Skip to content

Personal Consumption Expenditures – 2021

State-level data for Personal Consumption Expenditures (PCE), the most comprehensive measure of consumer spending, came out this week.  The data are only available at an annual frequency, with the new data covering the year 2021.  Arkansas growth was 12.8%, slightly outpacing the national average growth rate of 12.7%.  Last year, we noted that Arkansas was one of only a handful of states that saw an increase in PCE in 2020 (albeit only 0.1%). The new data revise that figure upward to 0.6%.

Source: Bureau of Economic Analysis

The breakdown of expenditures by category shows that Durable Goods purchases led the growth surge, increasing by approximately 25% for Arkansas and the U.S.  Nondurable goods purchases increased by 16.8% in Arkansas and 13.7% nationwide. After declining in 2020, spending on services rebounded in 2021, growing 9.0% in Arkansas and 10.2% for the U.S.

Source: Bureau of Economic Analysis

With the growth rates of goods purchases exceeding that of services, the share of services as a percent of total spending declined for a second year in 2021. The long-run trends in services shares have been increasing for decades.  With two years of decline, however, the services share has dropped from 69% in 2019 to 65.4% for the U.S., and from 66.1% to 62.3% here in Arkansas.

Source: Bureau of Economic Analysis

Arkansas Retail Sales – July & August 2021

The most recent information from our Retail Trade and Food Service Sales data show that consumers maintained a summer of soaring spending during July and August.  Compared to a year earlier, the July-August average was up 15.6% in Arkansas.  In the national Retail Sales data from the Census Bureau, consumer spending was up 15.2% over the same time span.  Relative to pre-pandemic levels, the summer’s retail sales figures are even more remarkable.  Compared to July-August of 2019, the figures for this past summer were up 25.8% in Arkansas  and 18.7% nationwide.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

A breakdown of these growth rates by industry group shows that the increased spending is across-the-board.  The smallest increases from 2020 to 2021 were sales at Food and Beverage Stores — up only 2.6% in Arkansas and 4.6% in the U.S. data.  The largest increases were in spending at Gasoline Stations, where much of the increase can be attributed to higher gasoline prices.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

The series for Food and Beverage Stores is a prime example of a persistent change in consumer spending patterns since the onset of the COVID-19 pandemic. After surging in the early months of the pandemic as households stocked-up on supplies, spending at this subset of retailers has settled in at around 16% higher than the summer of 2019.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

Another sector with persistently robust sales growth over the past two years is Building Materials and Garden & Equipment and Supplies.  This spending category saw increases early in the pandemic, when many areas of the country were under lockdown, and has continued to surge above pre-pandemic levels. Over the summer months of July and August, spending in this sector was up from the previous year by 13.1% in Arkansas and 7.6% nationwide.  These increases were on top of sharp gains recorded the previous year.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

Two sectors that have shown the largest increases in sales over the past year are Clothing and Clothing Accessories Stores and Gasoline stations.  The increased spending at gasoline stations partly reflects a recovery in travel, but largely reflects swings in gasoline prices during the recession and recovery phases.  In Clothing and Clothing Accessories, the spending patterns clearly display the resilience of the Arkansas consumer sector. The initial decline in spending was not nearly as large in Arkansas as the rest of the country, and by the summer of 2020 clothing store spending had fully recovered in Arkansas but still lagged pre-recession spending levels by more than 18% nationwide.  By the summer of 2021, nationwide spending in this sector had recovered to stand 14.8% higher than in the summer of 2019.  Here in Arkansas the increase from the summer of 2019 to the summer of 2021 was 24.5%.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

Increases in consumer spending over the past year have been boosted by unprecedented surges in personal income, as government support and stimulus programs have boosted consumers’ purchasing power.  As personal income growth returns to its longer run trend, retail sales growth will necessarily slow.  It will be interesting to see how recent changes in the mix of consumer spending across subsectors will persist.

# # #

Data on Arkansas Retail Trade and Food Service Sales are constructed by the Arkansas Economic Development Institute using tax collection information from the Arkansas Department of Finance and Administration.  Documentation of Methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.

Data for Arkansas Retail and Food Service Sales for July 2017 through August 2021 are available in an Excel Spreadsheet:  Arkansas-Retail-Sales-Aug-2020.  The data set includes statewide aggregates and components, both seasonally adjusted and not-seasonally adjusted. County-level data for Total Retail and Food Service Sales excluding Gasoline are available on a not-seasonally adjusted basis.




Personal Consumption Expenditures – 2020

The annual data on state-level Personal Consumption Expenditures (PCE) were published last week by the Bureau of Economic Analysis.  The data for Arkansas reaffirm our observation that Arkansas consumers maintained relatively high levels of spending during the depths of the pandemic.  Nationwide, PCE declined 2.6% from 2019 to 2020.  In Arkansas total spending increased–albeit at a rate of less than 0.1%. Arkansas was one of only four states to show an increase for the year. (The other states were Idaho, Utah and Montana.)

Source: Bureau of Economic Analysis

The brunt of the slowdown was borne by services consumption. With opportunities for spending on services severely limited by pandemic-related closures and lockdowns, consumer spending was diverted toward consumption of goods.  In both the national and Arkansas data, goods consumption increased in 2020.  However, the percent increases were larger for Arkansas in each category of spending.  Two categories of goods—Other durable goods and Gasoline—were lower for the year, but the declines were smaller in the Arkansas data.  Similarly, the declines in services consumption were generally much larger for the U.S. than recorded in the Arkansas data.  The only exception was Health care, which increased slightly more in the national data than in Arkansas.

Source: Bureau of Economic Analysis

One reason for the overall relative strength in the Arkansas statistics is the fact that goods consumption has historically  comprised a larger share of total spending in Arkansas.  This larger share of goods-consumption had the effect of boosting the impact of increased spending on goods and de-emphasizing the declining service-sector spending.  However, this effect was small:  If the sector-by-sector growth rates for Arkansas were re-weighted to reflect the higher service-content of the U.S. consumption basket, Arkansas growth rate for the year would be around -0.1%, instead of +0.1%.

Source: Bureau of Economic Analysis






Arkansas Retail Sales – March & April 2021

After a brief weather-related contraction in February, consumer spending surged in March and remained elevated in April.  Data for Arkansas Retail Sales shows that spending patterns in our state are matching the national data, with even larger increases relative to pre-pandemic levels.*

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

Severe snowstorms hit Arkansas relatively hard in February, but March saw a rebound amounting to a 22% increase for the month, nearly doubling the 11.3% surge in U.S. Retail Sales.  Sales in every three-digit industry group showed sharp increases, ranging from 7.5% at Food & Beverage Stores to 48% at Clothing Stores.  The relative magnitude of increase across sectors was similar in the nationwide data, with the largest increases tending to be associated with the sectors that experienced larger declines in February.  In April, Arkansas Retail Sales were down nearly 4%, but remained well above recent levels.  Gains and losses were mixed, but sharp declines in Motor Vehicle and Parts Dealers, Electronics and Appliance Stores and Food and Beverage Stores.  The decline in the Motor Vehicle sector is likely overstated: data limitations inhibit our ability to measure and incorporate recent increases in new and used car prices into the data.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

As indicated in the chart for total Retail and Food Services Sales above, consumer spending is far higher now then before the COVID-19 pandemic struck the economy in March 2020.  As measured from a baseline of July-December 2019, the average for March and April 2021 is up over 20% for the U.S. and up nearly 29% in Arkansas.  In both the state and national data, increases are widespread across Retail Trade sectors, but remain lower at bars and restaurants—at least in the nationwide data.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

Here in Arkansas, however, sales at Food Service and Drinking Places had been running at nearly the same pace as late 2019 for several months, and the March-April spending surge pushed total spending well above pre-pandemic levels:  In April, sales at Arkansas bars and restaurants were 16% higher than in late 2019.  Nationwide, spending at bars and restaurants recovered to pre-pandemic levels for the first time.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

At the county level, our data covers Retail Sales excluding gasoline stations (not seasonally adjusted).  As shown in the interactive map below, there is no county left behind when it comes to rising consumer spending.  Again comparing March-April averages to levels in the second half of 2019, Prairie and Arkansas Counties have shown the smallest increases, up 7.5% and 11.6% respectively.  At the other extreme, Woodruff County was up 49.4% and Fulton County was up 54.5%.  The median growth among counties was 36.1%.

# # #

Documentation of Methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.

Data for Arkansas Retail and Food Service Sales for July 2017 through April 2021 are available in an Excel Spreadsheet:  Arkansas-Retail-Sales-Apr-2020.  The data set includes statewide aggregates and components, both seasonally adjusted and not-seasonally adjusted. County-level data for Total Retail and Food Service Sales excluding Gasoline are available on a not-seasonally adjusted basis.

*Technical Note:  The methodology for calculating Retail Sales for Saline County has been updated to incorporate the county-level sales tax that was implemented in April 2019.  In earlier versions of the data set, we used aggregates of sales tax collections for the cities of Saline County, scaled to approximate total county-wide spending.  Actual county-level data are now used for the period December 2019 forward, with scaled sum-of-cities data (for each three-digit industry group separately) spliced to cover the period July 2017 through November 2019.

Arkansas Retail Sales – January 2021

Despite a sharp drop-off in automobile purchases, Arkansas Retail Sales increased sharply in January (seasonally adjusted).  Total Retail and Food Service Sales increased 6.1% from December.  Compared to a year earlier, sales were up 11.2%.  National Retail Sales statistics from the Census Bureau showed a January increase of 7.7% and a year-over-year increase of 9.6%.

Sources: U.S. Census Bureau, Arkansas Department of Finance and Administration, Arkansas Economic Development Institute

As shown in the table below, January retail sales featured a sharp drop-off in measured automobile sales, down 10.2% for the month and down 9.6% from a year earlier.  The sharp decline might be anomalous;  auto sales are recorded when the auto is registered and taxes paid by the buyer, and some registrations in February might have been delayed by harsh winter storms.  Sales at nonstore retailers, which include internet sales, showed a slight decline for the month but were up 46% compared to a year ago.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

Arkansas retail sales generally continue to show a more robust recovery from the pandemic-related economic downturn than have sales nationwide.  The U.S. Retail Sales data show ongoing year-over-year declines in Electronics and Appliance Stores, Clothing and Accessories Stores, and Food Service & Drinking Places.  In each of these categories, Arkansas sales have surpassed the levels of a year earlier.  Perhaps most remarkable, restaurant sales have recovered to pre-pandemic levels in Arkansas but are still down 14.7% nationwide.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

Sales at gasoline stations remain lower than a year ago, both here in Arkansas and nationwide. That decline reflects, at least in part, significantly lower gasoline prices.  Although rising more recently, the average price for gasoline in Arkansas was $2.15 in January 2021, down from $2.25 in January 2020.

County Data
With the exception of gasoline sales, the Arkansas Retail Sales data are derived from county-level reports on sales tax collections (see methodology notes) so we can break down the total sales figures by county (not-seasonally adjusted).  As shown in the interactive map below, year-over-year growth rates for Total Retail Sales ex Gasoline growth was positive in 70 of Arkansas’ 75 counties.  Growth rates exceeded 20% in 13 counties, with a high of 33.5% in Crittenden County.

 As noted above, a sharp drop in automobile sales was a factor reducing growth rates around the state.  When we remove that component, Retail Sales ex Gas & Auto showed positive growth to be even more prevalent.  Only one county (Lee County) showed a year-over-year decline (-2.1%).  47 counties showed growth rates of over 20% and 15 counties exceeded 30%.  The fastest growing county was Crittenden county, up 39.5% from the previous year.

# # #

Arkansas Retail Sales are constructed from county-level sales tax data obtained from the Arkansas Department of Finance and Administration. Documentation of our methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.

Data for Arkansas Retail and Food Service Sales for July 2017 through January 2021 are available in an Excel Spreadsheet:  Arkansas-Retail-Sales-Jan-2021.

The data set includes statewide aggregates and components, both seasonally adjusted and not-seasonally adjusted.  County-level data for Total Retail and Food Service Sales ex Gasoline, and ex Gas and Auto, are available on a not-seasonally adjusted basis.


Arkansas Consumer Spending in 2020

One of the most significant and unexpected features of the Arkansas economy during the COVID-19 pandemic has been the robust behavior of consumer spending.  Despite sharp increases in unemployment and losses in earnings, Arkansas consumers maintained and even exceeded previous trends in overall spending—albeit with notable effects on the composition of purchases.  This sustained spending profile contrasts with the behavior of national retail sales, which experienced historic declines in the spring of 2020.

In order to investigate the issue of consumer spending during the pandemic in more detail, researchers at the Arkansas Economic Development Institute have been refining a methodology for extracting retail sales data from reports on county sales tax receipts.  The raw data, available monthly for all of Arkansas counties broken down by four-digit industry sectors (NAICS codes), is provided by the Arkansas Department of Finance and Administration: Local Tax Distribution by NAICS.

From the raw data, we extract measures of total retail sales corresponding to the components of the U.S. Retail Trade and Food Services accounts published by the Census Bureau.  More details about the methodology are available here: Arkansas Retail Sales—A New Data Set from AEDI. The result is a data set of time series for statewide retail sectors, as well as for county-level totals.  For comparison with seasonally-adjusted national data, we implement a rudimentary seasonal-adjustment technique to adjust the statewide data.

Figure 1 displays an overall comparison of consumer spending trends during the pandemic.  Data for the U.S. and Arkansas are presented as indexes, normalized so that the second half of 2019 provides a baseline value of 100.

Figure 1:

The U.S. Retail Sales data show a sharp decline in early 2020, with sales dropping 21.2% from pre-pandemic levels by April.  The Arkansas data show declines in March and April, but the downturn was in the range of only 3 to 4 percent.  By May and June, spending was recovering briskly both nationwide and here in Arkansas, but spending in Arkansas rose further above pre-pandemic levels than indicated by the U.S. data:  Over the second half of the year, Arkansas retail sales were 8.7% higher than in 2019 while nationwide spending was up only 4.0%.

Spending by Industry Group
Table 1 compares growth rates for components of retail sales for the U.S. and Arkansas.  Measuring from December 2019, U.S. Retail and Food Services sales declined 21.5% through April, while the downturn in Arkansas was only 3.1%.  In every industry group except for Gasoline Stations and Health & Personal Care Stores, Arkansas retail sales outperformed the nation.  By the end of the year, U.S. spending totals were higher than the previous year in 9 of 13 subsectors with ongoing weakness in Electronics and Appliance Stores, Gasoline Stations, Clothing Stores and Food Services.  In Arkansas end-of-year sales were down from 2019 in only three sectors, Health and Personal Care Stores, Gasoline Stations and Food Services.

Table 1:

Figure 2 shows the relative sizes of the industry groups for the U.S. and Arkansas in 2019, before the onset of the COVID-19 pandemic.  Among the larger subsectors, Arkansas spending tends to be more concentrated in industry groups 447 and 452, Gasoline Stations and General Merchandise Stores.  On the other hand, Arkansans spend relatively less on Food and Beverage Stores, Clothing and Clothing Accessories Stores, and Nonstore Retailers (which includes internet shopping).

Figure 2:

Figure 3a through 3m, below, compare seasonally-adjusted time series for the U.S. and Arkansas, sector by sector.

Figure 3a shows an important component of consumer spending during the pandemic:  Motor Vehicles and Parts Dealers.  As described in Arkansas Retail Sales—A New Data Set from AEDI, construction of this component is complicated by the per-vehicle nature of sales taxes at the county level in Arkansas.  Consequently, for NAICS sector 441, the Arkansas measure combines two components:  Taxable sales at motor vehicle and parts dealers excluding automobiles, plus an estimate of the total value of vehicle sales based on an index of the number of vehicles sold.

Figure 3a shows one of the sharpest divergences between U.S. and Arkansas data.  While motor vehicle related sales plunged nationwide in March and April, the downturn in Arkansas lasted only through March.  By April, sales in Arkansas exceeded pre-pandemic levels.

Figure 3a:

Figure 3b displays sales at Furniture and Home Furnishings Stores.  This was one of the temporarily hardest-hit sectors nationwide, with sales falling more than 50% in April, then recovering to above per-pandemic levels by July.  In Arkansas, the sales decline in April was less than 20%, and sales over the second half of the year have averaged 13.3% above levels of the previous year.

Figure 3b:

Similarly, sales at Electronics and Appliance stores suffered sharper springtime losses nationwide than in Arkansas, and the nationwide statistics continue to show more weakness in the second half of the year.

Figure 3c:

Building Materials, Garden Equipment and Supplies, is one of the subsectors that thrived during the pandemic (Figure 3d).  Evidently, with additional time on their hands at home, people devoted more time and resources to home-improvement projects.  Nationwide, spending increased by more than 15% relative to the previous year, while in Arkansas the sustained increase averaged over 25%, and a peaked at a year-over year increase of 45% in June.

Figure 3d:

Food and Beverage Stores also saw sales increase during the pandemic.  As shown in Figure 3e, consumer stockpiling in March resulted in a surge of over 25% nationwide and 40% in Arkansas.  Over the second half of the year, U.S. grocery store sales have remained 10% above pre-pandemic levels, with Arkansas sales trending even higher.

Figure 3e:

Health and Personal Care Stores (NAICS 446) is one of the few subsectors that experienced a sharper initial downturn in Arkansas than nationwide (although the difference was not significant).  As shown in Figure 3f, Arkansas sales surged in the summer months and U.S. sales increased to a level about 5% higher than pre-pandemic levels.

Figure 3f:

Calculation of sales at gasoline stations is complicated by the fact that gasoline sales are not subject to sales tax.  The data from the Local Tax Distribution by NAICS accounts record all non-gasoline sales at gasoline stations.  To calculate a statewide measure that includes gasoline, we add non-gasoline sales to the total statewide gasoline sales measure that is constructed as part of the ATSIG data; namely, data on total gallons of motor fuel sales from DF&A is combined with average price per gallon from the Oil Price Information Service to yield an aggregate measure of gasoline sales.  The results of these calculations, displayed in Figure 3g, show that gasoline station sales in Arkansas have been running even with the nationwide trends.  Although the downturn in gasoline expenditures in 2020 is significant, it reflects lower gasoline prices as much as it does fewer gallons purchased.  To some extent, the reductions in gasoline sales frees-up purchasing power for consumers to spend in other sectors.

Figure 3g:

Nationwide, the subsector that experienced the sharpest declines in the spring of 2020 was Clothing and Clothing Accessories.  As shown in Figure 3h, sales in that subsector dropped by more than 80% during the springtime.  In Arkansas, the drop was also substantial – over 50%.  And while nationwide sales still lag behind the previous year, sales in Arkansas have returned to previous levels.

Figure 3h:

A collection of specialty stores, NAICS 451 provides another example of a subsector that has benefited from the pandemic, at least over the second half of 2020. Consisting of Sporting Goods, Hobbies, Musical Instrument and Book Stores, sales in subsector 451 declined by 45% nationwide in April but were down less than 10% in Arkansas.  As shown in Figure 3i, U.S. sales in this subsector were up significantly from the previous year (between 10% and 20%) during the second half of 2020, but not by as much as in Arkansas.

Figure 3i:

General Merchandise stores, which include department stores along with “Other” general merchandise stores, appears to have benefited from the initial phase of consumer stockpiling in March, but quickly dropped off.  Shown in Figure 3j, general merchandise stores nationwide have experienced somewhat stronger sales over the second half of the year, and have generally been even stronger in Arkansas (except for one outlier month).

Figure 3j:

Industry Group 453, Miscellaneous Store Retailers, is another category that combines several smaller specialty stores, including florists, office supply stores and used merchandise stores (among others).  As shown in Figure 3k, sales in subsector 453 for the entire U.S. followed a pattern of plunging sharply in the spring but recovering back to pre-pandemic levels by the end of the year.  In Arkansas, on the other hand, sales were up by approximately 25% by the end of the year, after showing no notable weakness at all during the early months of the year.

Figure 3k:

Industry group 454, Nonstore Retailers, displays an interesting pattern.  As shown in Figure 3l, U.S. sales at nonstore retailers showed no downturn at the onset of the pandemic, and surged 20% to 30% over the course of the year.   In Arkansas the 2020 increase was in the range of 40 to 50%. The explanation for this remarkable performance is in the composition of subsector 454:  It includes “Electronic Shopping and Mail Order Houses.”

Consumer sales via internet merchants soared during 2020.  The data suggest that the share of online shopping before the pandemic was smaller than the U.S. average [see Table 1], but it experienced much sharper increases as Arkansas shoppers caught up.

Figure 3l:

In Figure 3l, the sharp increase in sales over the second half of 2019 requires some explanation.  In July 2019, Act 822 took effect, mandating that out-of-state retailers collect and remit sales and use taxes on internet sales. The associated surge in tax collections doesn’t represent an increase in retail sales; rather, it reflects a broadening of the tax base.  The effect was not limited to NAICS sector 454, but it is the most evident there.

The impact of Act 822 creates a discontinuity in the Arkansas Retail Sales series that complicates interpretation of the data, but is largely unavoidable.  As part of the seasonal adjustment process, we estimated the magnitude of a July 2019 trend shift for all subsectors.  In many cases there was no significant effect, but several sectors did show statistically significant increases.  In the case of sector 454, the magnitude of this “internet sales tax effect” was a whopping 64%.  Calculated for Total Arkansas Retail and Food Service Sales, the effect is estimated to be 4.8%.  Although it is reasonable to expect that actual retail sales did not change after July 2019, counties and municipalities experienced an increase in sales tax revenues that amounted to nearly 5% of retail-related tax collections.  Using the same methodology, we estimate that total county and municipal tax collections were boosted by 4.2%.  These estimates are preliminary, and will be explored in more detail in further research.

The final subsector to consider is Food Services and Drinking Places.  As shown in Figure 3m, sales at restaurants and bars declined sharply in the spring of 2020.  U.S. sales were down over 50%, while the decline in Arkansas sales was less than half as large at 24%.  Even by the end of the year, nationwide restaurant and bar sales remained significantly lower than a year earlier.  In Arkansas it was one of the few sectors that had not recovered to pre-pandemic levels by the end of the year, but the year-over-year comparison was only -2.6%.

Figure 3m:

County Data
The data are necessarily less precise at the county level.  Relatively small idiosyncratic factors (as well as the suppression of some data for reasons of confidentiality) introduce sources of random fluctuations in the individual components of county-level retail sales.  Consequently, we construct only broad, not-seasonally adjusted measures of retail sales for Arkansas counties.

Two subsectors present specific issues:  First, gasoline sales are constructed using statewide data on fuel taxes, so we have no individual county measures for that component.  Second, although there is a full set of county data for automobiles, the tax information provides us with only an index of the number of vehicles sold, not their value.  Moreover, the taxes on motor vehicles are paid to the county of residence, rather than the county of purchase, introducing an additional complication in interpreting the data.

Accordingly, we present two measures of Retail Sales for Arkansas counties:  The first excludes Gasoline Stations and the second excludes Gasoline Stations and Motor Vehicles and Parts Dealers.  As shown in Figures 4a and 4b, the statewide measures for these aggregates show the same basic patterns as Total Retail and Food Services Sales (See Figure 1):  Namely, the downturn in Spring 2020 is far smaller for Arkansas than for the U.S., and the surge in sales during the second half of 2020 is larger for Arkansas than for the U.S.

Gasoline sales dropped sharply in April and have remained persistently low, so their exclusion results in aggregates with smaller downturn in early 2020 and stronger growth in the second half of the year.  Auto sales in Arkansas declined in March 2020 but began accelerating in April.  Hence, the exclusion of autos essentially eliminates the March downturn that is evident in Figure 1 for Total Retail Sales.

For both measures, there is little or no overall downturn in April, corresponding to the national retail sales trough, and very little indication of any downturn in either March or April.

Figure 4a:

Figure 4b:

Given the statewide performance of these two measures, it is not surprising that very few counties in Arkansas experienced any downturn in early 2020 at all.  In particular, if we examine sales in April 2020 (the national trough) relative to prior values, nearly every county experienced significant growth

Figure 5 shows a map that reveals differences across counties in the growth of Retail Sales less Gasoline.  The map depicts growth rates calculated as the change from the average for the second half of 2019 through April 2020  (2019:H2 is used as the base for calculating growth rates so as to avoid contamination by the change in internet sales tax regime in July 2019).

In Figure 5, only 8 counties showed negative growth over the period, with 67 counties showing positive growth—with five counties exceeding 20% growth over the period.  The collection of counties that experienced negative sales growth is clearly not entirely random, with the subset including Pulaski, Sebastian, Washington, Benton and Craighead – all central counties of Metropolitan Areas.

Figure 5:

Figure 6 shows growth rates of Retail Sales less Gas and Autos.  A similar pattern is clear, but after exclusion of the surge in auto sales in April, several more counties show negative growth in sales (with 15 counties showing declines).  The counties showing negative growth are not exclusively metropolitan counties, but there is a clear tendency for the declining counties to contain urban areas.  Without the strong auto sales included, growth rates are generally lower, with only 3 counties showing growth rates of over 20%.

Figure 6:


Over the second half of 2020, strength in consumer spending prevailed across the state.  As shown in Figure 7, county growth rates of Retail and Food Service sales less Gas and Auto ranged from 4.5% in Franklin County to 38.9% in Woodruff County.

Figure 7:


The COVID-19 pandemic, and efforts to contain it, have disrupted economic activity in many sectors of the economy.  Most directly affected has been retail spending, where business closures, capacity reductions and social distancing have had unequivocal effects on consumer behavior and spending patterns.  Nevertheless, consumer spending in Arkansas remained relatively robust.

During the spring of 2020, Arkansas experienced fewer restrictions on commerce than many other states.  We were one of the few states that did not go through a period of mandatory stay-at-home or shelter-in-place orders.  Consequently, while consumers and businesses had to adapt to changes on protocols, commerce continued.  The contribution of federal support and stimulus payments has also helped support the consumer sector.  Arkansas is a relatively low wage and low cost-of-living state, so direct payments and unemployment insurance extensions have given Arkansans’ an extra boost in purchasing power.

There is some evidence that consumer spending was slowing toward the end of 2020, but two federal Covid-relief bills were signed into law on December 27, 2020 and March 11, 2021.  Additional stimulus payments and unemployment insurance expansions are expected to provide additional purchasing power to fuel continued strength in consumer spending.  With inoculations proceeding and social distancing rules being relaxed, consumers should also find more opportunities for spending.  Consequently, the outlook is for retail sales to continue to drive economic activity in coming months. We will continue to track Arkansas Retail Sales to monitor and document these trends.

# # #

Documentation of Methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.

Data for Arkansas Retail and Food Service Sales for July 2017 through December 2020 are available in an Excel Spreadsheet:  Arkansas-Retail-Sales-Dec-2020.

The data set includes statewide aggregates and components, both seasonally adjusted and not-seasonally adjusted.  County-level data for Total Retail and Food Service Sales less Gasoline are available on a not-seasonally adjusted basis.

A PDF File of this Report is available HERE.

Arkansas Retail Sales — A New Data Set from AEDI

Tracking the economies of states and regions is often limited by the availability of data.  In the recent context of the COVID-19 pandemic and the associated economic dislocations, economists have found the development of new sources of information to be increasingly helpful in tracking the rapidly evolving economic situation.

One glaring omission in the data-measurement tools of regional economists is the lack of data on consumer spending.  The Census Bureau calculates Retail Sales on a national level, but not for smaller geographic subdivisions.[1] The Bureau of Economic Analysis publishes annual estimates of Personal Consumption Expenditures by state, but annual data is not terribly helpful in tracking situation during the pandemic.

At the Arkansas Economic Development Institute, we have been tracking one set of proxies for consumer spending since 2015—Arkansas Taxable Sales (ATS).  ATS is a simple extrapolation from state sales tax receipts: Dividing total receipts by the tax rate yields an estimate of the original expenditures.[2]  Using state data on gallons of taxable motor fuel sold, along with data on average gasoline prices in the state, we have added a component to create Arkansas Taxable Sales Including Gasoline (ATSIG).

Figure 1 shows compares ATSIG to the Census measure of U.S. Retail Sales and Food Services.

Figure 1:

Sources: Arkansas Department of Finance and Administration, U.S. Census Bureau, Oil Price Information Service, Arkansas Economic Development Institute

This comparison strongly suggests that Arkansas was spared the experience of a severe contraction in spending during March and April.  Indeed, by April, ATSIG was already recovering from a downturn in March, and was only lower than the previous April because April 2019 was a relatively strong month.

Although ATSIG is intended to capture trends in spending, it is not an ideal measure of consumer spending on the retail level. Sales taxes are levied on many transactions that are not consumer retail transactions, and the underlying data on net sales tax receipts is distorted by rebates for some non-retail sales and other transactions exempt from sales tax.

Constructing Arkansas Retail Sales: The Basics
An alternative source of sales tax data comes from the sales tax remittances reported to counties and municipalities.  Sales taxes are collected at the state level by the Arkansas Department of Finance and administration, then allocated to local governments, with accompanying reports of sales tax remittances by industry sector. These reports are published for the most recent 36 months at Local Tax Distribution by NAICS.  Our strategy for constructing a data set for Arkansas Retail Sales is to extract and aggregate information on sales tax receipts for all of Arkansas 75 counties, specifically for the sectors that correspond to the components of the U.S. Census Bureau’s report on Monthly Retail Trade and Food Services.

Appendix 1 shows an example of the Local Tax Distribution reports—specifically for Jackson County for October 2019.  The report lists net sales tax, net use tax and their sum by industry, delineated by four-digit NAICS codes.[3]  It also notes rebates and audits that were used to adjust the net figures.  The report is dated October 2019, corresponding to the month in which the sales tax revenue was credited to the County.  It was collected the previous month, from vendor remittances based on sales during the month before that.  So the figures reported in the October 2019 report roughly correspond to sales in August 2019.

Conceptually, the statistics on total net sales and use tax collections provide the basis for a useful measure of final spending, after rebates and audits are subtracted out.  However, the rebates and audits are recorded when they are received, rather than in the month in which the original sale occurred.  Consequently, the adjustments add noise to the monthly time series.  In constructing our measure of Arkansas Retail Sales, we start by calculating the net total less rebates and audits.[4]

To adjust for changes in local tax rates, the revenue figures are divided by the county sales tax rate in effect during the month in which the underlying sale took place, yielding a measure of taxable sales.

To construct measures comparable to the Census’ Retail Trade we select the same subset of 3-digit NAICS subsectors designated as retail, 441 through 454, plus the subsector 722 – Food Services and Drinking Places.  Table 1 lists the specific subsectors included.  The data reported in the Local Tax Distribution reports are reported for 4-digit industry groups, where the classification is self-identified by the tax remitter.

One shortcoming of the data is the practice of suppressing data for industries with fewer than three individual businesses reporting (for confidentiality reasons).  In the report for Jackson County shown in Appendix 1, 13.4% of the net total and 17.7% of the gross total are in the category “NAICS with Less Than 3 Businesses.”  Our supposition is that few 4-digit industries within the retail sector will fall into that category, and we maintain the assumption that changes in the composition of unreported industries do not bias our measurements.  Aggregating from 4-digit to 3-digit industry groups, and from county to statewide measures, should help smooth out some of the idiosyncratic fluctuations from this factor, as well as from other potential measurement problems that may be embedded in the raw data.

Table 1:

The data set we assembled runs from July 2017 through November 2020 (sales months), with statewide and county-level time-series calculated for each 3-digit industry group.  At the county level, data for 4-digit industries is sometimes sparse, and aggregation fills in some of the gaps.  However, data limitations—especially for the smaller counties in the state—suggest that estimates of monthly changes in taxable sales for individual 3-digit industry groups may be unreliable, and we report only broader aggregates for individual counties (for now).

As an example, Figure 2 shows the calculated Retail Sales for industry group 448: Clothing and Accessories Stores.  The constructed series has a clear seasonal patterns, with major peaks in December of each year, followed by a January lull and a spring surge round March.  The effect of the COVID-19 pandemic and social distancing restrictions had a clear impact on sales, with sales in April 2020 that were down 54% from the previous April.

Figure 2:

Seasonality is more relevant for some subsectors than for others, but Figure 2 shows that the normal seasonal variation can be large enough to obscure events as significant as the COVID pandemic. Year-over-year growth comparisons can be used to roughly eliminate seasonal effects, but it also induces a 12-month cycle that produces notable feedback a year after large changes like those that occurred in the spring of 2020.

Seasonal Adjustment
In order to account for seasonal variation, and for comparison with seasonally adjusted data on U.S. Retail Trade and Food Services, we implement a simple seasonal adjustment procedure.  The data series are too short to use sophisticated algorithms like the Census X-13 model.  And experimentation with a simple centered-moving-average approach revealed in important complication:  the implementation of Act 822 in 2019, which mandated that out-of-state retailers collect and remit sales and use taxes for online sales.

This change induced a shift in use-tax collections that represented a broadening of the tax base rather than an increase in spending, but it is an effect that turns out to be statistically significant for some subsectors.  Because the change was associated with an abrupt increase in tax collections in July 2019, simple MA seasonal factors were biased by the effect.

Consequently, we implemented a model-based approach to seasonal adjustment.  For each sector a (log) linear regression model was estimated, where the regressors include an implicit constant, a time-trend, and a full set of monthly seasonal dummy variables.  The regression also includes a dummy variable that takes on the value of one for July 2019 forward.  Regressions were estimated using OLSQ for the period July 2017 through February 2020.  Because the model is estimated in natural logs, the coefficient on the July 2019 dummy variable represents a direct estimate of the percent increase in tax-revenues associated with the implementation of Act 822.  The coefficients on the seasonal dummy variables are then used to calculate multiplicative seasonal factors.

This methodology produces, as a by-product, estimates of the magnitude of the out-of-state “internet sales tax effect” that accompanied Act 822.  For Total Retail and Food Service Sales, this produced an estimate of the internet sales tax effect of 4.8%.  For total taxable sales, including non-retail components, the effect was estimated to be 4.2%. These are preliminary estimates and will be explored in more detail in further research.

Figure 3 illustrates how the not-seasonally adjusted series are decomposed into trend and seasonal factors, again using Subsector 448 as an example.  The trend-shift in July 2019 represents an estimated increase of 3.8%, corresponding to the Act 822-effect.  The dashed line shows the trend plus estimates of recurring seasonal factors.  The deviation of the actual data from the dashed line reveals, indirectly, the seasonally-adjusted series.

Figure 3:

Figure 4 displays the seasonally adjusted series, after applying the estimated seasonal factors. With this refinement, the decline of sales to 54% below trend in April is evident.

Figure 4:

Gasoline and Automobiles
The procedures described above were implemented directly for 11 of the 13 subsectors included in Retail Trade and Food Services.  However, two subsectors require special treatment: gasoline and automobiles.  The Local Tax Distribution reports include tax revenue derived from sales at gasoline stations (NAICS 447) and automobile dealerships (NAICS 441), but gasoline itself is not subject to sales tax and automobiles are taxed at the local level on a per-vehicle basis.

Gasoline:  In order to include gasoline in the statewide aggregate, we incorporate the gasoline component from ATSIG:  Namely, statewide gasoline sales are calculated as the product of the monthly average gasoline price for Arkansas (obtained from the Oil Price Information Service) and the number of taxable gallons of gasoline sold (as reported by the Motor Fuel Tax division of the Department of Finance and Administration).

The estimated value for total gasoline sales is added to the estimate of taxable sales at gasoline stations (NAICS Code 441) as calculated using the Local Tax Distribution Reports.  This unweighted sum generates values for gasoline station sales that represents 11% of total Retail Trade and Food Services for Arkansas, compared with an 8% share in the U.S. Census data (2019 averages).

Lacking any information on county-level sales of gasoline, the broadest retail sales measure we are able to generate for individual counties is Retail Trade and Food Services ex Gas.

Automobiles:  Automobiles are subject to county and municipal sales taxes on a per-vehicle basis.  Specifically, the local sales tax for automobiles is $25 per vehicle for each percentage point of the local tax rate.  So, for example, if a county’s tax rate is 1.5%, the tax would be $37.50.  Consequently, the local tax collection data provides a measure of the number of vehicles sold, but not their valuation.

The revenue from this tax—reported on the Local Tax Distribution reports in a separate line from the NAICS code data—is used to create an index of vehicles sold, with the county totals aggregated to yield a statewide index.  The index is combined with data from NAICS code 441, Motor Vehicle and Parts dealers using the following equation:

SALES441 = NAICS441 + α*INDEX,

Where SALES441 is the total retail sales for Subsector 441, NAICS441 is the total retail sales for the non-automobile components, INDEX is the automobile index, and α is a constant that is set so that the ratio of SALES441 to Total Retail Sales and Food Services less Gasoline is equal to the nationwide ratio for the period July-December 2019.  The calculated value of α, 16,043, is assumed to be a constant over the sample period.

The SALES441 variable represents 19.2% of total Retail Sales in Arkansas, compared with 19.9% for the U.S. Retail Trade and Food Services nationwide (2019 averages).

Monroe and Saline Counties
Two counties present an additional complication:  Monroe County has no countywide sales tax, and Saline County established their county-wide tax only in April 2019.  For both counties, we construct county sales data by summing over the municipalities within the county that collect local sales taxes.[5]  These measures are, by construction, incomplete so some scaling is necessary.

For Monroe County, the totals calculated by summing over municipalities represents 0.139% of the total state excluding Monroe.  In terms of personal income, data from the Bureau of Economic Analysis shows that Monroe County’s share of state Personal Income is 0.183%.  Consequently, the raw data from the city aggregates is scaled up, multiplying by a factor of 1.32.

For Saline County, the county sales tax data accumulated since mid-2019 provide a basis for more detailed scaling:  For retail sales in NAICS codes 44 and 45 (excluding 441, Motor Vehicles and Parts Dealers), total county sales tax collections run approximately 20% higher than the sum of the municipalities.  The municipal-tax measures also generate a much smaller total for Motor Vehicles and Parts, with the countywide measure since mid-2019 running almost exactly twice the magnitude of total of municipalities.  On the other hand, total food services sales (NAICS 722) are approximately equal using either the county-wide or sum-of-municipalities approach.  These three scaling factors (1.2, 2.0 and 1.0) are used as multipliers to scale up the components of Retail Sales for Saline County.

It is expected that with the accumulation of additional data over time, our retail sales data for Saline County will be revised to reflect the actual county-wide data, using the municipal data to construct historical values prior to April 2019.  For now, however, the municipal aggregate is maintained as a consistent time series.

Total Retail and Food Services Sales for Arkansas
After constructing the data for each three-digit industry subsector by summing across counties, each subsector is seasonally adjusted and the components are summed to produce seasonally adjusted aggregates.  The final results, series for Arkansas Retail and Food Services Sales, are displayed in Figure 5.

Figure 5:


Data for Arkansas Retail and Food Service Sales for July 2017 through December 2020 are available in an Excel Spreadsheet:  Arkansas-Retail-Sales-Dec-2020.

The data set includes statewide aggregates and components, both seasonally adjusted and not-seasonally adjusted.  County-level data for Total Retail and Food Service Sales ex Gas, as well as ex Auto and Gas, are available on a not-seasonally adjusted basis.

A PDF File of this report is available HERE:  Arkansas Retail Sales – A New Data Set from AEDI



[1] The Census Bureau has begun publishing statistics on Monthly State Retail Sales (MSRS), but the data set is still a work in progress.

[2] In implementation, ATS is calculated using the .25% Conservation Tax, which has been invariant to recent changes in the taxable status of groceries and other special exemptions.  More details of its construction is available at

[3] NAICS is an acronym for North American Industrial Classification System,

[4] The two methodologies—the use of total net taxes versus the calculated gross—were compared in alternative data-construction exercises.  For statewide aggregates, the choice made little substantive difference, but comparisons revealed some examples of particular county-sector combinations for which the effects of the rebates and audits on monthly changes was clearly overwhelming the information in the underlying gross collections data.

[5] In Monroe County, the municipalities with sales taxes are Clarendon, Brinkley, Roe and Holly Grove.  In Saline County, taxes are collected by Bryant, Shannon Hills, Benton, Bauxite and Haskell.

Leisure and Hospitality Industries in Arkansas – 2020

Of all the sectors of the economy that have been disrupted by the COVID-19 pandemic, industries in the Leisure and Hospitality category have been among the hardest-hit.  These industries continue to show persistent declines in sales and employment, with many businesses remaining at-risk while other sectors of the economy recover.

This article documents the performance of Leisure and Hospitality industries in Arkansas relative to the United States as a whole.  Using payroll employment data and statistics derived from tax-collection data, we show that Arkansas has experienced smaller downturns in the Leisure and Hospitality sector than the national average, but the data also suggest persistent declines at both the state and national levels.

Figure 1 shows the composition and relative sizes of industries within the Leisure and Hospitality sector, in terms of employment shares in 2019. The total sector represents a smaller employment share in Arkansas than in the national totals, 9.4% versus 11.0%.  Restaurants and bars account for the overwhelming share of employment within the Leisure and Hospitality sector, particularly in Arkansas.

Figure 1:
Source: U.S. Bureau of Labor Statistics

Food Services and Drinking Places
The largest subset of industries in the Leisure and Hospitality Sector comprises bars and restaurants.  As shown in Figure 2, employment dropped dramatically in April 2020, falling more than 48% from the previous year nationwide.  In Arkansas the decline was somewhat smaller—only 38.5%.  After recovering during the summer months, employment levels were still down nearly 20% nationwide and about 10% in Arkansas at the end of the year.

Figure 2:
Source:  U.S. Bureau of Labor Statistics

 Figure 3 shows sales figures for the Food Services & Drinking Places sector.  Data for the U.S. are drawn from the U.S. Retail Trade and Food Services survey, published by the U.S. Census Bureau.  Sales figures for Arkansas are derived from county-level sales tax revenue, available by four-digit industry sector from the Arkansas Department of Finance and Administration.  Tax distributions for Food Services and Drinking Places are extracted from the overall figures, adjusted for changes in tax rates, then aggregated across counties.

The percentage changes in sales shown in Figure 3 display a pattern similar to the employment changes in Figure 2.  Nationwide restaurant and bar sales plunged over 50%, while in Arkansas the drop was 24%. By October, nationwide sales remained 12.5% below year-ago levels, while Arkansas sales had recovered to near pre-pandemic levels.  However, data available for November and December suggest renewed weakness.

Figure 3:
Sources: U.S. Census Bureau, Arkansas Department of Finance and Administration, Arkansas Economic Development Institute

The Accommodations industry includes hotels and motels, campgrounds, RV parks, etc.  Employment in the Accommodations nationwide dropped 43% in April 2020 and was down 48% in May.  In Arkansas the decline was approximately 35.5% in both months. Employment levels in the industry remain low.  For the U.S., employment in Accommodations was down nearly 33% in December from the previous year.  In Arkansas it was down about 25%.

Figure 4:
Source:  U.S. Bureau of Labor Statistics

There are two measures of state-level sales available to consider:  in addition to the county sales tax statistics, the state collects a 2% Tourism Tax that applies directly to the service of providing “accommodation to a transient guest.” Figure 4 shows year-over-year growth rates of these two proxies for sales in the Accommodations industry.  They show very similar patterns, especially the COVID-related downturn in April which amounted to a loss of approximately two-thirds of total revenues in the Accommodations sector.

Figure 5:
Sources: Department of Finance and Administration, Arkansas Economic Development Institute

The two revenue measures diverge during the summer months, with county sales tax receipts showing sustained declines from the previous year (down 23%) while the tourism tax indicated a slightly better recovery from the spring downturn.  One possible explanation of this patterns is that the tourism tax applies solely to accommodations, while the sales tax applies to other services provided by hotels and motels, including catering, providing meeting space, etc.  The sustained decline in the sales tax measure suggests that revenue losses in the Accommodation industry run deeper than just a dearth of travelers.

To give an indication of how sales in the Accommodation industry in Arkansas compare to national trends, Figure 6 compares the Arkansas tourism tax to a national measure of revenue per available room.  Under the assumption that the number of available rooms an Arkansas has changed little over time, the national revenue per room should correspond to the Arkansas revenue measure derived from the tourism tax.  Figure 6 shows that the decline in revenues nationwide was even sharper than the downturn in Arkansas.  Revenue per room in April was down 80% from the previous year, and continues to trend 50% lower than pre-pandemic levels.

Figure 6:
Sources: Arkansas Department of Finance and Administration, STR Global.

Arts, Entertainment, and Recreation
The final set of industries to consider in the Leisure and Hospitality Sector is Arts, Entertainment and Recreation.  This category covers a wide range of industries, including Performing Arts, Spectator Sports, Museums, Amusement Parks, Gambling Industries and other various Amusement and Recreation activities.  Figure 7 shows employment in this set of industries for Arkansas and the U.S.  While U.S. employment plunged over 50% in April and May, Arkansas dropped only 12.4%.  By the end of 2020, nationwide employment was still down 30%, while Arkansas recovered to only 5% below the previous year.

Figure 7:
Source:  U.S. Bureau of Labor Statistics

Sales tax data for industries in Arts, Entertainment and Recreation are somewhat sparse.  In any specific county, data are suppressed in sectors with fewer than three firms, so the totals are likely incomplete.  Moreover, comparable sales data on the national level are available only on a quarterly basis (from the U.S. Census Bureau’s Quarterly Services Survey).  Figure 8 displays year-over-year growth rates Arkansas and the U.S.  The Arkansas figures are constructed by aggregating total county-level sales tax data for the entire set of industries, then averaging over calendar quarters.  The series for the U.S. is the growth rate of Total Revenue for Arts, Entertainment, and Recreation from the Census Bureau.

Figure 8:
Sources: Arkansas Department of Finance and Administration, Arkansas Economic Development Institute, U.S. Census Bureau

The revenue data for the U.S. show a pattern similar to the employment data.  A sharp drop in the second quarter of 2020 represented a 57% decline from the previous year, and revenues remained down more than 30% by the end of the year.  In Arkansas, the second-quarter decline was only 28.4%. Arkansas revenues from Arts, Entertainment, and Recreation recovered sharply in the third quarter, but data for the fourth quarter suggests renewed weakness.

As comparisons in other industries have shown, economic activity in Arkansas was not as severely impacted by the COVID-19 pandemic as in other parts of the nation.  This appears to be true for Leisure and Hospitality sectors as well.  Although employment, sales and revenue have partly recovered from sharp declines in the spring of 2020, economic activity in the Leisure and Hospitality industries remained well below year-earlier levels at the end of 2020.

A PDF file of this report is available HERE.

Personal Consumption Expenditures – 2016

The Bureau of Economic Analysis reported yesterday that Personal Consumption Expenditures (PCE) rose by 3.9% in Arkansas in 2016.  Nationwide, the growth rate was 4.0%.  PCE is not adjusted for inflation, so after accounting for a 1.2% increase in prices from 2015 to 2016, Arkansas real PCE increased by about 2.7%.  As shown in the figure below, Arkansas PCE has been increasing at a slower pace than the national averages since 2012.

Source: Bureau of Economic Analysis
Source: Bureau of Economic Analysis

The fastest-growing components of PCE in Arkansas included Health care (+7.0%), Other nondurable goods (+6.8%), and Food services and accommodations (+5.6%).  The only category of spending to decline from 2015 to 2016 was Gasoline and other energy goods, which was affected by declines in gasoline prices.

Source: Bureau of Economic Analysis
Source: Bureau of Economic Analysis

Per Capita PCE
One of the reasons for the slower growth in Arkansas PCE relative to the U.S. average is the relatively slow population growth rate in Arkansas.  Population growth in Arkansas was approximately 0.3% in 2016, while the comparable growth rate for the U.S. population was 0.7%.  Accordingly, on a per capita basis, Arkansas PCE increased by 3.5% in 2016, slightly exceeding the national average growth rate of 3.2%.

The table below displays spending levels and expenditure shares for per capita PCE in 2016.  Overall, per capita spending in Arkansas was $31,117 — 78.5% of the national average.  It is not surprising that spending per capita is relatively low in Arkansas:  income per capita is below the national average and prices also tend to be well below the national average.  Figures from the Regional Price Party data show that prices are approximately 12.6% lower in Arkansas than the national average, with housing costs particularly low — about 36% lower than the national norm.  These price patterns show through to the per capita spending figures, with expenditures on housing nearly 34% lower than the U.S. average.   For two categories of spending, per capita PCE in Arkansas exceeds the national rate:  Motor vehicles and parts, and Gasoline and other energy goods.  At the other extreme, spending on Transportation services amounts to less than one-half of the per capita level nationwide.

Per Cap PCE 2016