The monthly employment report for August continued to show healthy labor market conditions for the State of Arkansas. The unemployment rate was unchanged at 3.3%, significantly lower than the national unemployment rate of 4.2%. After coming back down from a high of 3.7% at the end of 2023, Arkansas unemployment rate in August was slightly lower than it was one year earlier.
Source: Bureau of Labor Statistics
Underlying the stable unemployment rate was a small decline in the number of unemployed (-54) and a substantial increase in the total number of employed (+4,116). Household employment has now gone for ten months without a monthly decline, and is up 23,681 from August 2023. The Labor force has shown consistent growth as well—particularly over the past three months.
Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)
Recent increases in the labor force have had the effect of raising Arkansas’ labor force participation rate. As of the most recent observation, labor force participation is now at 58.0%—essentially the same as the rate that prevailed during 2019.
Source: Bureau of Labor Statistics
Payroll Employment Nonfarm payroll employment increased by 2,900 jobs in August. However, the figure for July was revised downward by 1,300 (-3,000, revised) so that the August employment level was basically unchanged from June. Nearly every sector saw employment increases in August, with the notable exceptions of Leisure & Hospitality Services and Other Services. Manufacturing was up for both durable and nondurable goods. After sagging for four months, employment in Construction rebounded with 700 net new jobs in August. Similarly, Professional and Business Services and Education & Health services showed robust increases for the month.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Employment in Leisure and Hospitality services declined by 2,000 jobs in August—the fourth consecutive monthly decline. Nevertheless, having increased sharply in the first three months of the year, total employment in the Leisure & Hospitality sectors is down only 400 jobs since December of 2023. One speculative explanation for this unusual pattern is that firms in the Leisure & Hospitality sectors added staffing in advance of the total solar eclipse event in April 2024, and have since gone back to sustainable employment levels.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
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Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format consistent with the monthly news release from the Arkansas Division of Workforce Services, can be found here: Table-Seasonally Adjusted NFPE.
The AEDI index of Arkansas retail sales declined by 0.7% in the first quarter of 2024, while the Census Bureau’s Retail Trade and Food Services for the U.S. declined by 0.2%. Compared to a year earlier, the Arkansas measure is up by 1.2%, compared to an increase of 1.4% in the U.S. measure.
Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau
First quarter sales in Arkansas were impacted by severe cold and ice in January. Nearly every retail sector showed a distinct decline in the monthly data. For example, the figure below shows sales for Furniture and Home Furnishing stores, where the decline in January 2024 is nearly as distinct as for the snowstorm of February 2021 (albeit without the sharp increase in the following month).
Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau
The furniture store sector is also the most prominent among several that has been trending downward for several quarters–down 20% from a year ago. In the U.S. data, sales at furniture stores have declined by 11% over the past four quarters. Other sectors that have been declining in both Arkansas and the U.S. include Electronics and Appliance Stores, Building Materials Stores, and Gasoline Stations (the latter is primarily attributable to declining gasoline prices).
Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau
Some elaboration on the Motor Vehicle and Parts Dealers data are in order:
The series on Motor vehicle and parts dealers required an adjustment to the timing of auto sales versus tax receipts during 2023. As of August 1, 2023, the time limit for car buyers to register their vehicles (and pay taxes) was raised from 30 days to 60 days. As a consequence, the timing of tax receipts relative to sales data had to be adjusted. Our approach was to assume that the lag between purchase and tax payment was a weighted average of one month and two months, with the weights evolving over the course of the year, but always summing to one. This had the effect of raising estimated auto sales during the year, and eliminating some of the volatility that emerged in the unadjusted data.
Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute
Carrying the analysis forward, the data for 2024 (assumed now to correspond to a two-month lag) shows a sharp drop in March 2024. March is typically a strong sales month for autos, so the seasonally adjusted decline corresponds to an increase in sales that was not proportionately as large as is “typical”. The result is a two percent decline for the first quarter of 2024.
Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau
Going forward, we will continue to evaluate the timing of sales and tax revenues for motor vehicle sales. For now, consider a measure of total retail trade and food service sales that excludes autos. The quarterly decline for this measure was 0.3% (compared with -0.7% for the total that includes autos). Compared with 2023:Q1, the measure excluding autos was up by 0.3%, rather than by the 1.2% reported for the inclusive measure.
Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau
One final note to bear in mind: The sales data are not adjusted for inflation. The nominal value of total retail sales was approximately 40% higher than average spending in 2019. After using the consumer price index to adjust for inflation, the growth in real consumer spending since 2019 has cumulated to only 15%.
Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau, U.S. Bureau of Labor
The latest information on metro area employment and unemployment showed stability in labor markets across the state. Unemployment rates were unchanged in all of Arkansas’ metro areas except for Texarkana, where the rate ticked up by 0.1 percentage points.
Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates.
Meanwhile, changes in nonfarm payroll employment were mixed. Employment increased n Northwest Arkansas, Fort Smith, Hot Springs, and Jonesboro. Declines were registered for Central Arkansas, Memphis, and Pine Bluff. Texarkana–the only metro area to see a change in the unemployment rate–had payroll employment that was essentially unchanged from the previous month.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Over the longer run, employment growth trends have diverged considerably. Over the past year Fayetteville continues to be the most rapidly growing metro area in the state, followed by Little Rock and Fort Smith. Growth in Jonesboro slowed in 2022 and 2023, but has picked up thus far in 2024. Hot Springs is down slightly over the past 12 months, and has seen little growth since mid 2022. Memphis, Pine Bluff, and Texarkana remain in the doldrums, with employment levels lower than at the onset of the Covid Contraction.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES).
With little other information of interest to consider regarding metropolitan areas, this is an opportune time to look at a snapshot of county-level unemployment rates around the state. On the map below, the metro areas with the lowest unemployment rates (Northeast, Northwest, and Central) stand out, with Benton and Washington counties having the lowest rates of all (2.4% and 2.3%, respectively). Counties with unemployment rates above 5% are clustered in the southeastern part of the state, with the highest unemployment rates in Chicot and Desha counties (both at 5.7%).
On April 8, 2024, Arkansas will be in the path of totality for a total eclipse of the sun. Based on past experience, there are widespread expectations that our state will experience an enormous influx of visitors to view the event. The last total eclipse to cross the U.S, in August 2017, was cited as the largest single tourist event on record for some of the affected states.
This raises an obvious question: What will be the economic impact on the state’s economy?
The experience of states that were in the path of totality during the eclipse of 2017 can serve as a model for what to expect in Arkansas this year. The 2017 eclipse took place on a Monday, as will this years eclipse, so the event became a weekend-long celebration. An economic impact study for Wyoming found that 77% of out-of-state visitors stayed overnight, with an average visit of 4.1 days and 3.5 nights.[1] A study for Nebraska found that about 87% of visitors were from out of state, and estimated an average stay of three days.[2]
The analysis of Wyoming’s experience included the results of a detailed expenditure survey that broke down the spending of visitors by length of stay and type of accommodation (motel/hotel, camping, rental home, stay with friends or family, day trip-only). Lacking any specific information about how Arkansas might differ in terms of the mix of day-visitors versus overnight visitors or the choices of accommodation, we will simply adopt the average spending per visitor from the Wyoming survey, adjusted for inflation since 2017, as our out-of-state tourist spending profile.
Broken down by spending category, the Wyoming results suggest the following spending profile per visitor in inflation-adjusted 2024 dollars:
Table 1:Sources: Wyoming Office of Tourism, Bureau of Labor Statistics, and author’s calculations
By using these average spending per visitor figures, adjusted for inflation, we are implicitly assuming that the spending profile of the average visitor to Arkansas will match that of the average visitor to Wyoming in 2017.
The remaining question to consider is this: How many visitors will come from outside of Arkansas?
For that, we can turn to some research presented on the website GreatAmericanEclipse.com. Researcher Michael Zeiler presents a model of where eclipse travelers will visit the path of totality. With data on US population distribution from the U.S. Census and a model of the road distribution network using ArcGIS software from Esri, Zeiler estimates a model of eclipse visitation based on the idea that people who live closer to the path of totality are more likely to visit and that they will travel the shortest drive distance to get there.[3]
For Arkansas, Zeiler’s model predicts estimates of total visitors ranging from a low of 84,000 to a high of 337,000. That’s a pretty wide range, but it gives us some idea of the order-of-magnitude to expect.[4]
In an effort to narrow down the range, we compared the predictions of Zeiler’s model for states in 2017 to the actual outcomes. South Carolina was expected to have the largest number of eclipse travelers, with a range of 547 thousand to 2.2 million. The actual number of total eclipse tourists was estimated at 1.6 million, comfortably within the projection range.[5] In Wyoming, however, the estimated number of travelers (including in-state travelers) was estimated to be 261 thousand—36% higher than the 192 thousand high-end prediction. Similarly, eclipse travelers in Nebraska totaled 708 thousand, 52% higher than the model’s high estimate. One speculative explanation of this pattern of prediction errors is that people might be more inclined to travel further in the West and Midwest to see an eclipse than they are along the highly-populated Atlantic coast.
In the results reported below, we present an optimistic range of projections. We take our low-end projection to be the midpoint of Zeiler’s two forecasts for Arkansas. For the higher estimate, we take Zeiler’s upper bound and add 36% (the excess visitors observed in Wyoming). Specifically, we present scenarios in which the total number of eclipse travelers ranges from 210 thousand to 460 thousand. Assuming that 75% of those total travelers are visiting from out of state (the Wyoming average), the total number of out-of-state visitors ranges from 160 thousand to 350 thousand.
Using these estimates for the number of travelers, along with the spending per out-of-state visitor spending in Table 1, we run a tourist-spending simulation in IMPLAN, an Input-Output model that traces spending effects through a local economy, in this case the State of Arkansas. The model simulations provide estimates that include both the Direct Effects of the spending, along with secondary effects of the tourism spending, which include Indirect Effects (measuring the increased demand that propagates along the supply chain) and Induced Effects (reflecting the extra spending generated by higher incomes and profits).
The results are reported in Table 2. The upper panel of Table 2 shows the estimated impact assuming 160 thousand out-of-state visitors. The direct impact on Value Added (State GDP), is approximately $29 million. Including the Indirect and Induced Effects, the total impact is $48 million. The projected increase in personal incomes, including direct and secondary effects, is nearly $27 million. The total impacts on employment are often described as the number of jobs supported by an economic activity or event, expressed in full-time equivalent (FTE) jobs over the course of the year. In this case, for a single-weekend event, the projections might better be interpreted as the FTE expression of the additional staffing that will be required to accommodate the short-term surge in demand.
Table 2:
The lower panel of Table 2 shows the impacts associated with a total of 350 thousand out-of-state visitors. In this case, the total impact on state GDP is over $100 million, with nearly $60 million in higher personal income and 1,700 full-time-equivalent jobs.
The magnitudes of the effects are linear with the values in the lower panel exactly 118.75% higher than in the upper panel (350/160), so the reader is welcome to adjust the results for different assumptions about total attendance.
This analysis had focused on a study area consisting of the entire state of Arkansas. For that reason, we deliberately excluded the effects of eclipse-related travel spending by Arkansas residents. If we were to focus more specifically on the areas within the path of totality, Arkansas residents from outside the path who were traveling to those counties/regions would generate additional impacts for the local destination economies.
Research by investigators at Forbes gives some insight into the relative impacts on regions that are likely to be the most affected.[6] Looking at data from retail foot traffic over the course of the long weekend in August 2017, the Forbes researchers found that retail traffic increased by 16.2% within the path of totality. Regions just outside the zone saw an even larger impact: up 27.7%. Outside the vicinity of the eclipse path but within driving distance (200 miles), retailers saw a decline of 14.7%. Moving further away, there was no notable impact. Overall, U.S. retail traffic dropped 12.7% during the hour of totality.
The projections presented here are rough estimates, but they convey the expected order-of-magnitude that the eclipse will have on the Arkansas economy. The numbers are big, but the event is temporary, so it represents a miniscule fraction of the state’s annual economic activity. If we consider state GDP for the month, our estimates represent an increase of only 0.3% to 0.7%. For the brief 4-day period, however, the magnitudes are non-trivial. Relative to an average 4-day period, the impact estimates presented here amount to about 2.5% to 5.5% of GDP with a 1.5% to 3.2% boost to personal incomes.
There are many uncertainties and contingencies about actual outcomes, with one big uncertainty being the weather. Nevertheless, many travelers have already laid their plans and made their reservations, and this is certain to be a significant, albeit temporary, economic event.
[4] There are two estimates for Arkansas in different locations on the website, with a lower estimate that ranged from 70,000 to 281,000. We are assuming that the higher range is the more recent estimate.
Sources: Wyoming Office of Tourism, Bureau of Labor Statistics, and author’s calculations