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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