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Arkansas GDP – 2022:Q3

The Bureau of Economic Analysis reported today that Arkansas GDP expanded at an annual growth rate of 1.3% in the third quarter.  The BEA report noted that 47 states plus the District of Columbia showed positive growth.  Arkansas’ growth rate ranked 41st among the states, and was significantly lower than the U.S. growth rate of 3.2%.

Source: Bureau of Economic Analysis

Data for previous quarters was unrevised, so the latest data represents an update to our previous report.

Although Arkansas’ growth rate has been slower than the national average in the second and third quarters of 2022, cumulative growth since 2019:Q4 shows Arkansas well-above the U.S.  In the 11 quarters since that pre-COVID reference point, Arkansas cumulative growth rate of 6.9% translates to an average annual rate of 2.4%.  By comparison the U.S. annual average growth rate over that period was 1.6%.

Source: Bureau of Economic Analysis

The growth rate of implicit price deflators (a measure of inflation) slowed sharply in the third quarter. For all private-sector industries, the deflator for Arkansas increased at an annual rate of 5.3%, down from 11.6% in the second quarter.  Over the four quarters from 2021:Q3 through 2022:Q4, this proxy for inflation was 8.9%.  The deflator for the U.S. slowed as well, with a four-quarter growth rate declining to 7.6% in 2022:Q3.

Source: Bureau of Economic Analysis

Returning to real GDP, the contribution of sectors to third quarter growth is broken down in the table below.  Arkansas showed larger declines than the national average in good-producing sectors.  Service-providing sectors showed positive growth rates both nationwide and here in Arkansas, and in many cases contributed more to Arkansas GDP growth than to U.S. growth.

Source: Bureau of Economic Analysis

The concentration of the growth slowdown in goods-producing sectors is consistent with the slowing we would expect in response to a higher interest rate environment, and is likely a precursor to continued weakness going into 2023. Nevertheless, newly-released GDP data are subject to considerable future revision, so the latest figures provide only a rough indication of recent trends.

 

Arkansas Employment and Unemployment – November 2022

Data on labor markets showed deteriorating conditions in November:  Unemployment continued its upward creep, while both household and payroll surveys showed employment contractions.

The unemployment rate ticked up from 3.6% to 3.7%, matching the national unemployment rate.  The number of unemployed increased for the 8th consecutive month, rising by 875 in November.  Since March, the number of unemployed has risen by 7,949.  The household survey also showed a decline in the number employed, with that total falling by 2,292 in November.  Having fallen for four consecutive months, employment is down by more than 9,000 since July.  The Arkansas labor force has also contracted for four months now, falling 1,417 in November and approximately 4,300 since July.

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

Payroll Employment
Nonfarm payroll employment was also down in November, declining by 3,200 jobs (seasonally adjusted).  Net job losses were registered for nearly every major sector, with the notable exception of Education and Health Services (up by 900 jobs).  Transportation and Utilities also registered a small increase.  Employment in Retail Trade dropped by 1,200, suggesting that the hire of temporary workers for the holidays was running below the typical pace.

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

Although employment was down for the month, the number of payroll jobs remains 18,300 higher than a year ago (+1.4%).  Year-over-year growth rates are particularly notable in Education & Health Services and Leisure & Hospitality Services, both being supersectors that suffered huge employment losses during the COVID pandemic.  Relative to the employment peak of February 2020, employment in Arkansas is up by 27,000 jobs or 1.8%. By comparison, U.S. payroll employment is only 0.7% above the level of February 2020.

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. 

 

Arkansas Employment and Unemployment – October 2022

The Arkansas unemployment rate increased another 0.1 percentage points in October rising from 3.5% to 3.6%.  It had been previously reported that the U.S. unemployment rate rose by 0.2 to 3.7% in October.

The increase in Arkansas’ unemployment rate resulted from both a decline in household employment and an increase in the number of unemployed.  The number of employed declined by 1,589 in October, the third consecutive monthly decline.  Since July the number of employed has declined by 6,776.  The number of unemployed increased by 1,100 in October.  After 7 monthly increases, the number of unemployed has risen by 7,070 since March.

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

Payroll Employment
Nonfarm payrolls expanded by 600 Jobs in October.  Construction jobs bore the brunt of the decline, falling by 800 jobs.  Other sectors showing declines included Professional & Business Services (with the job losses exclusively in Administrative & Support Services) and Education & Health Services (with the job losses all in the Health Care & Social Assistance category).

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

Compared to October 2021, total employment has increased by 29,200, with increases across most goods-producing and service-providing sectors. The sectors that have shown net job losses over the past year include Mining & Logging, Construction, and Retail Trade.

Relative to the pre-pandemic peak in February 2020, Arkansas payroll employment is up by 28,100, or 2.2%.  Nationwide, the net increase in payroll employment since February 2020 has been 0.5%.

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. 

Arkansas Economic Forecast Conference

Thank you to all the attendees of the Arkansas Economic Forecast Conference this morning.  Special thanks to the participants in our panel discussion:

  • Randy Zook, Arkansas State Chamber of Commerce
  • Bert Greenwalt, Arkansas State University
  • Shannon Newton, Arkansas Trucking Association
  • Try R. Wells, Baptist Health

Here are links to the forecasts presentations:

Arkansas Employment and Unemployment – September 2022

Arkansas’ unemployment rate rose by 0.1 percentage points to 3.5% in September.  The Bureau of Labor Statistics had previously reported that the U.S. unemployment rate declined .2 percentage points to 3.5% for the month.  Since the onset of the pandemic in early 2020, Arkansas’ unemployment rate has been running lower than the national average.  The two rates have now converged.

Source: Bureau of Labor Statistics

Underlying the uptick in the unemployment rate was both an increase in the number of unemployed and a decrease in the number of employed.  The number of unemployed has been edging higher for 6 months, having reached a trough of March of this year.  Over that six-month period, the number of unemployed has risen by nearly 6,000.  The number of employed Arkansans declined for the second consecutive month, falling by 2,445 in September after a decline of 2,775 in the previous month.

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

The declines in employment have driven a downturn in the size of the total labor force as well, down 2,400 over the past two months.  Two months of household employment declines indicate that labor markets might possibly be losing some momentum.  However, two months of data aren’t enough to establish a trend, but are merely suggestive of weakening conditions.  Overall, with the unemployment rate below 4%, labor market conditions remain strong.

Payroll Employment
Nonfarm payroll employment declined by 3,400 jobs in September (seasonally adjusted).  Before seasonal adjustment, the data showed a sharp increase in employment; however that was more than accounted for by the seasonal return of faculty and staff to public schools and universities.  In the seasonally adjusted data, the downturn was most prominent in Education and Health Services, which was down by 3,300 jobs. Other sectors with employment declines included Retail Trade, Transportation & Utilities, Financial Services and Other Services.  Sectors with increasing employment included Construction, Government, Information Services and Professional & Business Services.  Within Professional and Business Services, the increase was entirely in the Administrative & Support Services category, which includes temporary workers.

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

Over the past twelve months, Arkansas payroll employment has increased by 35,900 jobs, or 2.8%.  Over the same period, total U.S. payrolls have expanded by 5.69 million, or 3.9%.  Compared to the pandemic/recession trough of February 2020, Arkansas employment has expanded by 2.1%, compared to 0.3% nationwide.

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. 

 

Personal Consumption Expenditures – 2021

State-level data for Personal Consumption Expenditures (PCE), the most comprehensive measure of consumer spending, came out this week.  The data are only available at an annual frequency, with the new data covering the year 2021.  Arkansas growth was 12.8%, slightly outpacing the national average growth rate of 12.7%.  Last year, we noted that Arkansas was one of only a handful of states that saw an increase in PCE in 2020 (albeit only 0.1%). The new data revise that figure upward to 0.6%.

Source: Bureau of Economic Analysis

The breakdown of expenditures by category shows that Durable Goods purchases led the growth surge, increasing by approximately 25% for Arkansas and the U.S.  Nondurable goods purchases increased by 16.8% in Arkansas and 13.7% nationwide. After declining in 2020, spending on services rebounded in 2021, growing 9.0% in Arkansas and 10.2% for the U.S.

Source: Bureau of Economic Analysis

With the growth rates of goods purchases exceeding that of services, the share of services as a percent of total spending declined for a second year in 2021. The long-run trends in services shares have been increasing for decades.  With two years of decline, however, the services share has dropped from 69% in 2019 to 65.4% for the U.S., and from 66.1% to 62.3% here in Arkansas.

Source: Bureau of Economic Analysis

Arkansas Personal Income – 2022:Q2

Last week’s release of new GDP data coincided with a new report on state-level personal income. The Bureau of Economic Analysis indicated that the two reports would be released simultaneously from now on.  There is some logic in that plan: GDP and personal income statistics share many of the same original data sources and so the information is overlapping. One distinction between the two reports is that the highlighted GDP statistic is “real,” or inflation-adjusted, whereas the personal income statistics are in nominal terms.  Regarding the GDP report, we noted that the implicit price index has been increasing faster in Arkansas than nationwide, boosting nominal measures of economic activity.  This shows up in the personal income statistics as strong nominal growth.

The second quarter growth rate of personal income in Arkansas was 6.9% (annualized), compared to 5.8% for the U.S. The second quarter figure for Arkansas was revised significantly higher, with a growth rate that is now reported to have been 9.4%, up from the originally-reported rate of 5.5%.  For the first two quarters of the year, the growth rate of Arkansas personal income was 8.1% (annualized), well-above the 4.4% national average.  Among the 50 states, Arkansas’ growth rate ranked 5th highest in the nation.

Source: Bureau of Economic Analysis

Among the major components of personal income growth, Proprietors’ income increased dramatically, rising at a 53% rate. This increase contributed 3.3 percentage points to the state’s total personal income growth of 6.9%.  The increase in proprietors income was entirely in farming. Nonfarm proprietors’ income declined slightly in the second quarter, while farm income rose at a 288% rate.  Nationwide, the growth of personal current transfer receipts has slowed considerably with the winding down of covid-related transfer payments.  In Arkansas, transfers continued to contribute to income growth.

Source: Bureau of Economic Analysis

Data Revisions
As was the case for GDP, the second-quarter data included revisions dating back to 2017.  The cumulative effects of the revisions were relatively small, with the exception of proprietors’ income (revised upward) and Dividends, interest and rent (revised downward.)  The revision to proprietors’ income affected only post-covid data. The revision to Dividends, interest and rent was large and persistent, with the revised data showing a smaller contribution from this component from 2017 onward.

Source: Bureau of Economic Analysis
Source: Bureau of Economic Analysis
Source: Bureau of Economic Analysis

Earnings by Industry
A breakdown of earnings by industry shows many of the same patterns that we saw for GDP.  Total earnings contributed approximately 4.0 percentage points to total personal income growth, with 3.4 percentage points coming from the Farm sector.  Industries with negative contributions to growth included retail trade and real estate.  As was the case with GDP, a large negative contribution came from Management of companies and enterprises (following an unusual upward spike in the first quarter).

Source: Bureau of Economic Analysis

 

Arkansas GDP – 2022:Q2

New data for state GDP was released today by the Bureau of Economic Analysis.  Arkansas GDP was reported to have declined at an annual rate of 3.0% in the second quarter compared to a more modest rate of decline of 0.6% for the United States.  Arkansas GDP was previously reported to have declined in the first quarter of 2022 as well, but that statistic has been revised to show a growth rate of +6.5%.  Arkansas’ second quarter decline was among the largest in the nation, exceeded only by Indiana (-3.3%), Connecticut (-4.7%), and Wyoming (-4.8%).  Overall, GDP decreased in 40 states plus the District of Columbia.

Source: Bureau of Economic Analysis

Not only were the data for 2022:Q1 revised, but today’s release also included revisions back to 2017:Q1.  The revisions increased the cumulative level of Arkansas GDP considerably:  as of the first quarter, revised GDP was 3.9% higher than previously-reported estimates. The largest revisions were for 2020:Q1 (just before the pandemic-related downturn) and the revision for the first quarter of 2022.

Source: Bureau of Economic Analysis

With the upward revision to the path for Arkansas GDP, the state’s output shows even more indication of recovery since the pandemic recession.  Cumulative growth from 2019:Q4 stood at 6.5% for Arkansas, compared to 3.5% for the U.S.

Source: Bureau of Economic Analysis

Breaking down the sources of the second quarter decline in GDP, we see that Construction, Manufacturing and Wholesale trade were substantial negative components for both Arkansas and the U.S.  Nationally, Agriculture was a weak sector, although the positive contribution of agriculture to Arkansas GDP was substantial.  The weakest sector for Arkansas, accounting for over three-quarters of the overall decline, was Management of Companies and Enterprises. It’s not clear how to account for this factor, but we can note that the second quarter decline represented a partial offset of a sharp upward spike in the first quarter.

Source: Bureau of Economic Analysis

One other interesting piece of information that can be gleaned from the GDP report regards inflation.  GDP is reported for both nominal (dollar-value) and real (inflation-adjusted) measures. The ratio between the two defines an implicit price index for GDP.  The chart below shows year-over-year changes for the implicit price index for private-sector GDP. It suggests that there was less disinflation in Arkansas than the rest of the country in 2020, and a higher rate of price increases since than.  From 2021:Q2 to 2022:Q2, this measure of inflation was 9.7% for Arkansas compared to 8.2% for the U.S.

Source: Bureau of Economic Analysis

The data showing larger price increases for Arkansas GDP than for the U.S. could indicate the obvious conclusion: that inflation is running higher here in Arkansas. On the other hand, if the BEA’s price adjustments are overstating Arkansas inflation, then real GDP growth could be understated. There is certainly enough uncertainty about future data revisions to not rule out the latter possibility.

 

Arkansas Employment & Unemployment – August 2022

The newest reports on employment and unemployment in Arkansas indicate some signs of weakening conditions in the state’s labor markets, but payroll employment continues to expand at a healthy pace.

The headline news was an increase in the unemployment rate from 3.3% to 3.4%.  In light of the 0.2 percentage point increase in the national unemployment rate in August (to 3.7%), it is not surprising to see Arkansas’ rate edge up slightly as well.

Source: Bureau of Labor Statistics

The increase in the unemployment rate reflected an increase of 1,020 in the number of unemployed and a decline of 2,648 in the number of employed.  August was the fifth consecutive month of increasing numbers of unemployed persons, up a total of 4,177 since March.  The decline in the number of employed represents a departure from the rising employment trend that had prevailed since December of 2021.  With the decline in employment exceeding the increase in unemployment, the total labor force (and the labor force participation rate) declined for the month.

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

Although the overall trend in the number of employed has been increasing for over two years, the household employment series has yet to recover to pre-pandemic levels.

Payroll Employment
In contrast to the relatively sluggish growth of household employment, nonfarm payroll employment continues to register strong gains. For August, payroll employment was up 3,700 and the gain for July was revised higher by 1,700 jobs (seasonally adjusted data). Although nonfarm payroll employment growth was sluggish in the early months of the year, there have been 13,400 net new jobs created since March—an increase of 1.0%.

Employment growth in service-providing sectors was generally strong in August; however, there were job losses in Construction, as well as in the Trade, Transportation and Utilities super-sector.  Job gains were particularly strong in some of the sectors that have struggled to recover from the pandemic-recession, including Leisure and Hospitality Services (+1,100 jobs) and Other Services (+1,500 jobs).

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

Compared to a year ago, payroll employment is up 39,000 or 3.0%.the only sectors that have contracted over the past year are Mining & Logging, Construction, and Retail Trade.  Relative to the business-cycle peak of February 2020, most sectors have shown net increases, with the exceptions of Leisure and Hospitality Services and Other Services.  Government employment is still down significantly from pre-pandemic levels, primarily reflecting employment in public schools, colleges and universities.

JOLTS Data
New state-level data from the Job Openings and Labor Turnover Survey (JOLTS) was also released this morning.  Lagging the employment figures by one month, today’s report for July suggested some leading indicators of slightly weakening conditions.

Todays JOLTS report noted that Arkansas was among the states with the largest decline in job openings for the month (both in terms of numbers and rates).  As a result, the number of job openings per unemployed worker fell below 2.0 for the first time this year.

Source: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey (JOLTS)

The JOLTS report also cited Arkansas as one of the states that showed a statistically significant decline in job separations, with the Separation Rate falling from 4.7% of the total number employed to 4.1%. The decline in separations was concentrated in the Quits Rate, which fell from 3.5% to 3.0%. Although the month-to-month decline in quits was statistically significant, the trend remains high, consistent with an ongoing process of labor market churning that has come to be known as “the great resignation.”  The Quits Rate for Arkansas remains well above the national average.

Source: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey (JOLTS)

The decline in Job Openings, Quits, and overall Separations indicate some narrowing of the gap between job openings and available workers, and also suggest that the labor force might be settling into a more stable expansion path.

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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.