According to the latest statistics from the U.S. Bureau of Economic Analysis, Arkansas personal income rose 0.6% in the fourth quarter of 2011 — a somewhat smaller rate of increase than the U.S. average rate of 0.8%. The new data release also included upward revisions to Arkansas personal income in the first three quarters of 2011. From the fourth quarter of 2010 through the end of 2011, the latest figures show that personal income was up 3.7% in Arkansas and up 4.6% for the U.S. Farm income was particularly weak in 2011: Although it accounts for less than 2% of total personal income in the state, farm income declined 17.3% from the fourth quarter of 2010 through the fourth quarter of 2011. Arkansas nonfarm income was up 4.0% over the same period. As shown in the figure below, total personal income in Arkansas ended the year approximately 5.5% higher than its previous cyclical peak in 2008:Q2. U.S. personal income was 4.6% above the previous peak.
Excluding government transfer payments, the decline in incomes during the recession was substantially larger than for total personal income, and the recovery has taken correspondingly longer. The latest data show that Personal Income Less Transfers (PILT) rose by 4.8 percent in Arkansas during 2011 (Q4/Q4). For the U.S. overall, PILT was up by 5.8% over the same period. For both Arkansas and the U.S., a slowing pace of transfer payments was a factor dampening total income growth over the second half of 2011. As measured by PILT, Arkansas remains somewhat ahead of the nation in terms of economic recovery: At the end of 2011, PILT was 2.5% above its previous cyclical peak in Arkansas, and only 1.7% higher for the U.S.
Because this release was the first to include data for the entire year, the BEA report also summarized per capita personal income figures for 2011. In Arkansas, per capita income rose 3.7% to $34,014. For the entire U.S., per capita income was up 4.3% to $41,663. As of 2011, therefore, per capital personal income in Arkansas stood at 81.6% of the national average — leaving the state’s ranking among the 50 states plus District of Columbia unchanged at #45.
One consideration to bear in mind when evaluating personal income statistics is that they are not adjusted for inflation. Typically, the the national price index for personal consumption expenditures is used to adjust the nominal figures for inflation. By this measure, prices rose 2.5% in 2011, so the 3.7% increase in nominal per capita personal income correponds to a real (inflation-adjusted) increase of only 1.2%.
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