Total personal income increased at an annualized rate of 5.1% in the second quarter of 2018, recording the 7th highest growth rate among the 50 states. Nationwide, personal income rose at a rate of 4.2% for the quarter. The news release from the Bureau of Economic Analysis noted that Arkansas was one of nine states where the volatile farm earnings component contributed one-half a percentage point or more to increases in personal income. At a 91% annualized growth rate, farm income actually contributed over a full percentage point to Arkansas personal income growth. Excluding farm income, Arkansas incomes expanded at a 4.1% rate, slightly higher than the 4.0% national average.
Among other major components, wage and salary growth, plus supplements, grew slightly faster in Arkansas than the U.S. average. Proprietors’ income in Arkansas was boosted by a 111% increase in Farm proprietors’ income, but nonfarm proprietors’ income rose at a rate of only 4.5% — matching the nationwide average. Growth in Dividends, interest, and rent (3.7%) exceeded the U.S. growth rate (3.3%) while Personal current transfer receipts grew at a slightly slower rate (3.9% for Arkansas compared to 4.1% for the U.S.).
Percent changes from quarter to quarter can be quite volatile, so a better measure of longer term growth trends is the percentage change from a year earlier. By this measure, From 2017:Q2, Arkansas personal income increased 4.3%, compared to an gain of 4.6% nationwide. As illustrated in the chart below, Arkansas income growth has generally been slower than the U.S. average in recent years. From 2015:Q1, year-over-year growth has averaged 3.2% in Arkansas, 0.8% below the nationwide average of 4.0%.
Earnings by Industry
Total earnings (which include wages and salaries, supplements and proprietors’ income) also grew faster than the U.S. average, 3.6% compared to 3.2%. The table breaks down the contribution of earnings by industry to total personal income. Once again, the role of farm earnings in boosting total personal income is apparent. Among other sectors, Arkansas personal income was boosted by growth in Manufacturing; Professional, scientific, and technical services; and Health care and social assistance. Nondurable goods manufacturing, in particular, contributed more to Arkansas income growth it did to U.S. growth.
Today’s data release included a comprehensive update of state personal income, incorporating more detailed and complete source data, updated seasonal factors, and the results of the July 2018 comprehensive update of the National Income and Product Accounts. The figures below illustrate the nature of the revisions for Arkansas total personal income. In terms of levels, the revised data show slightly lower incomes in early 2016, but the revisions are cumulatively all positive since then. The revisions result in higher growth estimates for Arkansas: Over the four quarters ended 2018:Q1, previously published data had reported a growth rate of 2.0%, and the data revisions increased that estimate to 3.5%.