A forum for information and analysis on the Arkansas economy

Eclipse-onomics: On The Expected Economic Impact of the Great American Eclipse

On April 8, 2024, Arkansas will be in the path of totality for a total eclipse of the sun. Based on past experience, there are widespread expectations that our state will experience an enormous influx of visitors to view the event. The last total eclipse to cross the U.S, in August 2017, was cited as the largest single tourist event on record for some of the affected states.

This raises an obvious question: What will be the economic impact on the state’s economy?

The experience of states that were in the path of totality during the eclipse of 2017 can serve as a model for what to expect in Arkansas this year.  The 2017 eclipse took place on a Monday, as will this years eclipse, so the event became a weekend-long celebration. An economic impact study for Wyoming found that 77% of out-of-state visitors stayed overnight, with an average visit of 4.1 days and 3.5 nights.[1]  A study for Nebraska found that about 87% of visitors were from out of state, and estimated an average stay of three days.[2]

The analysis of Wyoming’s experience included the results of a detailed expenditure survey that broke down the spending of visitors by length of stay and type of accommodation (motel/hotel, camping, rental home, stay with friends or family, day trip-only). Lacking any specific information about how Arkansas might differ in terms of the mix of day-visitors versus overnight visitors or the choices of accommodation, we will simply adopt the average spending per visitor from the Wyoming survey, adjusted for inflation since 2017, as our out-of-state tourist spending profile.

Broken down by spending category, the Wyoming results suggest the following spending profile per visitor in inflation-adjusted 2024 dollars:

Table 1:Sources: Wyoming Office of Tourism, Bureau of Labor Statistics, and author’s calculations

By using these average spending per visitor figures, adjusted for inflation, we are implicitly assuming that the spending profile of the average visitor to Arkansas will match that of the average visitor to Wyoming in 2017.

The remaining question to consider is this: How many visitors will come from outside of Arkansas?

For that, we can turn to some research presented on the website GreatAmericanEclipse.com. Researcher Michael Zeiler presents a model of where eclipse travelers will visit the path of totality. With data on US population distribution from the U.S. Census and a model of the road distribution network using ArcGIS software from Esri, Zeiler estimates a model of eclipse visitation based on the idea that people who live closer to the path of totality are more likely to visit and that they will travel the shortest drive distance to get there.[3]

For Arkansas, Zeiler’s model predicts estimates of total visitors ranging from a low of 84,000 to a high of 337,000. That’s a pretty wide range, but it gives us some idea of the order-of-magnitude to expect.[4]

In an effort to narrow down the range, we compared the predictions of Zeiler’s model for states in 2017 to the actual outcomes. South Carolina was expected to have the largest number of eclipse travelers, with a range of 547 thousand to 2.2 million. The actual number of total eclipse tourists was estimated at 1.6 million, comfortably within the projection range.[5] In Wyoming, however, the estimated number of travelers (including in-state travelers) was estimated to be 261 thousand—36% higher than the 192 thousand high-end prediction. Similarly, eclipse travelers in Nebraska totaled 708 thousand, 52% higher than the model’s high estimate. One speculative explanation of this pattern of prediction errors is that people might be more inclined to travel further in the West and Midwest to see an eclipse than they are along the highly-populated Atlantic coast.

In the results reported below, we present an optimistic range of projections. We take our low-end projection to be the midpoint of Zeiler’s two forecasts for Arkansas. For the higher estimate, we take Zeiler’s upper bound and add 36% (the excess visitors observed in Wyoming). Specifically, we present scenarios in which the total number of eclipse travelers ranges from 210 thousand to 460 thousand.  Assuming that 75% of those total travelers are visiting from out of state (the Wyoming average), the total number of out-of-state visitors ranges from 160 thousand to 350 thousand.

Using these estimates for the number of travelers, along with the spending per out-of-state visitor spending in Table 1, we run a tourist-spending simulation in IMPLAN, an Input-Output model that traces spending effects through a local economy, in this case the State of Arkansas. The model simulations provide estimates that include both the Direct Effects of the spending, along with secondary effects of the tourism spending, which include Indirect Effects (measuring the increased demand that propagates along the supply chain) and Induced Effects (reflecting the extra spending generated by higher incomes and profits).

The results are reported in Table 2. The upper panel of Table 2 shows the estimated impact assuming 160 thousand out-of-state visitors. The direct impact on Value Added (State GDP), is approximately $29 million. Including the Indirect and Induced Effects, the total impact is $48 million. The projected increase in personal incomes, including direct and secondary effects, is nearly $27 million. The total impacts on employment are often described as the number of jobs supported by an economic activity or event, expressed in full-time equivalent (FTE) jobs over the course of the year. In this case, for a single-weekend event, the projections might better be interpreted as the FTE expression of the additional staffing that will be required to accommodate the short-term surge in demand.

Table 2:

The lower panel of Table 2 shows the impacts associated with a total of 350 thousand out-of-state visitors. In this case, the total impact on state GDP is over $100 million, with nearly $60 million in higher personal income and 1,700 full-time-equivalent jobs.

The magnitudes of the effects are linear with the values in the lower panel exactly 118.75% higher than in the upper panel (350/160), so the reader is welcome to adjust the results for different assumptions about total attendance.

This analysis had focused on a study area consisting of the entire state of Arkansas. For that reason, we deliberately excluded the effects of eclipse-related travel spending by Arkansas residents. If we were to focus more specifically on the areas within the path of totality, Arkansas residents from outside the path who were traveling to those counties/regions would generate additional impacts for the local destination economies.

Research by investigators at Forbes gives some insight into the relative impacts on regions that are likely to be the most affected.[6]  Looking at data from retail foot traffic over the course of the long weekend in August 2017, the Forbes researchers found that retail traffic increased by 16.2% within the path of totality. Regions just outside the zone saw an even larger impact: up 27.7%. Outside the vicinity of the eclipse path but within driving distance (200 miles), retailers saw a decline of 14.7%.  Moving further away, there was no notable impact. Overall, U.S. retail traffic dropped 12.7% during the hour of totality.

The projections presented here are rough estimates, but they convey the expected order-of-magnitude that the eclipse will have on the Arkansas economy. The numbers are big, but the event is temporary, so it represents a miniscule fraction of the state’s annual economic activity. If we consider state GDP for the month, our estimates represent an increase of only 0.3% to 0.7%. For the brief 4-day period, however, the magnitudes are non-trivial. Relative to an average 4-day period, the impact estimates presented here amount to about 2.5% to 5.5% of GDP with a 1.5% to 3.2% boost to personal incomes.

There are many uncertainties and contingencies about actual outcomes, with one big uncertainty being the weather. Nevertheless, many travelers have already laid their plans and made their reservations, and this is certain to be a significant, albeit temporary, economic event.

NOTES:

[1] Dean Runyan Associates, “2017 Eclipse Economic Impact Study: Summary of Findings,” Wyoming Office of Tourism, 2017.   https://buckrail.com/wp-content/uploads/2017/12/Wyoming-Office-of-Tourism-2017-Eclipse-Economic-Impact-Study.pdf

[2] Data from Nebraska are sourced from the Nebraska Tourism Commission, citied in, Jenn Gjerde and Angela Sears, “The Great American Eclipse Was Big Business for Nebraska,” https://visitnebraska.com/press-releases/great-american-eclipse-was-big-business-nebraska

[3] https://www.greatamericaneclipse.com/visitation

[4] There are two estimates for Arkansas in different locations on the website, with a lower estimate that ranged from 70,000 to 281,000. We are assuming that the higher range is the more recent estimate.

[5] Data from South Carolina are sourced from the South Carolina Department of Parks, Recreation and Tourism, cited in “KEY STATS: Total Eclipse Weekend Columbia, S.C.” https://totaleclipsecolumbiasc.com/key-stats-total-eclipse-weekend-columbia-s-c/

[6] Sean Lakind, “The Great American Eclipse and Its Effect on Retail Traffic,” Forbes Communication Council. https://www.forbes.com/sites/forbescommunicationscouncil/2017/09/12/the-great-american-eclipse-and-its-effect-on-retail-traffic/?sh=3fc4ca8d44b0

 

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Metro Area Employment & Unemployment – December 2023

This week we received the final metro area employment report covering 2023. For the month of December, unemployment rates were generally higher across the state, while changes in payroll employment were mixed.

As shown the table below, the change in unemployment rates in December were 0.1 percentage points higher than in November for Northwest Arkansas, Fort Smith, Hot Springs, Jonesboro, and Little Rock. The rate in Pine Bluff was up 0.2 percentage points and was unchanged in Texarkana. Only in Memphis was there a decline in the unemployment rate for the month.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Estimates

The table also shows that nearly all of Arkansas’ metro areas saw unemployment rates declining over the first half of the year and increasing over the second half of the year. This pattern is also clear in the figure below, with the exception of Texarkana and Memphis. Statewide, the unemployment rate ended the year at the same place it started. That was also true for Northwest Arkansas Little Rock, and Memphis. Year-over-year changes in the unemployment rate were positive for Fort Smith and Jonesboro; negative for Hot Springs, Pine Bluff, and Texarkana.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Estimates

Payroll Employment
Nonfarm payroll employment showed mixed changes around the state, but increases tended to predominate. Employment was slightly higher in Fayetteville, Fort Smith,  and Little Rock.  Relatively large gains were recorded for Memphis and Texarkana.  Hot Springs and Pine Bluff saw employment declines and Jonesboro was unchanged.

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

Year-over-year growth rates varied considerably among the metro areas. Northwest Arkansas continued its robust growth trend and Texarkana has a strong year of growth after languishing in 2021 and 2022. Employment was down in Hot Springs, Little Rock and Memphis.

 

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Arkansas Employment and Unemployment – December 2023

The state employment report for December continued to show that the labor market was weakening toward the end of the year, with the unemployment rate increasing for the fifth consecutive month. From a longer-term perspective, however, the weakness toward the end of the year was merely a partial offset to the strength we saw in the first half of 2023.

The state unemployment rate increased by 0.1 percentage points in December, rising from 3.3% to 3.4%. That is 0.6 higher than the record-low of 2.6% reported for June and July. Nevertheless, we ended the year with the same unemployment rate we had at the start of the year. The net change in the number of unemployed from the end of 2022 was only 446.

The December report also showed a decline in the number of employed for the third consecutive month, along with the second monthly decline in the size of the labor force. But these declines only partly offset the gains from earlier in the year. From December 2022 to December 2023, the household survey showed that the number of employed increased by 18,263 and the size of the labor force increased by 18,709.

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

The data for 2023 will be revised before we get our first reading on 2024. Typically, the end-of-year unemployment rate is subject to very small revisions, with the path from the beginning to the end of the year showing the effects of additional data refinements. We expect the revised data to show a smoothing of the relatively large swings in the number of unemployed that were reported during 2023.

Payroll Employment
Nonfarm payroll employment increased by 5,800 in December, recovering more than half of the employment losses reported for the previous three months (seasonally adjusted data). Expanding sectors included all major goods-producing sectors, with Construction and Durable Goods Manufacturing showing substantial gains. Relatively strong holiday shopping boosted employment in Retail Trade. Among service-providing sectors, employment in Education & Health Services and Other Services continued to expand, while Leisure & Hospitality Services contracted slightly. Compared to December 2023, payroll employment growth totaled 15,100, or about 1.1%.

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

Including the December increase, payroll employment has expanded by 62,700 since February 2020 (pre-COVID) amounting to a gain of 5.3%. Over the same period, the net change in U.S. employment has been 3.2%.

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

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Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format consistent with the monthly news release from the Arkansas Division of Workforce Services, can be found here: Table-Seasonally Adjusted NFPE. 

 

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Arkansas Employment and Unemployment – November 2023

Data for November indicate further weakening of Arkansas labor markets. The unemployment rate rose 0.2 percentage points to 3.3%, and both the household and payroll surveys showed employment declines.

The increase in the unemployment rate was the fourth consecutive monthly increase after hitting a low of 2.6% in June and July. Nevertheless, the state’s unemployment rate remains lower than a year ago. The U.S. unemployment rate declined from 3.9% to 3.7% in November, further closing the gap between the national and state unemployment rates. (The difference is no longer considered statistically significant.)

Source: Bureau of Labor Statistics

The pattern of the unemployment rate over the course of 2023 is attributable to large swings in the number of unemployed. From January through July, the number of unemployed declined by approximately 11,000 to an all-time low of 35,624. From July through November that number has risen by 9,655 to 45,279, but it remains lower than at the start of the year. The household survey also showed a decline in the number of employed in November (following a decline in October) and the net change in the labor force turned negative as well. Nevertheless, both employment and the labor force remain well-above levels of a year ago or at the start of 2023.

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

Payroll Employment
Nonfarm payroll employment declined by 1,600 in November, following a revised 4,500 decline in October (seasonally adjusted data). After reaching a peak in August, nonfarm payrolls have declined by 9,800. Compared to a year ago, however, payroll employment is up by 12,800 (approximately 1%).

The employment declines in November included nearly all goods-producing sectors, along with Wholesale and Retail Trade and Professional & Business Services. Government employment also declined (primarily local government). Several service-providing sectors registered employment gains, including Leisure & Hospitality Services and Education & Health Services. Those two super-sectors, along with Construction, comprise the areas where employment growth has been strongest over the past twelve months. At the other end of the scale, Manufacturing, Retail Trade, Transportation & Utilities, Information Services, and Professional & Business services have all declined compared to their levels in November 2022.

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

The 12,800 increase in Arkansas payroll employment over the past twelve months corresponds to a growth rate of 1.0%. Over the same period, U.S. employment increased by 1.8%. Compared to employment levels of February 2020, employment in Arkansas is up by 4.9%, while U.S. employment has increased by 3.1%.

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

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Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format consistent with the monthly news release from the Arkansas Division of Workforce Services, can be found here: Table-Seasonally Adjusted NFPE. 

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Arkansas GDP – Revisions and 2023:Q2

After a delay of more than two months, the comprehensive revisions to state-level GDP were released this week by the Bureau of Economic Analysis. The new data showed a small decline in Arkansas GDP for the second quarter of 2023 (-0.4% seasonally adjusted annual rate), and also revealed growth patterns in 2021 and 2022 that differ significantly from previously published estimates.

The revisions were part of a comprehensive reassessment that takes place every five years, in which new and revised source data is incorporated into the statistics, along with a re-estimation of seasonal factors and price deflators. The figure below shows the impact of the revisions on quarterly growth rates since 2021. The revised statistics show generally stronger growth than initially reported during 2001 and the second half of 2022.

Source: Bureau of Economic Analysis

A comparison of the previously published and revised statistics for the first quarter of 2022 shows how much data revisions can alter our view of history. Originally reported as growth at a seasonally adjusted annual rate of 6.5%, the revised statistics show that Arkansas GDP contracted at a rate of 2.2%. The second quarter growth rate was similarly revised lower.  Clearly, the first half of 2022 showed slower growth in the state’s output than was originally reported.

The sharp downward revision to 2022:Q1 is not attributable to any single factor:  Several service-providing sectors were initially reported as showing positive growth for the quarter, with revisions showing negative growth. One very large revision: Management of companies and enterprises was originally estimated to have expanded at a pace of over 200% in 2022:Q1, whereas the revised growth rate was 11.7%.  Nevertheless, the Management sector did show a substantial increase in the third quarter (not initially reported) that made up for the revision in the first quarter.  The timing and composition of growth changed, with little effect on cumulative growth.

Source: Bureau of Economic Analysis

The impact on cumulative real GDP growth, with a comparison to U.S. growth, is shown in the figure below. For the period 2019:Q4 through 2023:Q1, cumulative growth for Arkansas was 9.2%, compared to the initially published estimate of 7.8%. After the small first-quarter decline, cumulative GDP growth by the second quarter was 9.1%—three percentage points greater than cumulative growth in U.S. GDP over the same period.

Source: Bureau of Economic Analysis

As for the decline in 2023:Q2, the breakdown in the table below shows that the slow growth was entirely attributable to a sharp decline in agricultural output (-70.8% at a seasonally adjusted annual rate), which had the effect of subtracting nearly 2.8 percentage points from the state’s total GDP growth. In other words, non-agricultural GDP expanded at a rate of 2.4% in the second quarter.

Source: Bureau of Economic Analysis

 

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Arkansas Employment and Unemployment – October 2023

The state employment report for October reinforces suggestions of a slight weakening of labor market conditions that were indicated by the data of the past two months. The unemployment rate increased for the third consecutive month, while employment surveys showed declines for the month.

The headline measure, the unemployment rate, rose by 0.2 percentage points to 3.1% in October. The national unemployment rate was previously reported as increasing 0.1 percentage points to 3.9% in October.  Despite a slight narrowing of the gap between the two, Arkansas’ rate remains significantly lower (in a statistical sense) than the U.S. rate.

Source: Bureau of Labor Statistics

Although the Arkansas unemployment rate is one-half of a percentage point higher than in June and July, a rate of 3.1% matches the record-low prior to 2023. Similarly, the number of unemployed, which rose by 2,616 to 42,549 in October, remains lower than at any time prior to this year.

The October report also showed a decline in employment (-1,813) following two months of slow growth. The combination of the increase in the number of unemployed and decline in the number of employed resulted in a net increase in the labor force, continuing its upward trend and setting a new all-time high.

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

Payroll Employment
Nonfarm payroll employment declined by 3,500 in October, following a decline of 3,700 (revised) in September (seasonally adjusted data). The two months of decline offset some of the gains from the summer months, but total payroll employment remains higher than it was at the beginning of the year.  Compared to October 2022, employment is up by 12,800 jobs.

The downturn in October was broad-based, with lower employment in several good-producing and service providing sectors. One notable exception was Construction employment, which increased by 800, and is up 7,700 compared to a year ago. Government employment was also higher in October, up by 600 compared to the previous month and up 1,400 from a year ago.  Several service sectors that had been showing strong growth showed downturns in October, including Professional & Business, Education & Health, and Leisure & Hospitality services.

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

The net gain of 12,800 jobs over the past twelve months translates to a growth rate of 0.9%. Over the same period, U.S. payroll employment is up by 1.9%. Since the onset of the pandemic in February 2020, Arkansas employment is up by 5.2%, while the U.S. net increase is 3.0%.

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

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Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format consistent with the monthly news release from the Arkansas Division of Workforce Services, can be found here: Table-Seasonally Adjusted NFPE. 

 

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2023 Economic Forecast Event

This morning’s Economic Forecast Event was a great success. Thank you to all the participants and attendees, and special thanks to the Little Rock Branch of the Federal Reserve Bank of St. Louis for hosting the event.

Copies of the presentations are available by following the links below:

 

 

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Metro Area Employment and Unemployment – September 2023

Mirroring the statewide report, Arkansas’ metro areas saw unemployment creep higher, with signs of slowing employment growth in some areas.

Among the eight metro areas that cover parts of the state, only Texarkana saw no change in its unemployment rate.  The unemployment rates in Northwest Arkansas, Hot Springs, Little Rock and Memphis were up 0.1 percentage points, while Fort Smith, Jonesboro and Pine Bluff matched the 0.2 percentage point increase reported for the state in September. Along with increases in August, unemployment rates have risen noticeably over the past two months, but generally remain lower than a year ago.

Notably, the patterns for metro areas that are primarily based in Arkansas show a similar pattern: A sharp decline in unemployment during the first half of the year, and a rebound in the past two-to-three months. This pattern is not evident in the data for Memphis and Texarkana, suggesting that the state-specific component for Arkansas is driving the results. In our analysis of the statewide report for September, we conjectured that the 2023 dip in Arkansas unemployment—not present in the national data—might be a data anomaly that will be smoothed after the annual revisions in January. The patterns seen in the metro area data reinforce that suspicion.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Statistics

Unemployment rates in Fayetteville, Jonesboro and Little Rock remain lower than the statewide average of 2.9%, while rates in Memphis, Pine Bluff and Texarkana are above the national rate of 3.8%.  Fort Smith and Hot Springs occupy a space in-between the state and national rates.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Statistics

Payroll Employment
Nonfarm payroll employment declined from August to September in Jonesboro, Fort Smith and Little Rock. On the other hand, the data show strong job growth in Northwest Arkansas, Hot Springs, Memphis and Texarkana. With a surge over the past three months, employment in Texarkana is now 3.1% higher than a year ago—a growth rate nearly as high as the 3.4% growth in the Fayetteville-Springdale-Rogers MSA. Jonesboro and Pine Bluff have also shown significant growth over the past 12 months, while Hot Springs, Little Rock and Memphis are essentially unchanged from a year ago.

Source: Bureau of Labor Statistics, Current Employment Statistics

The longer-term growth trends continue to indicate that the strongest job growth is in the northeast and northwest areas of the state, with Fayetteville-Springdale-Rogers expanding by 13% since February 2020, followed by Jonesboro with 6.7% growth.  Little Rock and Hot Springs have also grown significantly relative to pre-pandemic employment levels. Pine Bluff is the only metro area in the state where employment remains below the February 2020 benchmark.

Source:

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Arkansas Employment and Unemployment – September 2023

The September report on employment and unemployment in Arkansas suggests a slight weakening of labor market conditions. The unemployment rate increased by 0.2 percentage points, from 2.7% in August to 2.9% in September. The national unemployment rate was 3.8% in September. The difference between the U.S. and Arkansas unemployment rates remains statistically significant. Despite September’s increase, the Arkansas unemployment rate below 3% remains exceptionally low.

Source: Bureau of Labor Statistics

The increase in the unemployment rate was attributable to the second month of increase in the number of unemployed. The number of unemployed was up 2,561 in September after increasing 1,715 (revised) in August. Despite these increases, the number of unemployed remains below 40,000 and the unemployment rate lower than 3% should be considered a sign of ongoing tightness of labor markets.  The number of employed continued its long span of expansion, albeit at a slower pace over the past two months. The labor force continues to grow.

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

Payroll Employment
Nonfarm payroll employment declined by 3,300 jobs in September (seasonally adjusted). Declining sectors included Durable Goods Manufacturing and Retail Trade. Employment Leisure and Hospitality Services declined in September as well, but remains well-above year-ago levels.  Sectors adding jobs in September included Construction and Professional and Business Services.

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

Over the past 12 months, nearly 20,000 jobs have been added to the Arkansas economy (a growth rate of 1.5%). Much of the growth has been concentrated in a few sectors, including Construction, Education & Health Services, and Leisure & Hospitality Services.

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Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format consistent with the monthly news release from the Arkansas Division of Workforce Services, can be found here: Table-Seasonally Adjusted NFPE. 

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Arkansas Personal Income – 2023:Q2

The most recent personal income report showed a sharp slowing of Arkansas income growth in the second quarter. However, thorough revisions to the data had the effect of raising estimates of the state’s growth in the recent past, particularly in 2020 and 2021.

For the second quarter, Arkansas Personal Income growth rate was only 0.4% at a seasonally-adjusted annual rate, compared to a 4.3% growth rate for the U.S.  Arkansas growth rate was the slowest positive growth rate in the nation, with Maine showing a decline of 2.7%.

Arkansas slow growth in the second quarter was primarily attributable to Farm Income, which dropped by 7.4% for the quarter, a decline of 97.8% at an annualized rate. This followed a (revised) sharp decline in the first quarter as well. The impact on total proprietors’ income is illustrated in the figure below.

Source: Bureau of Economic Analysis

Note that the decline in Farm income had the effect of lowering total proprietors’ income, even though Non-farm proprietors’ income increased at a 4.3% annual rate. This followed a (revised) sharp decline in farm income in the first quarter as well.

As shown in the table below, Proprietors’ income was the sole factor for slow earnings growth.  Wages & Salaries, and Dividends, Interest & Rent were positive contributing factors to personal income growth.

Source: Bureau of Economic Analysis

A breakdown of industry contributions to earnings and personal income growth again highlights the prominence of farm income in this quarter’s report. Nearly all other sectors showed positive growth or only small declines. Were it not for the -3.3 percentage point contribution of Farm earnings, personal income would have increased at the same rate as the U.S. total.

Source: Bureau of Economic Analysis

Data Revisions
Comprehensive revisions to the Personal Income data had significant implications for income growth over the past several years. The revised statistics show slower growth in 2019, but higher growth rates during 2021 and 2022.

Source: Bureau of Economic Analysis

The slower growth in 2019 is reflected in downward revisions to Dividends, Interest and Rent, as well as Proprietors Income. As shown in the two figures below, however,  Revisions of more recent data for these two categories diverge, however. The new data show more rapid post-2020 growth for Dividends, Interest, & Rent, while Proprietors Income was revised sharply lower (both Farm and Nonfarm were revised lower).

Source: Bureau of Economic Analysis

The upward revisions to personal income growth during the pandemic were primarily attributable to higher estimates of Current Personal Transfer Receipts:

Source: Bureau of Economic Analysis

The revisions had little impact on the main source of earnings: Wages and Salaries.

Overall, the revisions leave Arkansas in a position with larger cumulative income gains since 2019 than the rest of the nation. The most recent quarter added little to total growth, but compared to 2019:Q4 Arkansas income has increased by 25.8%. Over the same period, U.S. cumulative income growth has been 23.1%.

Source: Bureau of Economic Analysis

 

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