000 jobs have been added to the Arkansas economy.

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*Seasonally adjusted data for nonfarm payroll employment, reported in a format compatible with the monthly press release from the Arkansas Department of Workforce Services, are available here
Table – Seasonally Adjusted NFPE.

Metro Area Employment and Unemployment – October 2010

By , December 7, 2010 7:20 PM

This morning, the Bureau of Labor Statistics released the latest information (for October) on employment and unemployment in Metropolitan Statical Areas (MSAs) around the nation.  The report suggests that labor markets in Arkansas’ metro areas are slowly improving.

Household Suvey:
Unemployment in three of Arkansas’ MSAs  fell in October (seasonally adjusted data*).  Rates in both Hot Springs and Texarkana were down 0.1% while Pine Bluff fell 0.3%.   Rates in Fort Smith and Little Rock were unchanged.  Only two MSAs saw higher unemployment:  Rates in Fayetteville and Jonesboro both rose by 0.2%.

Sources:  Bureau of Labor Statisics, UALR Institute for Economic Advancement

Sources: Bureau of Labor Statisics, UALR Institute for Economic Advancement

It might appear that unemployment rates around the state are following a rising trend.  But if we take a step back and look at the pattern that rates have followed over the course of 2010 it looks more like a mini-double dip employment recession.

Sources:  Bureau of Labor Statistics, UALR Institute for Economic Advancement

Sources: Bureau of Labor Statistics, UALR Institute for Economic Advancement

In actuality, the patterns in the data are related to the hiring and subsequent layoffs of temporary Census workers.   Arkansas’ MSA’s have followed the same pattern seen in statewide and national data:  rates falling from around April until July, then rising until September or October, leaving unemployment rates about where they were in April.  This matches the timing of the surge in the employment of temporary Census workers.  Netting out this effect, unemployment has been approximately flat for most of 2010.

Payroll Survey:
Changes in nonfarm payroll employment provide encouraging signs:  October employment growth was zero or positive in each of the state’s MSAs.  This is not surprising, given the state-level data showing that Arkansas’ employment growth was the fastest in the nation in October.  Since the end of 2009, payroll growth has been positive in three of the seven MSAs.  Relative to a last October, growth has been positive in four MSAs.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

In terms of recovering the jobs that were lost during the recession, the figure below shows the cumulative change in employment since the start of the recession (December 2007).  Employment in the MSA’s of Hot Springs, Jonesboro, Texarkana — and more recently, Pine Bluff — have begun to increase from their low points earlier in year.  In fact, Jonesboro has experienced positive net employment growth since the start of the recession.  The other metro areas have a long way to go.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Although the effects of temporary Census workers have distorted the statistics, unemployment rates appears to be stabilizing.  And payroll employment figures are showing signs of real improvement (particularly in some areas of the state).  Employment statistics are lagging indicators (especially the unemployment rate), so even though we are nearly 1 – 1/2  years into the recovery it is likely to take considerably more time before the employment situation returns to a healthy state.

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*Seasonally adjusted data for MSA Payroll Employment are available from the Bureau of Labor Statistics.  However, data for unemployment rates are not.  In order to facilitate comparisons over different months of the year, unemployment rates are seasonally adjusted by the Institute for Economic Advancement using the conventional Census-X12 ARIMA procedure.

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