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Arkansas GDP – 2023:Q4

According to the latest figures from the Bureau of Economic Analysis, Arkansas Real Gross Domestic Product grew at an annual rate of 2.2% in the fourth quarter of 2023, surpassing the 0.7% rate reported for the third quarter, but well short of the national average growth rate of 3.4%. On a year-over-year basis, Arkansas was up 1.1%, compared to 3.1% for the U.S. Comparing fourth-quarter growth rates across the 50 states, Arkansas ranked number 42.

Source: Bureau of Economic Analysis

As shown in the table below, Arkansas growth rate was constrained by declines in several sectors, including Agriculture, Wholesale Trade, Administrative & Support, and Accommodation & Food Services. Retail Trade and Durable-goods Manufacturing were the strongest growth sectors, both here an Arkansas and nationwide. The health care sector was another major contributor to growth.

Source: Bureau of Economic Analysis

Although real GDP growth has gone through two slowdowns in the past two years, the state’s cumulative growth over the past four years has outpaced that of the U.S. Since the pre-pandemic quarter, 2019:Q4, the Arkansas economy has expanded by 9.9%, compared to 8.2% for the U.S.

Source: Bureau of Economic Analysis

The largest setback for Arkansas since the Covid-contraction was in early 2022. As a result, the annual figures for 2023 versus 2022 show a growth rate of 2.5%, matching the U.S. pace. By this metric, Arkansas growth rate ranked #22 among the 50 states. In the annual figures, a decline in the Agriculture sector lowered growth by nearly a full percentage point.

Arkansas GDP – Revisions and 2023:Q2

After a delay of more than two months, the comprehensive revisions to state-level GDP were released this week by the Bureau of Economic Analysis. The new data showed a small decline in Arkansas GDP for the second quarter of 2023 (-0.4% seasonally adjusted annual rate), and also revealed growth patterns in 2021 and 2022 that differ significantly from previously published estimates.

The revisions were part of a comprehensive reassessment that takes place every five years, in which new and revised source data is incorporated into the statistics, along with a re-estimation of seasonal factors and price deflators. The figure below shows the impact of the revisions on quarterly growth rates since 2021. The revised statistics show generally stronger growth than initially reported during 2001 and the second half of 2022.

Source: Bureau of Economic Analysis

A comparison of the previously published and revised statistics for the first quarter of 2022 shows how much data revisions can alter our view of history. Originally reported as growth at a seasonally adjusted annual rate of 6.5%, the revised statistics show that Arkansas GDP contracted at a rate of 2.2%. The second quarter growth rate was similarly revised lower.  Clearly, the first half of 2022 showed slower growth in the state’s output than was originally reported.

The sharp downward revision to 2022:Q1 is not attributable to any single factor:  Several service-providing sectors were initially reported as showing positive growth for the quarter, with revisions showing negative growth. One very large revision: Management of companies and enterprises was originally estimated to have expanded at a pace of over 200% in 2022:Q1, whereas the revised growth rate was 11.7%.  Nevertheless, the Management sector did show a substantial increase in the third quarter (not initially reported) that made up for the revision in the first quarter.  The timing and composition of growth changed, with little effect on cumulative growth.

Source: Bureau of Economic Analysis

The impact on cumulative real GDP growth, with a comparison to U.S. growth, is shown in the figure below. For the period 2019:Q4 through 2023:Q1, cumulative growth for Arkansas was 9.2%, compared to the initially published estimate of 7.8%. After the small first-quarter decline, cumulative GDP growth by the second quarter was 9.1%—three percentage points greater than cumulative growth in U.S. GDP over the same period.

Source: Bureau of Economic Analysis

As for the decline in 2023:Q2, the breakdown in the table below shows that the slow growth was entirely attributable to a sharp decline in agricultural output (-70.8% at a seasonally adjusted annual rate), which had the effect of subtracting nearly 2.8 percentage points from the state’s total GDP growth. In other words, non-agricultural GDP expanded at a rate of 2.4% in the second quarter.

Source: Bureau of Economic Analysis

 

Arkansas Personal Income and GDP

New reports on personal income and GDP for the first quarter show signs of relative weakening of the Arkansas economy.

Personal income increased at a 3.2% annual rate in the first quarter, well below the national growth rate of 5.1%. (Personal income figures are not adjusted for inflation.) Arkansas growth rate ranked among the lowest in the nation, ranking 45th among the 50 states.  The report from the Bureau of Economic Analysis showed reported that “Nationally, Nationally, earnings, property income (dividends, interest, and rent), and transfer receipts all contributed to the increase in personal income.”  However, the growth rate of net earnings was only 0.1% in Arkansas, the lowest growth rate in the nation.

Source: Bureau of Economic Analysis

Among the components of earnings, wages and salaries increased at a 4.6% rate, outpacing the nationwide growth rate of 2.4%. However, proprietors’ income declined at an annualized rate of 21.8%.

Source: Bureau of Economic Analysis

The decline in proprietors’ income was, in turn, entirely attributable to farm proprietors’ income. In fact, total farm income declined at a rate of 54.1%. Rising farm income had been a contributing factor to higher growth rates in 2022, so although the decline in the first quarter is disappointing, farm income remains a positive contribution to total earnings.

Source: Bureau of Economic Analysis

Quarterly growth rates of personal income can vary significantly without necessarily indicating a change in trend. If we consider the longer-term performance of income growth in Arkansas, the first-quarter results are disappointing but they do not suggest an imminent downturn. In fact, the growth rate of total personal income over the past four quarters has been 6.2% in Arkansas and 5.1% for the U.S.

Source: Bureau of Economic Analysis

State GDP
Figures for Arkansas GDP showed similar relative weakness. Real GDP growth in the first quarter came in at an annualized growth rate of only 0.2%, compared to a nationwide growth rate of 2.0% (inflation-adjusted).  Arkansas’ growth rate was among the lowest in the nation, with only Rhode Island showing slower growth (0.1%).

Source: Bureau of Economic Analysis

As we saw in the case of personal income, much of the first quarter slowdown in GDP was attributable to farm sector. In contrast to a positive contribution to the national growth rate, the contribution of Agriculture, forestry, fishing, and hunting was to subtract 0.6% from GDP growth in Arkansas. Other factors subtracting from growth included Manufacturing, Finance and insurance, and Real estate.  In contrast, significant positive contributions were recorded for Construction, Wholesale and Retail trade, as well as Accommodation and food services.

Source: Bureau of Economic Analysis

As is the case for personal income, the first quarter performance of Arkansas GDP is disappointing, but does not necessarily indicate a significant change in trend. Over the longer term, Arkansas growth has been relatively strong. Since the fourth quarter of 2019, cumulative growth has totaled 7.8% in Arkansas, compared to 5.6% for the U.S.

Source: Bureau of Economic Analysis

The next release of GDP and Personal Income data will be in September, which will include annual revisions to the data.

Arkansas GDP – 2022:Q4

The latest data from the Bureau of Economic Analysis reports that real GDP growth in Arkansas proceeded at a 3.2% annual rate in the fourth quarter. U.S. GDP growth rate for the quarter was 2.6% for the quarter.  Growth over the four quarters of 2022 totaled 1.9% in Arkansas, compared to 0.9% for the U.S.

Source: Bureau of Economic Analysis

Growth in the fourth quarter adds to the gap between GDP growth in Arkansas and the U.S. that has emerged since the onset of the COVID-19 pandemic. Cumulative growth since the fourth quarter of 2019 has been 7.7% in Arkansas and 5.0% for the U.S.

Source: Bureau of Economic Analysis

Breaking down the sources of GDP growth by sector, we see that Agriculture was an important contributor to Arkansas’ growth in the fourth quarter (as we also see in the nominal personal income statistics). Also contributing to Arkansas’ growth were Durable Goods Manufacturing and the collection of sectors referred to as Trade, Transportation and Utilities. Growth in other service sectors was mixed.

Source: Bureau of Economic Analysis

Note: The Bureau of Economic Analysis released data on both Personal Income and Gross Domestic Product by State on Friday, March 31: Gross Domestic Product by State and Personal Income by State, 4th Quarter 2022 and Year 2022.  The Personal Income data are discussed in a separate post.

 

Arkansas GDP – 2022:Q3

The Bureau of Economic Analysis reported today that Arkansas GDP expanded at an annual growth rate of 1.3% in the third quarter.  The BEA report noted that 47 states plus the District of Columbia showed positive growth.  Arkansas’ growth rate ranked 41st among the states, and was significantly lower than the U.S. growth rate of 3.2%.

Source: Bureau of Economic Analysis

Data for previous quarters was unrevised, so the latest data represents an update to our previous report.

Although Arkansas’ growth rate has been slower than the national average in the second and third quarters of 2022, cumulative growth since 2019:Q4 shows Arkansas well-above the U.S.  In the 11 quarters since that pre-COVID reference point, Arkansas cumulative growth rate of 6.9% translates to an average annual rate of 2.4%.  By comparison the U.S. annual average growth rate over that period was 1.6%.

Source: Bureau of Economic Analysis

The growth rate of implicit price deflators (a measure of inflation) slowed sharply in the third quarter. For all private-sector industries, the deflator for Arkansas increased at an annual rate of 5.3%, down from 11.6% in the second quarter.  Over the four quarters from 2021:Q3 through 2022:Q4, this proxy for inflation was 8.9%.  The deflator for the U.S. slowed as well, with a four-quarter growth rate declining to 7.6% in 2022:Q3.

Source: Bureau of Economic Analysis

Returning to real GDP, the contribution of sectors to third quarter growth is broken down in the table below.  Arkansas showed larger declines than the national average in good-producing sectors.  Service-providing sectors showed positive growth rates both nationwide and here in Arkansas, and in many cases contributed more to Arkansas GDP growth than to U.S. growth.

Source: Bureau of Economic Analysis

The concentration of the growth slowdown in goods-producing sectors is consistent with the slowing we would expect in response to a higher interest rate environment, and is likely a precursor to continued weakness going into 2023. Nevertheless, newly-released GDP data are subject to considerable future revision, so the latest figures provide only a rough indication of recent trends.

 

Arkansas GDP – 2022:Q2

New data for state GDP was released today by the Bureau of Economic Analysis.  Arkansas GDP was reported to have declined at an annual rate of 3.0% in the second quarter compared to a more modest rate of decline of 0.6% for the United States.  Arkansas GDP was previously reported to have declined in the first quarter of 2022 as well, but that statistic has been revised to show a growth rate of +6.5%.  Arkansas’ second quarter decline was among the largest in the nation, exceeded only by Indiana (-3.3%), Connecticut (-4.7%), and Wyoming (-4.8%).  Overall, GDP decreased in 40 states plus the District of Columbia.

Source: Bureau of Economic Analysis

Not only were the data for 2022:Q1 revised, but today’s release also included revisions back to 2017:Q1.  The revisions increased the cumulative level of Arkansas GDP considerably:  as of the first quarter, revised GDP was 3.9% higher than previously-reported estimates. The largest revisions were for 2020:Q1 (just before the pandemic-related downturn) and the revision for the first quarter of 2022.

Source: Bureau of Economic Analysis

With the upward revision to the path for Arkansas GDP, the state’s output shows even more indication of recovery since the pandemic recession.  Cumulative growth from 2019:Q4 stood at 6.5% for Arkansas, compared to 3.5% for the U.S.

Source: Bureau of Economic Analysis

Breaking down the sources of the second quarter decline in GDP, we see that Construction, Manufacturing and Wholesale trade were substantial negative components for both Arkansas and the U.S.  Nationally, Agriculture was a weak sector, although the positive contribution of agriculture to Arkansas GDP was substantial.  The weakest sector for Arkansas, accounting for over three-quarters of the overall decline, was Management of Companies and Enterprises. It’s not clear how to account for this factor, but we can note that the second quarter decline represented a partial offset of a sharp upward spike in the first quarter.

Source: Bureau of Economic Analysis

One other interesting piece of information that can be gleaned from the GDP report regards inflation.  GDP is reported for both nominal (dollar-value) and real (inflation-adjusted) measures. The ratio between the two defines an implicit price index for GDP.  The chart below shows year-over-year changes for the implicit price index for private-sector GDP. It suggests that there was less disinflation in Arkansas than the rest of the country in 2020, and a higher rate of price increases since than.  From 2021:Q2 to 2022:Q2, this measure of inflation was 9.7% for Arkansas compared to 8.2% for the U.S.

Source: Bureau of Economic Analysis

The data showing larger price increases for Arkansas GDP than for the U.S. could indicate the obvious conclusion: that inflation is running higher here in Arkansas. On the other hand, if the BEA’s price adjustments are overstating Arkansas inflation, then real GDP growth could be understated. There is certainly enough uncertainty about future data revisions to not rule out the latter possibility.

 

Arkansas GDP – 2021:Q1

The U.S. Bureau of Economic Analysis recently published state-level estimates of Gross Domestic Product for the first quarter of 2021.  The report showed widespread recovery from the COVID-19-induced recession of 2020, with all 50 states showing sizable quarterly growth.  Annualized rates ranged from 4.5% in Texas to 10.9% in Nevada.  Arkansas’ growth rate for the quarter was 6.9%, slightly higher than the nationwide average of 6.4%.

A breakdown of quarterly growth rates by sector shows that Arkansas outpaced the national average in most industries.  For some sectors, including Retail trade and Transportation & Warehousing, Arkansas’ growth rate was slower in the first quarter, but had already displayed above-average recovery in the second half of 2020.  The largest contributor to growth was in Durable Goods Manufacturing, which contributed nearly 2 percentage points to the state’s growth rate.  The report from the BEA noted that “This industry was the leading contributor to the increases in 24 states.”  Arkansas trends were also consistent with nationwide patterns showing rapid growth in Information Services, as well as in  Professional, Scientific, and Technical Services.  Arkansas, along with 35 other states, also followed the national trend of seeing negative growth in Nondurable Goods Manufacturing.

Source: Bureau of Economic Analysis

The second two columns of the table show cumulative GDP growth since the fourth quarter of 2019 (which has been officially designated as the quarterly business cycle peak).  Arkansas is one of only fifteen states that are producing more now than before the pandemic (see also the figure below).  In other words, Arkansas and 14 other states have apparently completed the recovery phase of the economic expansion. In some sectors, growth has been substantial: for example, Finance and Insurance has grown at an average rate of 9.0% over the most recent 5 quarters covered.  Several sectors continue to show the lingering effects of the economic contraction at both the state and national levels: production remains lower than pre-pandemic levels in Transportation & Warehousing, Education, Health Care, and Nondurable Goods Manufacturing.

Source: Bureau of Economic Analysis

Data on GDP, particularly at the state level, is often subject to substantial revision.  The BEA will report revised historical statistics when the second-quarter data are released on October 1.

 

 

 

 

Arkansas GDP During the Pandemic

State-level GDP data for the third quarter were released over the holidays (December 23).  The latest data showed that Arkansas Real GDP increased 7.1% in Q3 (an annual rate of 31.8%).  The nationwide growth rate was 7.5% (annual rate 33.4%).  The change in real GDP was positive for all 50 states plus the District of Columbia, with annual growth rates ranging from 52.2% in Nevada to 19.2% in D.C. It was generally the case that states that had experienced the largest downturns in the first half of the year rebounded to have higher growth rates in the third quarter.

As illustrated in the figure below, U.S. GDP declined by 10.1% between 2019:Q4 and 2020:Q2, while Arkansas GDP declined by 8.8%.  After the third quarter increases, U.S. GDP remained 3.4% lower than its level at the end of 2019.  Arkansas GDP was down only 2.3%.

Source: Bureau of Economic Analysis

The table below decomposes the changes during 2020 by major industry sector for Arkansas and the U.S.  In many of the most pandemic-sensitive sectors (e.g. Accommodation and Food Services) the declines over the first half of 2020 were smaller in Arkansas than the U.S. average.  For most sectors, the third-quarter recovery brings Arkansas closer to pre-pandemic production levels.  In some sectors, Arkansas GDP growth has moved into positive territory, with total Q3 output above levels of 2019:Q4.

Source: Bureau of Economic Analysis

Although the third-quarter GDP increases represent significant recovery from the economic downturn in the first half of 2020, it is likely that many service-related sectors will remain remain below total capacity for some time as efforts to control the COVID-19 pandemic continue.

Arkansas GDP – 2020:Q1

In the latest report on state-level GDP, the U.S. Bureau of Economic Analysis reported that Arkansas’ economy contracted at a 5.0% annual rate in the first quarter, the same rate as the U.S.  That was also the median growth rate among states.  GDP declined in all 50 states, with growth rates ranging from -1.3% in Nebraska to -8.2% in New York and Nevada.

Source: Bureau of Economic Analysis

Over the course of 2018 and 2019, Arkansas GDP growth averaged 1.9% compared to the U.S. average growth rate of 2.4%.  Arkansas growth rate had exceeded that of the U.S. in the second half of 2019.  Accordingly, year-over-year increase for Arkansas is slightly higher than the U.S.: +0.5% versus +0.3%.

Source: Bureau of Economic Analysis

The breakdown of GDP by sector shows that although Arkansas contracted at the same rate as the U.S., the composition of the decline was somewhat different.  Arkansas benefited from relatively strong growth in Construction and Management of Companies and Enterprises.  Manufacturing contributed more to Arkansas decline than to the U.S. for two reasons:  Manufacturing represents a larger share of the state’s output and both durable goods and nondurable goods manufacturing declined more sharply in Arkansas.  In sectors considered most-affected by pandemic-related shutdowns (e.g. Retail Trade, Health Care, Accommodation & Food Services, etc.), Arkansas’ declines tended to be smaller than the national average.

Source: Bureau of Economic Analysis

 

Metro Area GDP – 2016

The Bureau of Economic Analysis released 2016 GDP data for metropolitan areas earlier this week. The data for Arkansas metro areas show relatively strong growth in Fayetteville, Jonesboro, and Texarkana. Real GDP contracted in Fort Smith, Hot Springs and Pine Bluff.

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

It should be noted that real GDP data are adjusted for the overall rate of inflation.  However, they are not adjusted for changes in population growth.  That is, real GDP growth can be decomposed into two components: growth due to population increase and growth due to the expansion of output per capita. As shown in the table below, the decomposition shows differing characteristics of growth in the various metro areas covering parts of Arkansas. For example, nearly 60% of the GDP growth in the Fayetteville metro area is attributable to population growth, leaving a per capita growth rate of 1.6%. On the other hand, slow population growth in Texarkana means that most of the overall GDP growth in that metro area reflects increases in output per person — at an even faster pace than in Northwest Arkansas!  In Pine Bluff, population is contracting more rapidly than overall GDP growth, implying a positive growth rate per person in spite of the overall negative growth rate.

Sources: Bureau of Economic Analysis, Census Bureau
Sources: Bureau of Economic Analysis, Census Bureau

GDP is intended to measure the entire output of an economy — the sum of all goods and services produced within a particular geographic area.  The calculation of such a comprehensive measure of economic activity is necessarily complex and is often subject to revision as more information becomes available.  Consequently, the initial estimates of 2016 metro area GDP that were released this week are quite likely to be revised in the future.

The data released earlier this week includes revisions to the previously published estimates for 2001-2015.  As illustrated by the set of charts below, the magnitude of these revisions can be substantial. For example, the data that came a year ago showed Hot Springs growth in the range of 3 to 4% in 2012 and 2013. The newly revised and updated figures show growth over the same period to have been negative 3 to 4%.  This is a rather extreme example of the revisions typically observed, but it highlights the uncertainty associated with originally published estimates of metro area GDP statistics.

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