Skip to content

Arkansas Personal Income – 2023:Q4

The latest figures on state-level personal income show that Arkansas incomes expanded at an annual rate of 1.0% in the fourth quarter, compared to a 4.0% growth rate nationwide. Arkansas’ growth rate ranked 48th among the 50 states, with only North Dakota and Iowa showing slower growth. On a more positive note, data for the third quarter were revised upward to show a growth rate of 0.8%—previously reported to have been 0.0%. Over the past four quarter, Arkansas personal incomes have increased by only 1.4%, compared to 4.7% for the U.S.

Source: Bureau of Economic Analysis

The table below shows the year-over-year growth rates of some key components of personal income. Significant factors lowering Arkansas overall growth are Farm income and Proprietors income, as well as Transfer receipts.

Source: Bureau of Economic Analysis

The declines in Farm income and Proprietors’ income are reflections of the same phenomenon, since most farm income is received by proprietors. As shown below, large swings in farm income boosted total proprietors’ income in 2021 and 2022, but that collapsed in effect collapsed in 2023. Meanwhile, nonfarm proprietors incomes have continued to expand in 2023.

The swings in farm income are likely an artifact of the way that agricultural inventories are valued in the personal income and GDP accounts. The post-pandemic rise in commodity prices caused a positive revaluation of inventories, while more recent declines in commodity values have reversed that effect. This is likely an inaccurate measure of true agricultural income: extreme fluctuations in inventory valuations represent paper profits and losses, not necessarily income flows.

The other factor suppressing personal income growth in 2023 was the decline in transfer receipts, which is associated with the winding-down of pandemic-related spending programs. As shown below, transfers declined during 2023 to pre-pandemic levels in Arkansas.

Source: Bureau of Economic Analysis

Annual data for total for total personal income shows growth of 4.0 percent for Arkansas, compared to 5.2 percent nationwide. Contributions of Dividends, interest & rent and Transfer receipts are comparable, but Arkansas is lagging in net earnings growth.

Breaking down the growth in net earnings by sector we see that the major factor restraining Arkansas’ growth is farm earnings. Positive contributors include Construction, Wholesale trade, and Health care.