Skip to content

Arkansas Personal Income – 2015:Q2

New data on personal income by state for the second quarter show an increase of 0.8% in Arkansas, compared to 0.9 for the United States.  Over the past four quarters, income has expanded 3.1% in Arkansas and 4.1% nationwide.  Today’s report also included a sharp downward revision to first-quarter income growth for Arkansas:  Originally reported at 1.0%, first quarter growth is now reported to have been only 0.2%.

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

The table below reports growth rates for some of the major components of personal income.  For both Arkansas and the U.S., farm income contributed negatively.  On a year-over-year basis, farm income in Arkansas was down 17.7%, although that is a smaller decline than the 34.7% drop for the U.S.  Arkansas Proprietors’ income was flat in the second quarter and was down 2.1% on a year-over-year basis.  However, that component of income had previously shown much higher growth in Arkansas than for the nation as a whole:  From 2010:Q2 to 2015:Q2, proprietors’ income in Arkansas was up by a total of 56.1% (9.3% annual rate).  For the same five-year period, U.S. proprietors’ income rose 34.1% (6.0% annual rate).

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

The breakdown of earnings by industry shows strengths and weaknesses in Arkansas that mirror the national averages.   Earnings growth was negative in Farming, Forestry & Fishing, and particularly in Mining.  Durable goods manufacturing was negative as well.  Most of the earnings growth was attributable to a subset of service-providing sectors.

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

 

 

 

Maps from AADO Presentation

As part of my presentation to the Association of Arkansas Development Organizations (AADO) on August 26, I presented a series of maps showing demographic and economic variables for Arkansas’ 75 counties.  Some general observations about the maps are discussed in a commentary in this week’s Arkansas BusinessFinding Patterns in Counties’ Statistics (Michael Pakko Commentary).

The maps and correlations among variables are available here:  Pakko-August2015-maps.pdf.

The entire set of slides from the presentation is available here:  Pakko-August2015-pdf.

Arkansas Personal Income – 2015:Q1

Personal income in Arkansas increased by 1.0% in the first quarter of 2015, outpacing the national average 0.9%.  Arkansas’ growth rate ranked 25th among the 50 states.  The 1st quarter increase in income comes on top of an upwardly revised figure of 1.9% growth in the 4th quarter (previously reported at 1.2%).  Over the past four quarters, incomes have increased by 4.9% in Arkansas, compared to 4.4% for the entire U.S.  Relative to the previous cyclical peak (2008:Q2), incomes have risen 22.6% in Arkansas.

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

Farm income and proprietors’ income more generally were down, both in Arkansas and nationally.   On the other hand, personal current transfer receipts were up sharply, reflecting several special factors including a 1.7% cost-of-living adjustment to social security benefits.

Earnings was up 0.7% and accounted for 44% of total personal income growth.  As shown in the following table, earnings growth was relatively strong in Utilities, Construction, Management of companies and enterprises, and Accommodation and food services.  In addition to the decline in farm income, earnings from Manufacturing and Mining were also negative.

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

 

Arkansas Personal Income – 2014:Q4

This morning, the Bureau of Labor Statistics issued its report on State Personal Income for the fourth quarter of 2014 and for calendar-year 2014.  The headline statistic was an national average growth rate of 3.9% from 2013 to 2014.  In Arkansas, the annual growth rate was 3.1%.  Per capita income in Arkansas rose by 2.9% to $37,751, while national per capita income rose 3.0% to $46,129.  Accordingly, Arkansas per capita income remained at 82% of the national average, with a ranking of 44th among the 50 states plus D.C.

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

Total earnings — which includes wages and salaries, employer supplements to wages and salaries, and proprietors income — rose by 1.9% in 2014, compared to a 4.1% increase nationally.  The table below shows the growth rates of total earnings broken down by industry.  Growth rates in Arkansas were below the national average in most sectors.

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

Quarterly Data
For the fourth quarter of 2014, Arkansas personal income increased 1.2% from the previous quarter, and was up 4.5% from the fourth quarter of 2013.  For the U.S., the comparable growth rates were 1.0% quarterly and 4.5% year-over-year. Since the recession of 2008-09, Personal income in Arkansas has been tracking fairly close to the national average.  Compared to the previous cyclical peak (2008:Q2), total income in Arkansas is up 20.6% (an average annual rate of 2.9%).  Since the trough of the recession (2010:Q1), Arkansas income has increased by 24.7% (a 3.5% annual rate).

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

The table below shows some of the key components of personal income growth in the fourth quarter.  Two components are notable.  First, growth of Proprietors’ incomes in Arkansas significantly exceeded the national average in both the quarterly and year-over-year data.  Second, another area of strong income growth in Arkansas — particularly in the year-over-year figures — was personal current transfer receipts.  This component was boosted by payments associated with Medicaid expansion (a.k.a. the “Private Option”).  Today’s report from the BEA noted that “Medicaid transfer receipts increased 13.6 percent in the states where coverage expanded in 2014 under the Affordable Care Act and 7.3 percent in the states where coverage did not expand.”   In Arkansas Medicaid transfers increased by 29.2% from 2013:Q4 to 2014:Q4.  That was ore than twice the national average rate of 13.3%.

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

 

 

Local Area Personal Income – 2013

The Bureau of Economic Analysis released new statistics on local area personal income this morning.  The new data for metro areas and counties show a pronounced slowdown in economic growth in 2013 compared to 2012, but the slowdown was not unique to Arkansas.  Nationwide, per capita personal income growth slowed from 4.4% in 2012 to 1.3% in 2013.   As shown in the table below, Fayetteville was the only metro area in Arkansas that grew faster than the national average in 2013.   Growth in three of Arkansas metro areas was negative in 2013, and with the exception of Northwest Arkansas none of the state’s metro areas experienced growth above 1%.  Revised figures for 2012 show that the slowdown in 2013 was particularly sharp in Arkansas, with all metro areas falling from above average growth in 2012.  Taking a somewhat longer view, two-year average growth rates for all of Arkansas’ metro areas except Texarkana exceeded the nationwide average.

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

The same pattern of sharp deceleration was evident in the county-level data as well.  Each of Arkansas’ 75 counties experienced a slowdown in growth between 2012 and 2013.  Individual county growth rates ranged from a high of 6.9% in Scott County to a low of -4.6% in Hempstead County.  Above-average growth was more common among individual counties than among metro areas:  34 of the state’s counties had growth rates that exceeded the national average.

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

Levels of per capita income continue to vary widely across the state.   In 2013, three of Arkansas’ counties had per capita personal income above the national average:  Pulaski, Union, and Arkansas counties.  At the other extreme, Sevier county had per capita income that was only 55.7% of the U.S. average.

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

Arkansas Personal Income – 2014:Q2 and Revisions

New data on personal income that came out last week included first-published data for the second quarter of 2014, along with revisions going back as far as 2001.  The news on personal income for Arkansans was generally quite positive, but also highlighted some areas of weakness in the state’s economic expansion since the 2008-09 recession.

The news for the most recent quarter was certainly upbeat:  Personal income in Arkansas rose 1.9%–above the national average of 1.5% and ranking Arkansas as the 7th fastest growing state for the quarter.  A revision to the data for the first quarter of the year was also good news:  Previously reported as a decline of 0.2%, the revised data for 2014:Q1 showed an increase of 0.8%.  The update to the first quarter data was largely due to a substantial upward revision to estimates of farm income (which accounted for much of the weakness in the first-published report).  As shown in the chart below, Arkansas personal income is 18.5% higher than at the previous cyclical peak of 2008:Q2.  Over the same period, U.S. personal income is up 17.4%.  On the basis of overall personal income, Arkansas’ cumulative recovery is faring slightly better than the nation’s.

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

The past revisions to the data for Arkansas were also positive.  As shown in the chart below, the data for 2012 and 2013 were revised upward substantially — averaging 2.3% over that two year period.  The spike in income during the fourth quarter of 2012 was subject to a particularly large revision.  Recall that this spike was attributable to income-shifting associated with changes in income tax laws that went into effect at the beginning of 2013 (see, Arkansas Personal Income – How Policy Has Affected Growth).  It is therefore not surprising that the revision for 2012:Q4, in particular, was primarily attributable to an upward revision of the Dividends, Interest, and Rent component of overall personal income.

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

In fact, the entire revision was attributable almost exclusively to the Dividends, Interest, and Rent component.  Of the total average upward revision for 2012 and 2013, Wages and Salaries accounted for approximately 1% and Proprietors’ Income accounted for about 19%.  Transfer Receipts and Employer Contributions for Pensions and Insurance were revised downward.  After those downward revisions in other components, the Dividends, Interest, and Rent component was left to account for 114% of the total revision.

The revision to Dividends, Interest, and Rent reflects a realization that recent earnings on returns to wealth were larger than previously recognized.  But the small revision to Wages and Salaries suggests no improvement in the record on labor compensation during the business cycle expansion in Arkansas.  And even before the data revisions, the pattern was skewed — the new data highlight the imbalance.

The two charts below (using the newly revised data), show how the two components have fared in Arkansas relative to the national average.  The first shows Wages & Salaries, which comprise about 55% of total income in Arkansas.  While the data show that the recession did not impact Wages and Salaries in Arkansas as much as the rest of the nation, the pace of recovery has been slower.  Compared to the peak quarter of total personal income, Arkansas has seen a cumulative increase of 13.0%, while the U.S. increase has been 13.8%.

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

The second chart shows Dividends, Interest, and Rent, which accounts for about 21% of total personal income in Arkansas.  After a downturn of the same magnitude as the U.S. average, this component has shown remarkable growth in Arkansas.  Relative to 2008:Q2, this component has shown a cumulative increase of  27.5% in Arkansas, while increasing a total of 13.3% nationwide.

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

The relative strength of growth in Dividends, Interest, and Rent — in spite of its relatively small share in total income — fully accounts for the fact that Arkansas personal income growth has exceeded the national average during the economic expansion.  The relatively sluggish performance of the Wages and Salaries component highlights the weakness that appears to be holding back the recovery of the state’s labor markets.

Arkansas Personal Income – 2014:Q1

New figures came out this morning showing that Arkansas personal income declined by 0.2% in the first quarter.  Data for the fourth quarter of 2013 were also revised downward to show a 0.2% decline in that quarter as well.  Compared to the first quarter of 2013, the new data indicate year-over-year growth of 1.0%.  The weakness in Arkansas income was concentrated in farm income.  The report from the Bureau of Economic Analysis noted that first-quarter farm earnings declined by more than $1 billion in each of several agricultural states, including North Dakota, Minnesota, Iowa, Arkansas and Nebraska.  The report noted that the declines reflected falling crop prices.  Nonfarm income in Arkansas increased 0.9% in the first quarter, and was up 2.8% from the first quarter of 2013.

PI-2014Q1-map

The declining income in Arkansas over the most recent two quarters contrasts with modest but positive growth in personal income nationwide.  For the U.S. as a whole, personal income was up 0.8% in the first quarter following a (revised) 0.5% increase in the fourth quarter of last year.  The most recent data puts U.S. personal income 14.8% higher than its pre-recession peak.  For Arkansas, first quarter income was 13.6% higher than the previous cyclical peak.

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

Over the past four quarters, the price index for personal consumption expenditures increased by 1.1%.  Hence, on an inflation-adjusted basis, real incomes in Arkansas have fallen 0.1% over the past year.  For the U.S., real income increased by 2.5% over the same period.

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

The table below shows the critical role that declining farm income played in the first quarter report.  Total earnings (which includes wages and salaries, supplements to wages and salaries, and proprietors income) contributed -.42% to the quarterly decline in Arkansas personal income. The contribution of farm income to that total was more than a full percentage point.  All other sectors combined contributed +0.65% to personal income growth.  Some sectors showed notable growth, including Construction and Nondurable goods manufacturing.

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

 

Regional Price Parities and Income – New Data for 2012

When the 2013 data on state personal income were recently released, we noted that per capita income in Arkansas was approximately 81% of the national average — essentially unchanged from the previous year.  But when it comes to purchasing power, incomes in Arkansas imply a higher standard of living than suggested by the 81% figure.

This morning, the Bureau of Economic Analysis released their first official set of statistics on Real Personal Income for States and Metropolitan Areas. (Experimental data had previously been released for years prior to 2012, see here and here).  The data confirmed that the cost of living is significantly lower in Arkansas than elsewhere in the U.S.  The overall price parity figure for Arkansas was 87.6, implying that prices were approximately 12½% lower than the nationwide average in 2012.   Adjusting incomes for this difference in the cost of living, Arkansas real incomes have a purchasing power that is 92.6% of the U.S. average.

As shown in the figure below, the 2012 statistics showed Arkansas to be the second-lowest cost state in the nation.

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

Regional price parities are generally lower in non-metropolitan areas than in metropolitan areas, and tend to be higher in the larger metro areas.  Differences in goods prices tend not to vary geographically as much as prices for services, and much of the regional variation in prices is driven by differences in rent costs.  The table below illustrates these patterns for Arkansas, breaking down prices of goods and services for metro- and non-metro areas of the state.   In the non-metro portions of the state, prices are generally 15% lower than the national average, led by rental costs that are just over half the U.S. mean.  The most expensive areas of the state are Memphis, Little Rock, and Fayetteville, each with an overall price parity exceeding 90.0.  Among metro areas, Jonesboro has the lowest cost of living.  In fact, today’s announcement from the Bureau of Economic Analysis showed Jonesboro to be fourth on the list of the most inexpensive metro areas in the nation.

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

 

Arkansas Personal Income – 2013:Q4

New data from the Bureau of Economic Analysis (BEA) shows that Arkansas personal income rose by only 0.2% in the fourth quarter of 2013, compared to a growth rate of 0.6% for the U.S.  Over the four quarters from 2012:Q4, growth was 0.7% in Arkansas and 1.4% for the U.S.  The year-over-year growth rates are distorted by the expiration of the payroll tax holiday at the end of 2012.  In the absence of that change in tax policy, growth would be nearly one full percentage point higher.  Since the official end-date of the recession (2009:Q2), personal income growth has averaged approximately 3.7% for both the state and the nation.

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

Personal income data are not adjusted for inflation. To account for changes in purchasing power over time, the chart below uses the price index for personal consumption expenditures to illustrate real (inflation adjusted) personal income. After adjusting for price changes, real personal income in Arkansas was -0.1% in the fourth quarter and -0.3% over the most recent four quarters. For the U.S., quarterly real income growth was 0.3%.  From the fourth quarter of 2012, U.S. real income growth was 0.4%.

Sources:  Bureau of Economic Analysis, author's calculations
Sources: Bureau of Economic Analysis, author’s calculations

Annual Data for 2013
The news release from the BEA focused on annual averages for 2013 compared to the previous year.  On that basis, Arkansas income growth was 2.2%, compared to 2.6% for the U.S.  In terms of year-over-year growth, Arkansas ranked 35th among the 50 states.  The release noted that the national price index for personal consumption expenditures was 1.1% over the same period, implying real income growth rates of approximately 1.1% for Arkansas and 1.5% for the U.S.

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

The BEA news release also summarized data for per capita personal income.   Arkansas per capita income was $36,086, up 1.8% from 2012.  This figure represents approximately 81% of the national average.  Arkansas’ rank among the 50 states dropped from 45th to 46th.

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

(Note:  If it were included in the state rankings, the District of Columbia would be ranked #1 with a per capita income of $74,513 — more than 67% above the national average.)

Earnings by Industry
Total earnings in Arkansas increased by 2.9% in 2013, compared to 3.4% nationwide.*  The table below summarizes earnings by industry.  Comparing Arkansas with the U.S. total, notable sectors of weakness included construction and manufacturing.  Earnings in several service-providing sectors in Arkansas exceeded nationwide growth rates; particularly in the categories of professional and business services.  Farm income in Arkansas also outpaced the national average.

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

__________

*Total earnings includes wages and salary disbursements, supplements to wages and salaries, and proprietors’ income.  It does not include dividends, interest and rent; or personal current transfer receipts — nor does it adjust for employer and employee contributions for government social insurance.

 

Arkansas Personal Income – New and Revised Data

Arkansas personal income increased by 0.6% in the second quarter, compared to a 1.0% increase in the U.S. data.  Compared to a year earlier, Arkansas personal income was up 2.1%.  Nationwide, the four-quarter increase was 2.6%.

The most recent report also incorporated the latest comprehensive (benchmark) revision of the data.  As illustrated in the chart below, the newly revised data suggest that the drop in incomes during the 2008-09 recession was slightly less severe — but more protracted — than indicated by the pre-revision data.  Previously-published data showed a peak-to-trough decline of 4.7% (from 2008:Q2 through 2009:Q3).  The new data show a downturn off only 3.5% for the same period, but with a slower trajectory of recovery through 2010.  Since the beginning of 2011, however, the revised data show a slightly higher growth rate than previously reported.

Source: Bureau of Economic Analysis

Data for U.S. personal income were also revised, altering the comparison of Arkansas and U.S. income growth during the recession and recovery.  As shown in the next figure, the new data suggest that the downturn in Arkansas was nearly as large as the U.S. average.  Previously, the data suggested that Arkansas’ downturn was not as severe as the nation’s.  On the other hand, the upward revision to Arkansas data in 2011 and 2012 now indicates that Arkansas is on a more rapid path of recovery than the nation as a whole.  As of the second quarter of 2013, personal income in Arkansas is 12.9% higher than its pre-recession peak.  U.S. personal income has shown a net increase of 11.9% over the same period.

Source: Bureau of Economic Analysis

The newly-revised data had little impact on estimates of how recent changes in tax policy has affected personal income growth (see previous post).  The expiration of the payroll tax holiday at the beginning of the year is estimated to have lowered first quarter growth by approximately 0.9%.  The surge in dividend income in the fourth quarter of 2012 (to avoid higher income tax rates in 2013) added at approximately 0.7% to end-of-year income — subtracting a commensurate amount from first quarter growth.  Combined, these two effects reduced first-quarter growth by 1.6%.  The reported first-quarter growth rate of -0.9% (revised) would have been approximately +0.7% in the absence of these changes in tax policy.

Sources: Bureau of Economic Analysis, Institute for Economic Advancement

Adjusting for the expiration of the payroll tax holiday.  Income growth from 2012:Q2 through 2013:Q2 would have been approximately 3.1% for Arkansas and 3.6% for the U.S.

# # #

Note:  Our analysis of the second-quarter personal income data was delayed by the Federal government shutdown.  The data were originally released on September 30, but were inaccessible from October 1 through October 16 while the website of the Bureau of Economic Analysis was non-functional.