Data for Gross Domestic Product by State were released this morning by the Bureau of Economic Analysis.  The numbers for Arkansas were something of a surprise.  Our state was one of only 10 that experienced positive growth in total output.  Arkansas’ growth rate of 0.6 percent (compared to the previous year) ranked 8th among the 50 states.  Overall, the United States experienced a decline of 2.1 percent.

A natural question that arises is this:  How can we reconcile relatively strong output growth with weak performance of labor markets?  After all, payroll employment in 2009 was down by more than 37 thousand jobs compared to the previous year.

In part, the answer involves rising productivity.  Businesses managed to produce more goods and services with fewer labor resources.  More important is the composition of growth.   GDP growth was concentrated in industries that are important for the Arkansas economy, but not necessarily the largest employers in the state.  The largest contributors to output growth included mining (+22.3%), Information Services (+20.8%), and Management services (+10.8%).  These three sectors together account for less than 5 percent of total employment in Arkansas.  On the other hand, some of the sectors that employ the most workers in Arkansas experienced contractions in 2009.   For example, output was lower in Manufacturing (-8.1%), and Transportation and Warehousing (-6.3%).   Manufacturing alone accounts for over 14 percent of Arkansas total employment.

Available data for 2010 suggest that output growth is spreading more broadly across the economy.  Sales, income, and employment are all showing signs of recovery.  When the GDP data for 2010 become available (a year from now), they should show more rapid and broad-based growth.