Institute for Economic Advancement

Arkansas Personal Income – 2014:Q1

By , June 24, 2014 3:43 PM

New figures came out this morning showing that Arkansas personal income declined by 0.2% in the first quarter.  Data for the fourth quarter of 2013 were also revised downward to show a 0.2% decline in that quarter as well.  Compared to the first quarter of 2013, the new data indicate year-over-year growth of 1.0%.  The weakness in Arkansas income was concentrated in farm income.  The report from the Bureau of Economic Analysis noted that first-quarter farm earnings declined by more than $1 billion in each of several agricultural states, including North Dakota, Minnesota, Iowa, Arkansas and Nebraska.  The report noted that the declines reflected falling crop prices.  Nonfarm income in Arkansas increased 0.9% in the first quarter, and was up 2.8% from the first quarter of 2013.

PI-2014Q1-map

The declining income in Arkansas over the most recent two quarters contrasts with modest but positive growth in personal income nationwide.  For the U.S. as a whole, personal income was up 0.8% in the first quarter following a (revised) 0.5% increase in the fourth quarter of last year.  The most recent data puts U.S. personal income 14.8% higher than its pre-recession peak.  For Arkansas, first quarter income was 13.6% higher than the previous cyclical peak.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Over the past four quarters, the price index for personal consumption expenditures increased by 1.1%.  Hence, on an inflation-adjusted basis, real incomes in Arkansas have fallen 0.1% over the past year.  For the U.S., real income increased by 2.5% over the same period.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The table below shows the critical role that declining farm income played in the first quarter report.  Total earnings (which includes wages and salaries, supplements to wages and salaries, and proprietors income) contributed -.42% to the quarterly decline in Arkansas personal income. The contribution of farm income to that total was more than a full percentage point.  All other sectors combined contributed +0.65% to personal income growth.  Some sectors showed notable growth, including Construction and Nondurable goods manufacturing.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

 

Arkansas Employment and Unemployment – May 2014

By , June 20, 2014 12:44 PM

The Arkansas unemployment rate declined another two-tenths of a percent in May, falling to 6.4%.  The unemployment rate has fallen for eight consecutive months, and is now 1.1% lower than it was in May of 2013.  The Arkansas rate has been declining along with the national unemployment rate, which stood at 6.3% in May. URATES-AR&US-0514

For the second consecutive month, however, the unemployment rate drop was accompanied by a sharp decline in the labor force.  The number of unemployed dropped by 2,637 in May, and was down 7,649 since March.  But we have not been seeing a commensurate increase in the number of  employed Arkansans.  Rather, the number of employed has declined by 7,776 over the past two months.  As a result, the labor force declined by 15,425 during April and May.  The declining labor force is something of a puzzle.  With labor market trends appearing to be on an improving trend, we would expect to see discouraged job-seekers re-enter the labor force, boosting participation rates and unemployment rates.  Instead, we’re seeing the reverse.  It might be the case that some job-seekers are leaving the labor force out of frustration, but it might also be the case that job seekers are leaving the Arkansas labor force in favor of finding jobs elsewhere.  The declining labor force might also reflect a cohort of newly retired baby-boomers dropping out of active labor force participation.  Two months is not long enough to establish a trend, but this development is worthy of monitoring closely over the next few months.

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

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

Payroll Employment
The separate survey of employers showed nonfarm payroll employment down by 400 in May (seasonally adjusted).  Sectors losing jobs in May included Construction, Manufacturing, and Retail Trade.  Employment was down in most service sectors as well.  A notable exception was Education and Health services, which increased by 2,500 jobs.  Over a longer span of time, payroll employment is maintaining a respectable growth rate.  Since May 2013, total employment is up by over 14,000 jobs, and we’ve seen the creation of nearly 39,000 jobs since the trough of February 2010.  Nevertheless, Arkansas employment remains more that 18,000 jobs lower than it was before the recession began in December 2007.

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

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

Considering the employment gains of the past 12 months, there are two distinct subperiods.  During the latter part of 2013 we saw significant job growth, with an increase of nearly 15,000 jobs in the period from May 2013 through January 2014.  So far this year, however, job growth has stalled.  From January through May 2014, total payroll employment has declined slightly.  Some of the slowdown is likely associated with harsh winter weather that we experienced in the first part of the calendar year.  More recent weakness in payroll employment growth parallels the reversal of employment gains that we’ve seen in the household survey.

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 hereTable-Seasonally Adjusted NFPE.

 

Arkansas GDP in 2013

By , June 11, 2014 2:52 PM

The Bureau of Economic Analysis announced this morning that Arkansas GDP growth in 2013 was 2.4%, up from a revised growth rate of 1.1% in 2012.  Arkansas’ growth rate was well above the national average of 1.8%, and ranked #16 among the 50 states. gsp_0614

Today’s report included a comprehensive set of revisions that affected the data going back to 1997. Although Arkansas’ growth rate in 2012 was revised downward, the revisions generally paint a picture of stronger long-term growth for the state.  As shown in the figure below, the immediate post-recession years of 2010 and 2011 saw much stronger growth than previously estimated.  Growth in 2003 through 2008 was also revised upward.  Cumulatively Arkansas GDP growth is now reported to have increased by 28.3% over the 10 years from 2002-2012, up from a previously-reported total of 16.5%.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

After the data revisions, Arkansas growth over the past several years is now estimated to have exceeded that of the U.S. as a whole.  The 2009 drop in output was previously estimated to have been smaller than the national average, but it is now reported to have been about the same (-2.7%).  Nevertheless, stronger growth in the decade before the recession — as well as in 2010 and 2013 — result in a significant cumulative improvement for Arkansas.  In per capita terms, Arkansas real GDP (in 2009 dollars) increased from $33,828 in 2003 to $39,111 in 2013 (an increase from 73.7% of the national average to 79.6%).

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Over half of Arkansas’ growth in 2013 came from natural resource sectors:  Agriculture, forestry, fishing and hunting contributed over half of a percentage point to total growth and Mining accounted for more than a full percentage point.  The BEA news release noted that these sectors figured prominently in national growth patterns.  The Agriculture, etc. component contributed positively to growth in 49 states plus the District of Columbia.  Mining “was not a significant contributor to real GDP growth for the nation,” but it did boost the growth rates of some of the fastest growing states in the nation.  For example, mining accounted for 3.61 percentage points of North Dakota’s 9.7 percent growth.

Some sectors in Arkansas’ economy remain relatively weak, however.  Construction had a positive contribution to growth nationwide, but subtracted from growth in Arkansas.  Manufacturing in Arkansas showed essentially zero growth over the year, while it added 0.4% to the U.S. growth rate.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

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