State-level data on personal income in the first quarter were released by the Bureau of Economic Analysis this morning. The statistics show a second consecutive quarter of positive growth for Arkansas. Personal income was up 0.4% in the first quarter of this year, following a (revised) growth rate of 0.6% in the previous quarter. For the U.S. as a whole, personal income growth was 0.9%.
Among the 50 states, this growth rate was among the lowest in the country (47th). However, as indicated by the figure below, Arkansas personal income did not fall nearly as sharply during the recession as did incomes in much of the rest of the country. From the peak in 2008Q2, personal income in Arkansas fell by only 1.5% by the 2009Q3. Over the same period, personal income for the U.S. was down by 2.3% (at its lowest point, U.S. personal income was down by 2.7% in the 2009Q1). In some sense, the latest figures show that the rest of the country is now catching up with Arkansas.
Although the report showed total personal income was up in the first quarter, net earnings were slightly lower (-0.3%) as were dividends, interest and rent (-1.0%). Consequently, the overall increase in income was attributable to transfer payments (+3.2%). This pattern was common in many other states as well, with the increase due to payments associated with the American Recovery and Reinvestment Act (ARRA). ARRA payments were up by over 33% in Arkansas in the first quarter.
Breaking down the decline in net earnings by sector, the decline was most pronounced in farm income. Earnings were up in manufacturing, wholesale and retail trade, and several other categories of service-sector employment (including government).