State-level personal income statistics for the fourth quarter came out today [LINK]. Arkansas’ annualized growth rate for the quarter was reported at 3.6%, one percentage point lower than the U.S. growth rate of 4.6%. Arkansas ranked in the lowest quintile of growth rates among states. However, the state’s growth rate for the third quarter was revised upward from 5.4% to 7.1%, retaining the status of being the highest-growth state in the third quarter (and making Arkansas the highest growth state for the third and fourth quarters combined).
The slower growth in Arkansas than the U.S. was attributable to net earnings. Transfer receipts generated approximately the same growth for personal income at the national and state level, while property income (Dividends, Interest, & Rent) contributed somewhat more to Arkansas’ growth rate than for the nation.
The slower growth rate of earnings in Arkansas was, in turn, driven by lower growth in wage & salary components. In contrast, Proprietors’ Income surged higher, growing at an annualized rate of over 30% and contributing 1.5 percentage points to the personal income growth rate for the quarter.
If you’ve been following the personal income statistics for a few quarters, the source of the surge in Proprietors’ Income should not be surprising: farm proprietors’ income accounted for the bulk of the increase. This component has been the source of volatility in Arkansas income growth statistics since 2020.
The contribution of the agriculture sector is also prominent in the breakdown of earnings by sector, with Arkansas Farm earnings accounting for nearly three-quarters of growth in total earnings.
Note that Management of Companies and Enterprises had a significant negative contribution to overall earnings growth in the fourth quarter; however, that decline merely offset a sharp positive spike in the third quarter (and therefore contributing to the strong third-quarter growth).
With the preliminary estimates for fourth-quarter income in hand, the preliminary annual figures for 2024 are now also available. Compared to the previous year, Arkansas growth was 4.2%, compared to 5.4% for the U.S.
One notable feature of the annual growth contributions is the relatively small contribution of Personal Current Transfer Receipts to earnings growth in 2024. The press release from the BEA noted that Arkansas had the lowest growth rate in the nation for transfer payments (only 1.7%).