Institute for Economic Advancement

Arkansas House Prices – 2011:Q3

By , November 29, 2011 12:12 PM

New data from the Federal Housing Finance Agency (FHFA) show that house prices in Arkansas increased slightly in the third quarter,  and data for the second quarter were revised to show a modest increase as well.   The FHFA All-Transaction Index for Arkansas increased by 0.4% from the second quarter to the third, leaving home prices down 1.8% from a year earlier.  The index for the U.S. was up 0.9% for the quarter, but remains 4.3% lower than the previous year.

Source:  Federal Housing Finance Agency

Source: Federal Housing Finance Agency

Among Metropolitan Statistical Areas (MSAs) that include parts of Arkansas, prices were up in Fayetteville-Springdale-Rogers, Fort Smith, Jonesboro, Little Rock-N. Little Rock-Conway, and Memphis.  Prices were down in Hot Springs, Pine Bluff and Texarkana.  Compared to the third quarter of 2010, prices were higher in two of the state’s MSAs:  Hot Springs and Texarkana. 

House prices in Arkansas have generally been trending downward from the beginning of 2009, and the increase in prices in the third quarter only partly reversed the accumulated declines.  Compared to two years ago, house prices are down in all of Arkansas’ MSAs.  But in the longer run, house prices outside of Northwest Arkansas have retained much of their value.  Over the past 5 years, the net change in house prices has been positive in 5 of the state’s MSAs, and are essentially unchanged in Pine Bluff.  Only the Fayetteville and Memphis metro areas have shown net declines since the third quarter of 2006.

Source:  Federal Housing Finance Agency

Source: Federal Housing Finance Agency

Arkansas Employment and Unemployment – October 2011

By , November 22, 2011 10:50 AM

The unemployment rate in Arkansas dropped one tenth of a percentage point to 8.2 percent in October.  According to data from the Bureau of Labor Statistics (BLS) and the Department of Workforce Services (DWS), the number of unemployed Arkansans fell by 663 (seasonally adjusted), the first monthly decline since May.  The data from the household survey also showed that the number of employed rose by 7,424.  Arkansas was one of  36 states to see a drop in the unemployment rate in October, but one of only 8 states with an unemployment rate higher than one year earlier.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The separate payroll employment report showed an increase of 1,000 jobs for the month (seasonally adjusted).  However, total employment in October was down 1,300 from a year earlier, and 8,500 below the recent peak employment recorded in April 2011.  Month-to-month changes showed declines in good-producing sectors, with Construction down by 500 and Manufacturing down by 1,500.  Employment in Trade, Transportation and Utilities was also down sharply.  With the exception of Information Services, all service-sector categories showed increases in October.  As noted in the news release from DWS, not-seasonally-adjusted data for Education and Health Services and Local Government showed increases associated with back-to-school effects.  Nevertheless, these categories also experienced employment increases after accounting for this recurring seasonal pattern.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

As previously reported on the Arkansas Economist, the payroll data are subject to annual benchmark revisions that will be completed in March 2012.  Based on available data from the Quarterly Census of Employment and Wages (QCEW), the benchmark revisions are likely to show sharply lower job growth for the fourth quarter of 2010 and the first quarter of 2011.  Consequently, the total level of employment for all subsequent months (including October) are likely to be revised downward by about 10,000 jobs (+/- 2,000).

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

Arkansas Taxable Sales – 2011:Q3 (Preliminary*)

By , November 9, 2011 9:00 AM

The latest monthly revenue report from the Department of Finance and Administration indicated another slow month for sales tax collections in October (corresponding to transactions in September).  Nevertheless, strength in the previous month propelled the non-gasoline component of Arkansas Taxable Sales to a healthy increase of 1.8% in third quarter (seasonally adjusted).*  And despite a decline in gasoline prices relative to the second quarter, gasoline expenditures rose by 3%.  Overall, Arkansas Taxable Sales Including Gasoline (ATSIG) rose by 1.9%.

Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

The third-quarter increase in ATSIG represents a wecome recovery from the decline recorded in the second quarter.  And in fact, growth in the previous two quarters would have been slower had it not been for higher gasoline expenditures associated with a price spike.  The third quarter growth rate appears to indicate a resurgence of growth after a year-long slowdown.

Relative to U.S. Retail Sales, the third quarter increase in ATSIG also represents an improvement (see chart, below).  Arkansas had fallen behind in the pace of overall sales growth during late 2010 and early 2011, but the 1.9% increase in the third quarter exceeded the U.S. growth rate of 1.1%.

Sources:  U.S. Census Bureau, Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

Sources: U.S. Census Bureau, Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

One important caveat to the third quarter figures should be mentioned:  The totals for ATSIG do not include tax-exempt expenditures associated with the new back-to-school sales tax holiday in August.  Information is sketchy on the magnitude of this sales surge.  But if DF&A estimates are correct,  August sales were actually about 1% higher than implied by the sales tax data.  This corresponds to a 0.3% increase in quarterly growth, raising ATS growth in the third quarter to over 2%.

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Arkansas Taxable Sales (ATS) is calculated by the Institute for Economic Advancement 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 data is available here:  Arkansas Taxable Sales Data 2011:Q3 (Excel file)

* Data are preliminary until the release of the DFA report, Arkansas Fiscal Notes for October 2011, and will be updated when information becomes available.

Expected Employment Revisions – 2011

By , November 8, 2011 1:25 PM

News coverage of the Arkansas Economic Forecast Conference featured the forecast of an “expected future revision of history.”  Just as in 2009, it appears likely that the annual benchmark revision of payroll employment data will include sharply lower estimates for Arkansas employment in 2011.  Compared to currently-published estimates, the revised data will show about 11,000 fewer jobs.

The monthly payroll employment data come from the BLS’s Current Employment Statistics (CES) program.  According the the BLS, the CES surveys “about 150,000 businesses and government agencies, representing approximately 390,000 individual worksites.”  Each year, however, the CES data are revised to match the more-comprehensive Quarterly Census of Employment and Wages (QCEW).  The QCEW is a detailed account of employment, disaggregated by sectors and by counties.  It is constructed from state unemployment insurance records, so it constitutes a full accounting of all covered jobs in the nation. 

Because of it’s comprehensive coverage, the QCEW provides a more accurate picture of employment than the CES.  But it also takes longer to compile —  data for the first quarter of 2011 were published just last month.  When the revised CES payroll employment data are released next March, it is this 2011:Q1 QCEW data that will be used as a benchmark.  The benchmark revision process is a detailed exercise that affects data for each individual sector and each state and metro area in the U.S. — that’s why we won’t find out the results until March 2012. 

But it is possible to estimate the approximate magnitude of the revisions for Arkansas using simple linear regression techniques.*  Based on this analysis, we forecast that the CES data for Arkansas will be revised sharply downward in the first quarter of 2011 — down approximately 11,000 jobs.  The lower employment in 2011:Q1 will carry through for the rest of the year, resulting in a permanently lower level of employment estimates for 2011.

Source:  Bureau of Labor Statistics; calculations by the Institute for Economic Advancement.

Source: Bureau of Labor Statistics; calculations by the Institute for Economic Advancement.

The revision is not entirely negative.  Revised data for 2010 will show slightly higher employment than the currently-published numbers.  But this tends to exacerbate the negative impact of the revisions on job growth for 2011.  Currently-published data show job growth of 8,000 (0.7%) for the four quarters ending 2011:Q3.  The revised data are expected to show a net decline of 3,200 jobs (-0.3%).

The magnitude of the data revisions also vary by sector.  As shown in the table below, some sectors are likely to show positive net revisions:  Manufacturing and Government, in particular, are expected to be revised upward — each by more than 3,000 jobs.  Downward revisions are concentrated in private-sector service-providing sectors, with Business & Professional Services and Leisure & Hospitality Services registering the largest declines.  Note that the sum of the estimated component-revisions do not add to the total.  Taking the estimated revisions sector-by-sector, the total downard revision is 9,400.

Source:  Bureau of Labor Statistics; caluclations by the Institute for Economic Advancement

Source: Bureau of Labor Statistics; caluclations by the Institute for Economic Advancement

Whether the total downward revision is 11,000 (as estimated for the total) or 9,400 (as estimated for the sum of super-sector components), the general magnitude of the downward revision is clear.  After all the data are in, it looks like employment growth during 2011 will be close to zero.  In terms of the slow jobs-recovery from the 2008-09 recession, 2011 is shaping up to be a “lost year” for Arkansas. 

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*The projected benchmark series is calculated using some simple statistical procedures to estimate the  correspondence between the two measures in the past (Jan. 2001-Dec. 2009) and to forecast that relationship in the more recent past (Jan. 2010-March 2011).  For April 2011 through September 2011 (the most recent month availabile for the CES payroll data), month-to-month percent changes are used to extrapolate these estimates forward.  Quarterly estimates are then calculated as the average of monthly figures.

Metro Area Unemployment – September 2011

By , November 3, 2011 3:55 PM

Yesterday, the September figures for employment and unemployment were released by the Bureau of Labor Statistics.  The not-seasonally-adjusted data for Arkansas metro areas show that unemployment was higher in September of 2011 than in September of 2010 everywhere except Hot Springs.  On a month-to-month basis, unemployment rates were down across the state; however, this drop represents part of the typical seasonal effect that is seen in August and September — when the students are back to school and teachers are back to work.  After seasonal adjustment, the change in unemployment rates from August to September was postive in each of Arkansas MSAs.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

As shown in the chart below, there is a clear trend emerging for 2011.  After some improvement in 2010, unemployment rates have been rising for several months now.   Higher rates of unemployment are emerging in nearly every area of the state, and the magnitudes of increase rates have been substantial:  Since February, unemployment rates are up more than a percentage point in Fayetteville, Little Rock and Pine Bluff.

Source:  Bureau of Labor Statistics; Seasonally adjusted by the Institute for Economic Advancement.

Source: Bureau of Labor Statistics; Seasonally adjusted by the Institute for Economic Advancement.

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