Institute for Economic Advancement

Arkansas Home Sales – A Sluggish Summer Season

By , September 26, 2012 3:02 PM

The Arkansas Realtors® Association just released new sales figures for July and August.  July home sales were essentially unchanged from the previous year, while August sales were down 5.6% compared to August of 2011.  The sales downturn in August overstates recent weakness in the market:  As shown in the figure below, sales were particularly strong in August 2011, so the percentage change reflects relative strength last year as much as it does relative weakness this year.  Nevertheless, cumulative year-to-date sales as of August are down 2.0% from last year’s totals.

Source: Arkansas Realtors® Association

After seasonal adjustment, the sluggish sales growth of recent months is even more apparent.  On a seasonally-adjusted basis, monthly home sales have been fluctuating within a range of 1,800 to 2,100 per month for the past year or so.  Sales appeared to be slowly trending upward in the second half of 2011, but slowed somewhat in the spring and summer of this year.

Source: Arkansas Realtors® Association; Seasonal adjustment by the Institute for Economic Advancement.

Recent sales reports seem to suggest a shifting of sales activity around the state.  Some of the larger real estate markets that were rebounding strongly a year ago have been areas of slower sales this year.  For example, the central Arkansas counties of Pulaski, Saline and Faulkner were showing double-digit sales growth in mid-2011, but have slowed or contracted slightly in the latest monthly reports.  The same pattern seems to characterize Craighead County home sales.   On the other hand, the Northwest Arkansas counties of Benton and Washington are among the stronger performers in recent sales reports, compounding gains from last year.  This rebound is welcome — and not particularly surprising — in light of the fact that Northwest Arkansas markets were hit harder by the housing market collapse and subsequent recession.

The real estate reports from July and August also documented sharp increases in median sales prices.  In July, the median price was up 13.3% and in August it was up 17.3%.  These increases reflect a combination of factors.  First, they suggest that the higher-priced end of the housing market is showing more activity — this includes the impact of higher relative sales volumes in Northwest Arkansas.  The higher sales prices also reflect the general improvement in home values, as evidenced by recent home-price data from the FHFA.

With home prices appearing to have bottomed-out and with mortgage rates at historic lows, conditions appear favorable for a sharper rebound in home sales.  Factors holding back home sales include tight credit conditions and weak household balance sheets.  Improving labor market conditions should help surmount these obstacles over time.

Arkansas Personal Income – 2012:Q2

By , September 25, 2012 11:39 AM

A new report from the Bureau of Economic Analysis shows that personal income in Arkansas rose by 1.2% in the second quarter of 2012, slightly higher than the U.S. average rate of 1.0%.  Growth was postitive in all 50 states, although it slowed in most states.  Arkansas growth rate was up from the previous quarter, and ranked the state as the 8th fastest-growing in the nation.  Over the past four quarters, cumulative income growth in Arkansas was 3.0%, just slightly lower than the 3.3% growth rate for the U.S.  With a CPI inflation rate of 1.9% for the same period, these figures represent postive real (inflation-adjusted) growth in incomes.

Revised data from the previous quarter also show an improved picture for Arkansas.  Previously reported at 0.3%, first quarter growth is now estimated to have been 0.9%.  The revisions show a particularly large adjustment to farm income:  The new report shows farm income expanding 1.2% in the first quarter instead of contracting by 28.6% as originally reported.

Today’s report also included comprehensive revisions for 2009 through 2011.  As shown in the figure below, the revised data show that incomes fell more sharply during the recession (-4.7%) than previously estimated (-3.3%).  The revised data also show a more variable growth path during the subsequent recovery.

Source: Bureau of Economic Analysis

The revised data continue to show that Arkansas incomes were not as hard-hit by the recession as the national average, but cumulative growth during the recovery has been somewhat slower.   As of the second quarter of 2012, incomes in both Arkansas and the U.S. were up 6.4% from the previous cyclical peak (2008:Q2).

Source: Bureau of Economic Analysis

Today’s report shows that earnings growth was up 1.0% for the quarter, compared to a 0.8% growth rate for the U.S.  Earnings growth was positive for nearly every industry in Arkansas, with only nondurable-goods manufacturing and military pay showing slight declines.

Source: Bureau of Economic Analysis

 

Arkansas Employment and Unemployment – August 2012

By , September 21, 2012 10:17 AM

The unemployment rate in Arkansas was unchanged in August, remaining at 7.3%.  According to the news release from the Bureau of Labor Statistics, 26 states saw increases in unemployment, 12 states saw decreases, and Arkansas was one of 12 states where the rate was unchanged.  Both employment and unemployment were down for the month, with the labor force declining by 3,600.  In percentage terms, this is nearly identical to the labor force contraction that was widely noted in the national unemployment statistics released two weeks ago.  From July 2011 through May of this year, Arkansas had been running counter to the national trend with labor force participation rising steadily.  August represents the third consecutive monthly decline.

Source: Bureau of Labor Statistics

Payroll Employment:

Information from the payroll survey was a bit more upbeat.  Total employment was up 2,600 for the month (seasonally adjusted).   Construction employment alone was up by 2,000, reversing the sharp decline that we saw in July.   Employment in several service sectors also increased, including Education & Health Services and Leisure & Hospitality Services.  Government employment was also higher, with net increases in Federal, State, and Local government hiring.

On the down side, employment contracted in both Wholesale and Retail trade sectors (-1,200 combined) and was also down in the Manufacturing sectors (-1,300).  Manufacturing job-losses were present in both durable and nondurable goods production.

On a year-over-year basis, payroll employment is up by around 10,000 jobs, but most of that increase took place in the final months of 2011.  Total employment in August was essentially unchanged from its level at the beginning of 2012.

Source: Bureau of Labor Statistics (CES)

Overall, the data from August reinforce the view that the steadily improving conditions we saw in Arkansas labor markets during the second half of 2011 and the first part of this year have given way to relative stagnation.  The unemployment rate is stuck in the range of 7.1 to 7.3, and payroll employment is similarly showing no clear trend in recent months.

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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, are available hereTable – Seasonally Adjusted NFPE.

USDA Forecasts Solid Gains for Arkansas Agricultural Production

By , September 13, 2012 8:30 AM

New forecasts from the USDA’s National Agricultural Statistics Service (NASS) project sizable increases in Arkansas agricultural output in 2012.   Output figures from 2011 and projections for 2012 are summarized in the table below.

Source: USDA National Agricultural Statistics Service.

  • Corn production, in particular, is expected to be up sharply from last year.  The increase is attributable to increases in both the number of acres harvested (+23%) and the yield per acre (+23%).
  • Cotton production is expected to fall slightly, in spite of a 7% increase in yield.  The number of acres expected to be harvested is down 12%.
  • Rice production is expected to be up 18%, with gains coming from increases in both acreage (+11%), and yield (+6%).
  • Sorghum output is also expected to benefit from higher acreage (+22%) and yield (+11%).
  • Soybean production is expected to be essentially unchanged from last year, with acreage down 2% and yield up 3%.

These statistics suggest that damage from this summer’s drought and from Hurrican Isaac are not as severe as many had feared — at least in Arkansas.  Nationwide, the drought has had a larger impact.  For example, U.S. corn production is forecast to be down 13% and soybean production down 14%.  (Crop Production, September 2012).

A Note on Poverty in 2011

By , September 12, 2012 12:21 PM

This morning, the Census Bureau released new statistics on Income, Poverty, and Health Insurance Coverage in the United States: 2011.  The headline of the report was that the official U.S. poverty rate was 15.0% in 2011, little changed from the previous year.

The report did not contain any specific information on individual states, but some of the underlying data from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) are now available.  Those data tell us that here in Arkansas, the poverty rate was 18.7%.  That was the fifth highest rate in the nation (of all 50 states plus the District of Columbia).  Median Family Income in Arkansas was  approximately $51,000, amounting to 84.3% of the national median of $60,500.  Arkansas’ ranking on family income was 46th.*

These statistics are based on the Census Bureau’s measure of “money income,” which does not include income from many programs intended to alleviate poverty.  For example, money income does not include Supplemental Nutrition Assitance Program (food stamps), housing subsidies, low-income energy assitance, or the earned-income tax credit.  A new Supplemental Poverty Measure which incorporates these income sources—along with updating the methodolgy for calculating the poverty threshold—were introduced last year.  Statistics on these alternative calculations will not be available until November.

It should also be pointed out that income and poverty data for individual states are more accurately measured in the Census Bureau’s American Community Survey (ACS) and the Small Area Income and Poverty Estimates (SAIPE), which will come out later this month and in November, respectively.
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*Median income figures are calculated using the standard method and may differ from published Census estimates that are calculated using linear interpolation.

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