New figures came out this morning showing that Arkansas personal income declined by 0.2% in the first quarter. Data for the fourth quarter of 2013 were also revised downward to show a 0.2% decline in that quarter as well. Compared to the first quarter of 2013, the new data indicate year-over-year growth of 1.0%. The weakness in Arkansas income was concentrated in farm income. The report from the Bureau of Economic Analysis noted that first-quarter farm earnings declined by more than $1 billion in each of several agricultural states, including North Dakota, Minnesota, Iowa, Arkansas and Nebraska. The report noted that the declines reflected falling crop prices. Nonfarm income in Arkansas increased 0.9% in the first quarter, and was up 2.8% from the first quarter of 2013.
The declining income in Arkansas over the most recent two quarters contrasts with modest but positive growth in personal income nationwide. For the U.S. as a whole, personal income was up 0.8% in the first quarter following a (revised) 0.5% increase in the fourth quarter of last year. The most recent data puts U.S. personal income 14.8% higher than its pre-recession peak. For Arkansas, first quarter income was 13.6% higher than the previous cyclical peak.
Over the past four quarters, the price index for personal consumption expenditures increased by 1.1%. Hence, on an inflation-adjusted basis, real incomes in Arkansas have fallen 0.1% over the past year. For the U.S., real income increased by 2.5% over the same period.
The table below shows the critical role that declining farm income played in the first quarter report. Total earnings (which includes wages and salaries, supplements to wages and salaries, and proprietors income) contributed -.42% to the quarterly decline in Arkansas personal income. The contribution of farm income to that total was more than a full percentage point. All other sectors combined contributed +0.65% to personal income growth. Some sectors showed notable growth, including Construction and Nondurable goods manufacturing.