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Arkansas Personal Income – 2023:Q2

The most recent personal income report showed a sharp slowing of Arkansas income growth in the second quarter. However, thorough revisions to the data had the effect of raising estimates of the state’s growth in the recent past, particularly in 2020 and 2021.

For the second quarter, Arkansas Personal Income growth rate was only 0.4% at a seasonally-adjusted annual rate, compared to a 4.3% growth rate for the U.S.  Arkansas growth rate was the slowest positive growth rate in the nation, with Maine showing a decline of 2.7%.

Arkansas slow growth in the second quarter was primarily attributable to Farm Income, which dropped by 7.4% for the quarter, a decline of 97.8% at an annualized rate. This followed a (revised) sharp decline in the first quarter as well. The impact on total proprietors’ income is illustrated in the figure below.

Source: Bureau of Economic Analysis

Note that the decline in Farm income had the effect of lowering total proprietors’ income, even though Non-farm proprietors’ income increased at a 4.3% annual rate. This followed a (revised) sharp decline in farm income in the first quarter as well.

As shown in the table below, Proprietors’ income was the sole factor for slow earnings growth.  Wages & Salaries, and Dividends, Interest & Rent were positive contributing factors to personal income growth.

Source: Bureau of Economic Analysis

A breakdown of industry contributions to earnings and personal income growth again highlights the prominence of farm income in this quarter’s report. Nearly all other sectors showed positive growth or only small declines. Were it not for the -3.3 percentage point contribution of Farm earnings, personal income would have increased at the same rate as the U.S. total.

Source: Bureau of Economic Analysis

Data Revisions
Comprehensive revisions to the Personal Income data had significant implications for income growth over the past several years. The revised statistics show slower growth in 2019, but higher growth rates during 2021 and 2022.

Source: Bureau of Economic Analysis

The slower growth in 2019 is reflected in downward revisions to Dividends, Interest and Rent, as well as Proprietors Income. As shown in the two figures below, however,  Revisions of more recent data for these two categories diverge, however. The new data show more rapid post-2020 growth for Dividends, Interest, & Rent, while Proprietors Income was revised sharply lower (both Farm and Nonfarm were revised lower).

Source: Bureau of Economic Analysis

The upward revisions to personal income growth during the pandemic were primarily attributable to higher estimates of Current Personal Transfer Receipts:

Source: Bureau of Economic Analysis

The revisions had little impact on the main source of earnings: Wages and Salaries.

Overall, the revisions leave Arkansas in a position with larger cumulative income gains since 2019 than the rest of the nation. The most recent quarter added little to total growth, but compared to 2019:Q4 Arkansas income has increased by 25.8%. Over the same period, U.S. cumulative income growth has been 23.1%.

Source: Bureau of Economic Analysis