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Arkansas Retail Sales – 2023

Editorial Note: We haven’t been reporting regularly on Arkansas Retail Sales lately, but we have continued to refine and improve our methodology (as described in the notes at the end of this post). Constructed using sales tax collection data at the county level, our Arkansas Retail Sales Indices estimate total sales to consumers from the retail trade and food service sectors. They are intended to be comparable to the Retail Trade and Food Service Sales data published by the U.S. Census Bureau.

Total retail spending in 2023 was 2.4% higher than the previous year—comparable to the 2.6% increase in U.S. retail sales. These growth rates were sharply lower than in the previous two years, and after adjusting for 4.1% CPI inflation represent negative growth in real consumer spending.

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

Quarterly indices for total retail sales show that growth slowed significantly during 2022 and has been fairly flat over the course of 2023 (with both U.S. and Arkansas indices taking a slight dip in the second quarter). After the rapid growth period in late 2020 and 2021, retail spending is approximately 37-38% higher than in 2019.

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

One sector that continues to show higher spending is the Food Services and Drinking Places. In the fourth quarter of 2023, spending was 10.1% higher than a year earlier in the U.S. data and 5.3% higher in the Arkansas data. It’s probably no coincidence that prices of “food away from home” continue to rise faster than other consumer prices.

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

An example of one sector where sales have fallen over the past two years is Furniture and Home Furnishings. Since 2022:Q2, sales in this retail sector declined by 10.0% nationwide and by 18.4% in Arkansas.

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

In contrast, General Merchandise Stores—which includes warehouse clubs and supercenters—continued to see strong sales growth, particularly in the Arkansas data.

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

All of these series are nominal; i.e. not adjusted for inflation. After adjusting for price changes as measured by the Consumer Price Index, real retail spending has been declining since early 2021. As of the fourth quarter of 2023, real spending was about 14% higher than four years earlier (about a 3% annual rate of growth). Some of that growth is likely attributable to the persistent shift of consumption towards goods as opposed to services that we’ve seen since the pandemic. Spending on services is underrepresented in the retail sales sectors, relative to broader measures like total personal consumption expenditures.

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

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Methodological Notes:

Indices of 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 our original methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.

As we have accumulated additional data, we have made several methodological adjustments:
1. With more observations, we are now able to use a more sophisticated seasonal adjustment technique. We now use the Census X-13 ARIMA procedure, with new seasonal factors estimated at the end of each calendar year.
2. Early series for Saline County, which had been calculated using municipal tax collection data, have been spliced together with data from after the introduction of a countywide sales tax in 2019.
3. Greater care has been given to identifying and adjusting for significant outlying observations, particularly with respect to month-to-month variations.
4. Automobile sales data, constructed from an index of number of vehicles sold, has been augmented by adjusting for price changes using CPI data for New and Used Vehicles.
5. We also made adjustment for the different timing of tax collections on motor vehicles. That is likely to require additional attention after the recent change from a 30-day to a 60-day grace period for registering newly purchased vehicles.

Arkansas Personal Income – 2023:Q4

The latest figures on state-level personal income show that Arkansas incomes expanded at an annual rate of 1.0% in the fourth quarter, compared to a 4.0% growth rate nationwide. Arkansas’ growth rate ranked 48th among the 50 states, with only North Dakota and Iowa showing slower growth. On a more positive note, data for the third quarter were revised upward to show a growth rate of 0.8%—previously reported to have been 0.0%. Over the past four quarter, Arkansas personal incomes have increased by only 1.4%, compared to 4.7% for the U.S.

Source: Bureau of Economic Analysis

The table below shows the year-over-year growth rates of some key components of personal income. Significant factors lowering Arkansas overall growth are Farm income and Proprietors income, as well as Transfer receipts.

Source: Bureau of Economic Analysis

The declines in Farm income and Proprietors’ income are reflections of the same phenomenon, since most farm income is received by proprietors. As shown below, large swings in farm income boosted total proprietors’ income in 2021 and 2022, but that collapsed in effect collapsed in 2023. Meanwhile, nonfarm proprietors incomes have continued to expand in 2023.

The swings in farm income are likely an artifact of the way that agricultural inventories are valued in the personal income and GDP accounts. The post-pandemic rise in commodity prices caused a positive revaluation of inventories, while more recent declines in commodity values have reversed that effect. This is likely an inaccurate measure of true agricultural income: extreme fluctuations in inventory valuations represent paper profits and losses, not necessarily income flows.

The other factor suppressing personal income growth in 2023 was the decline in transfer receipts, which is associated with the winding-down of pandemic-related spending programs. As shown below, transfers declined during 2023 to pre-pandemic levels in Arkansas.

Source: Bureau of Economic Analysis

Annual data for total for total personal income shows growth of 4.0 percent for Arkansas, compared to 5.2 percent nationwide. Contributions of Dividends, interest & rent and Transfer receipts are comparable, but Arkansas is lagging in net earnings growth.

Breaking down the growth in net earnings by sector we see that the major factor restraining Arkansas’ growth is farm earnings. Positive contributors include Construction, Wholesale trade, and Health care.

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 Employment and Unemployment – February 2024

Data on Arkansas employment and unemployment for February showed signs of resilience in the state’s labor markets. After rising to 3.7% over the second half of 2023, the unemployment rate ticked downward from 3.7% in January to 3.6% in February. The national unemployment rate increased from 3.7% to 3.9% in February.

Source: Bureau of Labor Statistics

The decline in Arkansas’ unemployment rate was driven by a fairly sharp drop in the number of unemployed, -1,365. The number of employed increased, but by only 1,105. As a result, the labor force declined slightly—the first monthly decline since July 2021. Although the increase in employment was not enough to offset the decline in unemployment, February marked the fourth consecutive month of employment growth.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

Payroll Employment
Nonfarm Payroll Employment was up by 2,400 in February, after an upward revision of 1,400 to January’s total (seasonally adjusted data). Expanding sectors included Construction, along with several service-providing sectors. Employment in durable goods manufacturing was up slightly (+300), but non-durable goods employment was down by 1,000. Other sectors showing job declines included wholesale and retail trade, information services, and professional & business services.

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

Over the past twelve months, we’ve seen expansion across most service-providing sectors. In the goods-producing sectors, growth has been strong in construction employment, but manufacturing employment is down. Total employment growth over the past twelve months has been 15,400 jobs—about 1.1% growth. Over the same period, U.S. payroll employment growth was approximately 1.8%.

It has been four years since the peak-employment of February 2020, just before the onset of the pandemic-related contraction. Relative to that prior high-point, Arkansas employment growth has totaled 5.2%, compared to 3.6% for the U.S.

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. 

Metro Area Employment and Unemployment – January 2024

The Bureau of Labor Statistics has released new data on metro area employment and unemployment for January 2024, including annual revisions to previously-reported data.

The unemployment data have been partially revised, but comparable historical data will not be available until April 19. Today’s release did include revised, not-seasonally adjusted data for January 2023 and December 2023, so we can make some comparisons.  First, the figure below compares the new January unemployment rates with the revised unemployment rates from January 2023. Over the year increases ranged from 0.1 to 0.6 percentage points, with the exception of Texarkana, where the rate declined by 0.2. Five metro areas had unemployment rates above 4% in January 2024, while Fayetteville, Jonesboro, and Little Rock had rates below the statewide average.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

The revisions to the data for metro areas generally appear to follow the pattern seen in the revised data for statewide unemployment. Specifically, that rates were revised lower for January 2023 but ended the year higher than originally reported.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

Payroll Employment
Nonfarm payroll employment was up 0.3% in the Little Rock metro area, but unchanged or lower for the rest of the state. Pine Bluff and Texarkana had the largest declines. Compared to a year earlier, Little Rock showed the strongest growth at 2.0%, slightly outpacing Northwest Arkansas. As discussed below, this reversal of relative growth trends is largely attributable to revisions to the employment data for those two metro areas.

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

Over the longer run, cumulative growth rates since February 2020 have varied widely across the state, ranging from 11.1% in Northwest Arkansas to -2.8% in Pine Bluff.

Revisions to Payroll Employment Data
Payroll employment data for metro areas that was released this week was subject to the same annual benchmark revision process as for the statewide data. The revisions were generally limited to the period since April 2022 for not seasonally adjusted data, with minor changes to seasonal factors going back to 2019. The BLS report also mentioned that “Some not seasonally adjusted and seasonally adjusted series have been revised as far back as 1990.” The data for Arkansas metro areas include examples of these long-term adjustments of the series.

As shown in the set of figures below, employment data for Fayetteville and Fort Smith were subject to a downward shift for all pre-2022 data, while Little Rock shows a corresponding upward revision to the historical series.

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

More interesting are the revisions to recent growth trends. Over the two year period from December 2021 to December 2023, employment growth for Fayetteville was previously estimated to be 9.1%. In the revised data, the growth rate is only 6.9%. Growth rates for Jonesboro, Memphis, and Texarkana were also revised lower. Growth for Fort Smith and Hot Springs were revised higher, but the largest change was for Little Rock, where the previously-reported growth rate of 2.4% was revised up to 4.9%. The upward revision for Little Rock and the downward revision for Fayetteville, both primarily affecting data for 2023, resulted in the reversal of year-over-year growth patterns.

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

 

Arkansas Employment and Unemployment – January 2024

New employment and unemployment data for January was mixed. Data from the household survey showed only small changes in the number of employed and unemployed Arkansans. The payroll survey showed mixed results for the month, but data revisions suggest significant changes from previously reported levels and growth rates for some sectors.

After being revised upward from 3.4% to 3.7% for December (see HERE), the unemployment rate was unchanged in January. With the recent revisions, the Arkansas unemployment rate has matched the U.S. rate In November, December and January. Last week the Bureau of Labor Statistics reported that the national unemployment rate rose to 3.9%.

Source: Bureau of Labor Statistics

The data underlying the unemployment rate were little changed in January. The number of unemployed was estimated to have risen by 46, and the number of employed increased by 460, for a change in the labor force of just over 500. The figures below illustrate these changes in the context of the recent revisions to the data.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

Payroll Employment
The not-seasonally adjusted data for nonfarm payroll employment showed a decline of 17,700 jobs from December to January. However, there is always a post-holiday season drop-off in January employment. After seasonal adjustment, the data show an increase of 2,700 jobs. Monthly changes were mixed, with Construction and Retail Trade showing significant increases. Employment declines were reported for Durable Goods Manufacturing, Wholesale Trade, Financial Services and Other Services. Differences across sectors are even more noticeable when comparing growth from a year ago. Year-over-year gains in Construction, Retail Trade  and Education and Health Services have been significant. Other sectors have shown small changes over the past year. Manufacturing, Transportation & Utilities, and Professional & Business services are three sectors that have shown notable job losses in the past 12 months.

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

Revisions to Payroll Data
Having concluded their annual benchmark revisions, the Bureau of Labor Statistics included newly revised data on payroll employment in this morning’s report. The revised not-seasonally adjusted data, now adjusted to 2023 benchmark levels, were revised back to April 2022. Seasonal factors were subject to small revisions going back to January 2019. For total nonfarm payroll employment, the revisions had the effect of lowering the level of employment by 7,400 as of December 2023. The new data show a two year growth rate of 4.0% for the period December 2021 through December 2023, down from the previously-reported 4.4%.

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

The table below details the changes, by sector, in the levels of employment for December 2023, along with changes in the two-year growth rates for December 2021 through December 2023. Because the largest revisions were made to the most recent data, the changes in the levels of employment reported in the first column tend to carry over into revisions of the corresponding two-year growth rates. Some of the more notable revisions were for Retail Trade, Transportation & Utilities, Information Services, and Other Services.

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. 

 

Revised Data on Employment & Unemployment

The Bureau of Labor Statistics has issued its first round of employment data revisions for the year, publishing revised statistics for unemployment and employment as measured by the Household Survey and published in the Local Area Unemployment Statistics (LAUS) database.  As expected, the new data show that the sharp dip in unemployment recorded in mid-2023 was not as large as originally reported. Instead of showing a dip to 2.6% in June and July, the revised data show that the unemployment rate bottomed-out at 2.8% in March and April.  The new data also show a more pronounced rise in the unemployment rate over the second half of 2023, with the December rate being revised upward from 3.4% to 3.7%.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

As shown above, the significant revisions to the unemployment rate data mostly affected the period since mid-2022. However, the extent of the revisions went back to 2019. The unemployment rate closely tracks the number of unemployed, for which the revisions produce the same patterns shown above. The new data show that the number of unemployed dropped to just under 40,000 at its low point, rather than falling as low as 35,600 in the previously published data.

Revisions to the number of employed were subject to more extensive revision.  The new data show that the drop in employment back in April of 2020 was a bit sharper than previously reported, and that employment growth since then has not been quite as rapid.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

Labor force data was revised in line with the employment revisions.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

As a result of the downward revision to the labor force statistics, the labor force participation rate would be also expected to show a slower recovery from the pandemic-related decline in 2020 and 2021. However, updated population statistics from the 2020 census showed a downward revision as well, partly offsetting that effect. As a result, the revised data show a participation rate of 57.5%, only slightly lower than the 57.6% rate previously reported.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

New data on unemployment for January, along with revised data from the Establishment Survey, will be reported on March 11th.

 

Eclipse-onomics: On The Expected Economic Impact of the Great American Eclipse

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.

NOTES:

[1] Dean Runyan Associates, “2017 Eclipse Economic Impact Study: Summary of Findings,” Wyoming Office of Tourism, 2017.   https://buckrail.com/wp-content/uploads/2017/12/Wyoming-Office-of-Tourism-2017-Eclipse-Economic-Impact-Study.pdf

[2] Data from Nebraska are sourced from the Nebraska Tourism Commission, citied in, Jenn Gjerde and Angela Sears, “The Great American Eclipse Was Big Business for Nebraska,” https://visitnebraska.com/press-releases/great-american-eclipse-was-big-business-nebraska

[3] https://www.greatamericaneclipse.com/visitation

[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.

[5] Data from South Carolina are sourced from the South Carolina Department of Parks, Recreation and Tourism, cited in “KEY STATS: Total Eclipse Weekend Columbia, S.C.” https://totaleclipsecolumbiasc.com/key-stats-total-eclipse-weekend-columbia-s-c/

[6] Sean Lakind, “The Great American Eclipse and Its Effect on Retail Traffic,” Forbes Communication Council. https://www.forbes.com/sites/forbescommunicationscouncil/2017/09/12/the-great-american-eclipse-and-its-effect-on-retail-traffic/?sh=3fc4ca8d44b0

 

Metro Area Employment & Unemployment – December 2023

This week we received the final metro area employment report covering 2023. For the month of December, unemployment rates were generally higher across the state, while changes in payroll employment were mixed.

As shown the table below, the change in unemployment rates in December were 0.1 percentage points higher than in November for Northwest Arkansas, Fort Smith, Hot Springs, Jonesboro, and Little Rock. The rate in Pine Bluff was up 0.2 percentage points and was unchanged in Texarkana. Only in Memphis was there a decline in the unemployment rate for the month.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Estimates

The table also shows that nearly all of Arkansas’ metro areas saw unemployment rates declining over the first half of the year and increasing over the second half of the year. This pattern is also clear in the figure below, with the exception of Texarkana and Memphis. Statewide, the unemployment rate ended the year at the same place it started. That was also true for Northwest Arkansas Little Rock, and Memphis. Year-over-year changes in the unemployment rate were positive for Fort Smith and Jonesboro; negative for Hot Springs, Pine Bluff, and Texarkana.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Estimates

Payroll Employment
Nonfarm payroll employment showed mixed changes around the state, but increases tended to predominate. Employment was slightly higher in Fayetteville, Fort Smith,  and Little Rock.  Relatively large gains were recorded for Memphis and Texarkana.  Hot Springs and Pine Bluff saw employment declines and Jonesboro was unchanged.

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

Year-over-year growth rates varied considerably among the metro areas. Northwest Arkansas continued its robust growth trend and Texarkana has a strong year of growth after languishing in 2021 and 2022. Employment was down in Hot Springs, Little Rock and Memphis.

 

Arkansas Employment and Unemployment – December 2023

The state employment report for December continued to show that the labor market was weakening toward the end of the year, with the unemployment rate increasing for the fifth consecutive month. From a longer-term perspective, however, the weakness toward the end of the year was merely a partial offset to the strength we saw in the first half of 2023.

The state unemployment rate increased by 0.1 percentage points in December, rising from 3.3% to 3.4%. That is 0.6 higher than the record-low of 2.6% reported for June and July. Nevertheless, we ended the year with the same unemployment rate we had at the start of the year. The net change in the number of unemployed from the end of 2022 was only 446.

The December report also showed a decline in the number of employed for the third consecutive month, along with the second monthly decline in the size of the labor force. But these declines only partly offset the gains from earlier in the year. From December 2022 to December 2023, the household survey showed that the number of employed increased by 18,263 and the size of the labor force increased by 18,709.

Source: Bureau of Labor Statistics, Local Area Employment Statistics (LAUS)

The data for 2023 will be revised before we get our first reading on 2024. Typically, the end-of-year unemployment rate is subject to very small revisions, with the path from the beginning to the end of the year showing the effects of additional data refinements. We expect the revised data to show a smoothing of the relatively large swings in the number of unemployed that were reported during 2023.

Payroll Employment
Nonfarm payroll employment increased by 5,800 in December, recovering more than half of the employment losses reported for the previous three months (seasonally adjusted data). Expanding sectors included all major goods-producing sectors, with Construction and Durable Goods Manufacturing showing substantial gains. Relatively strong holiday shopping boosted employment in Retail Trade. Among service-providing sectors, employment in Education & Health Services and Other Services continued to expand, while Leisure & Hospitality Services contracted slightly. Compared to December 2023, payroll employment growth totaled 15,100, or about 1.1%.

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

Including the December increase, payroll employment has expanded by 62,700 since February 2020 (pre-COVID) amounting to a gain of 5.3%. Over the same period, the net change in U.S. employment has been 3.2%.

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.