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%.
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%.
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.
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.
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.