Yesterday, the U.S. Bureau of Economic Analysis released third-quarter data for state-level personal income and GDP. For both series, Arkansas had the distinction of having the highest growth rates in the nation. Arkansas Personal Income increased at an annual rate of 5.4% and real GDP expanded at a 6.9% pace.
Arkansas’ rapid growth rate in the third quarter was attributable to the same factor that was responsible for relatively slow growth in the second quarter: the volatile Farm Income component. Excluding the sector of Agriculture, forestry, fishing and hunting, GDP growth in the third quarter was 4.0%. Excluding that component from second-quarter growth yields a growth rate of 3.4%, compared to total GDP growth of only 1.5%. Over the four quarters from 2023:Q3 – 2024:Q3, Arkansas GDP growth was 4.4%, compared to a growth rate of 2.7% for the United States. Excluding the farm income component, Arkansas’ four-quarter growth rate would be 3.5%.
A more detailed breakdown of contributions to GDP growth by sector highlights the contribution of agriculture, but also reveals positive contributions from a number of industries. Manufacturing added nearly a full percentage point to growth and retail trade added nearly 1.5 percentage points. The only sectors showing negative growth for the quarter were Construction and Accommodation and food services.
Personal Income
Arkansas personal income expanded at a 5.4% rate, compared to 3.2% for the U.S. As broken down in the table below, the growth rate of earnings (by place of work) was 9.7%, led by a huge increase in Proprietors’ Incomes. Capital income (Dividends, interest, and rent) contracted both nationally and here in Arkansas.
The contribution of proprietors’ income to income growth was, not surprisingly, dominated by farm income. Nonfarm proprietors’ income increased at an annual rate of 1.3%, while farm proprietors’ income increased more than three-fold in a single quarter.
