A forum for information and analysis on the Arkansas economy

Metro Area Employment and Unemployment – May 2021

Statewide employment trends have shown a slow pace of recovery over the past three months, and the data for the state’s metropolitan areas generally reflect that

Unemployment rates were unchanged in five of the state’s metro areas, but declined slightly in Fort Smith, Jonesboro and Little Rock. The 0.2 percentage point decline in Fort Smith came on top of a 0.1 percentage point downward revision to April’s unemployment rate. On the other hand, Jonesboro, Little Rock, and Pine Bluff all saw upward revisions of 0.1 percentage points for April.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates

Compared to a year ago, unemployment rates have fallen significantly in all of Arkansas’ metro areas. Of course, that’s not surprising. The News Release from the Bureau of Labor Statistics reported “Unemployment rates were lower in May than a year earlier in all 389 metropolitan areas” across the United States. The relative magnitudes of the changes largely reflect the initial impacts of COVID-19 driving unemployment rates higher a year ago. For example, Hot Springs experienced the largest spike in unemployment last spring and has shown the largest decline since then. Unemployment rates remain one to two percentage points higher than in the pre-pandemic month of February 2020. The fact that the statewide rate has fallen to within 0.6 percentage points of it’s February 2020 rate suggests that the non-metropolitan areas of the state have recovered more fully.

Such a pattern is borne out in a breakdown of unemployment rate changes by county. Because the data for counties are not seasonally adjusted, the map below measures changes from May 2019 to May 2021. In a handful of counties, unemployment rates are lower in May 2021 than they were two years earlier. Unemployment rates in metropolitan areas remain elevated, along with several counties in the Delta region. The aggregate for all metropolitan counties in May was 4.2% up 1.3 percentage points from two years earlier. For nonmetropolitan counties, the May unemployment rate—while somewhat higher at 4.9%—was only 0.8 percentage points higher than in May of 2019.

Payroll Employment
Nonfarm payroll employment was up 0.3% statewide in May (seasonally adjusted), but metro area estimates varied considerably. Employment in Jonesboro and Texarkana surged by 1.7% and 1.3%, respectively; and payrolls also expanded in Fayetteville, Hot Springs and Memphis. Employment declined for the month in Little Rock and Pine Bluff, and was unchanged in Fort Smith. Compared to February 2020, employment is down across all metro areas, with the net declines ranging from -0.5% in Northwest Arkansas to -4.0% in Central Arkansas.

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

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Arkansas Employment and Unemployment – May 2021

Although Arkansas labor markets have recovered considerably over the past several months, progress toward the return to full-employment has clearly slowed.  For the third consecutive month, the Arkansas unemployment rate registered 4.4%.  The number of unemployed Arkansans continues to decline, falling by 762 in May with a cumulative three-month decline of 2,528.  But with household employment expanding slowly or not at all (down by 3,971 in May), contraction of the labor force is matching the declining unemployment, leaving the unemployment rate unchanged (at least to the nearest tenth of a percent).

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

Arkansas’ unemployment rate has come down considerably from its peak of 10% in April 2020, but remains above pre-pandemic levels.  The national unemployment rate in May was.5.8%, significantly higher than the Arkansas rate.

Source: Bureau of Labor Statistics

Payroll Employment
Arkansas nonfarm payroll employment increased by 3,400 in May (seasonally adjusted).  Sectors showing notable increases included Manufacturing (both Durables and Nondurables), Wholesale Trade, Education & Health Services, and Government.  The increases in Education Services and Government reflect, in part, unusual seasonal patterns. Typically, education-related employment declines in May, but the declines this year are smaller than usual.  Hence, the seasonally-adjusted figures show increases.  Similarly, employment in both Retail Trade and Leisure & Hospitality Services typically rise sharply in May, but the seasonal increases this year appear smaller than usual so the seasonally-adjusted data for these series indicate small declines.

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

Over the past 12 months, payroll employment has expanded by 70,200, with sharp recovery in the Leisure & Hospitality sector, Retail Trade, Durables Manufacturing and Professional & Business Services.  Compared to the pre-pandemic employment peak in February 2020, Arkansas employment is down by 31,600—approximately 2.2%.  Nationwide, employment in May remained 5.0% lower than in February 2020.

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. 

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Metro Area Employment & Unemployment – April 2021

In a month where the statewide unemployment rate and payroll employment totals were essentially unchanged, labor market indicators for Arkansas’ metropolitan areas were mixed in April.

From March to April, unemployment rates declined slightly in Northwest Arkansas, Fort Smith, Jonesboro and Little Rock; but increased in Memphis, Pine Bluff and Texarkana (Hot Springs was unchanged).  One year ago, unemployment rates peaked during the harshest period of pandemic-related economic business closures.  Since that time, rates have dropped significantly. The largest decline from a year ago was in Hot Springs, where the unemployment rate peaked at over 15% but had fallen to 5.9 by April 2021. The unemployment rate in Pine Bluff has only fallen 3.7 percentage points since April 2020, but at its peak was only 4.6 percentage points above pre-pandemic levels. All eight of the metro areas that include parts of Arkansas have higher unemployment rates than in February 2020, with net increases ranging from 0.9 percentage points in Northwest Arkansas and Pine Bluff to 2.8 percentage points in Memphis.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates

Payroll Employment
Nonfarm payroll employment increased in Fayetteville, Hot Springs, and Little Rock but was down across the state’s other metro areas.  Net changes from a year ago reflect progress toward recovering lost employment, with the largest increase—over 17% in Hot Springs—reflects the magnitude of last year’s downturn.  Employment has risen 10% over the past year in Fayetteville and Texarkana, leaving Fayetteville down less than one percent from pre-pandemic levels.  Texarkana, which suffered a larger initial decline in employment last April, remains 4.0% below pre-pandemic levels.

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

 

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Arkansas Retail Sales – February 2021

When the national retail sales statistics for February were released, a downturn in consumer spending was attributed to a wave of heavy snow and bitterly cold weather across the country.  Arkansas being near the heart of that storm, it is not surprising that Arkansas Retail Sales showed a decline for the month.  Total Retail and Food Services Sales declined 4.9% from January (seasonally adjusted) compared with a 3.3% decline nationwide (revised data).

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

The monthly slowdown in sales was evident in nearly every retail industry group, both nationally and here in Arkansas, with particularly large declines at Clothing Stores and Health and Personal Care Stores.

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

The only exception was for sales at Motor Vehicles and Parts Dealers. As we speculated in the report for January, the inclement weather in February might have resulted in postponement of vehicle registrations, and if so we might expect for some of that overhang to show up in the data as sales in February.  That appears to have been the case.  The February data show sales at Motor Vehicle and Parts Dealers up 27.2% from the previous month, and up 22.6% compared to February of 2020.

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

Compared to February 2020, several retail industry groups are recording sharp increases, including Building Materials, etc., Food & Beverage Stores, Sporting Goods, etc.,  and Nonstore retailers (including online shopping).  Sales within some industry groups remain suppressed by the COVID-19 pandemic, including Clothing Stores, Electronics and Appliance Stores, as well as Food Services.

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

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

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

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Arkansas Employment and Unemployment – April 2021

Labor markets in Arkansas generally continued to improve in April, but at a much slower pace than in the early months of the recovery.  First, the state’s unemployment rate was unchanged at 4.4%, still significantly lower than the national unemployment rate of 6.1%.

Source: Bureau of Labor Statistics

The underlying data from the household report showed an increase in the number of employed (+2,779) and a decline in the number of unemployed (-795), so technically the Arkansas unemployment rate declined in April, just not enough to register a change of even one-tenth of a percent (and not nearly enough to be statistically significant).  The increase in employment was also associated with a net increase in labor force participation.

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

Payroll Employment
Nonfarm payroll employment was little changed in April. The not-seasonally adjusted data showed an increase of 6,100 jobs, but much of that increase was in industries that typically add jobs during the spring, including Leisure & Hospitality, as well as Administrative and Support Services.  After seasonal adjustment, Arkansas payroll employment showed a slight decline – down 1,300 jobs.  Today’s report also included an upward revision of 1,200 to the preliminary employment total reported for March, so the net new information indicates little change.  Arkansas employment remains 2.4% lower than in February 2020.  By comparison, U.S. employment is still down 5.4% from the previous peak.

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

As shown in the table below, employment declines showed up in the Trade, Transportation and Utilities sectors, as well as in Financial Services.  Nondurable manufacturing experienced a decline in April that was enough to make the year-over-year change slightly negative.  With the exception of Financial Services, the service-providing sectors all added jobs in April.  Within the broad super-sectors, noteworthy increases were reported in Administrative & Support Services (a component of Professional & Business Services), as well as the Accommodation & Food Service component of Leisure & Hospitality.

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

It was one year ago the employment hit bottom, so the year-over-year figures this month directly measure the recovery from the downturn of March-April 2020.  Over the past 12 months, the state’s payrolls have increased by 96,400 with significant gains in the sectors that were hardest-hit during the downturn.  Several sectors now show higher employment than before the pandemic-related downturn, including Durables Manufacturing, Retail Trade, Financial Services and Other Services.

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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. 

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Metro Area Employment & Unemployment – March 2021

New statistics for metro area employment and unemployment were released this morning.  The data show that recovery from the pandemic-related unemployment spike of April 2020 continues across the state.

Revisions to the household survey data, from which unemployment rates are calculated, are taking longer than usual.  Data for 1990 through 2009 were issued on March 19 and data for 2010 through 2020 were released on April 16.  Seasonal-adjustment models are still going through re-fitting and are not yet available.  The revised data that came out two weeks ago showed that unemployment rate spikes in April 2020 were not quite as severe as estimated at the time.  As shown in the figure below, unemployment rate peaks were revised downward in all metro areas except Memphis (+0.2) and Texarkana (unch.).  The ranking of unemployment rates among Arkansas metro areas was unchanged by the revision, with Hot Springs and Texarkana showing the highest unemployment rates.

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

The data released this morning showed that unemployment rates continue to decline.  Unemployment in Northwest Arkansas has fallen below 4% and Jonesboro reached that benchmark in March.  The most significant recovery is Hot Springs, down 8.9 percentage points from April 2020 through March 2021.  As of March, Pine Bluff and Texarkana had the highest unemployment rates among Arkansas metro areas.

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

Payroll Employment
Nonfarm payroll employment continued to increase in six of the eight metro areas that cover parts of Arkansas.  Employment in Northwest Arkansas was unchanged for the month and Hot Springs saw a decline of 1.0%.  With the March downturn, Hot Springs remains 4.0% below the employment level of March 2020.  Jonesboro, Little Rock, Memphis and Texarkana have also seen year-over-year declines larger than the statewide average (-2.0%) but none of the Arkansas metro areas have suffered job losses as large as the national average (-4.5%).

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

The figure below provides more detail on the relative magnitudes of employment losses last spring, as well as the state of recovery as of March 2021 (with the data indexed to a common value of 100 for February 2020).  Pine Bluff experienced the smallest percentage decline in employment from February 2020 through April 2020, and remains the metro area with the smallest net decline since the onset of the pandemic.  Hot Springs suffered the state’s largest decline in April 2020, and was showing signs of a significant rebound until the first part of 2021. The Fayetteville-Springdale-Rogers metro area saw 2020 job losses commensurate with those in Memphis and Little Rock, but has rebounded to be nearly tied with Pine Bluff for the smallest net decline since February 2020.

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

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Arkansas Retail Sales – January 2021

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

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

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

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

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

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

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

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

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

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

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

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

 

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Arkansas Employment and Unemployment – March 2021

The latest data on state employment and unemployment shows that Arkansas economy is continuing to recover from the downturn of 2020.  Employment statistics showed gains in March and the number unemployed continued to decline.

The unemployment rate dropped another tenth of a percentage point to 4.4%, remaining significantly lower than the national unemployment rate of 6.0%.

Source: Bureau of Labor Statistics

The drop in the unemployment rate reflected the ongoing decline in the number of unemployed, which dropped by 1,400 in March.  The number of employed in the household data also declined in March, as did the labor force.  March represented the third consecutive decline in the labor force, the effect of which has been to reverse some of the unexpectedly large increase reported for December.

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

Payroll Employment
Nonfarm payroll employment increased by 3,400 in March (seasonally adjusted)—about 0.3%.  Moreover, the data for February, which originally showed a decline of 3,400 jobs, were revised to show a downturn of only 700 jobs.  The March data showed monthly increases in the goods-producing sectors of Construction and Manufacturing, as well as in several service-providing sectors: Employment in Education and Health Services increased by 1,700, and the categories of Leisure &Hospitality Services and Other Services each saw gains of 600 jobs.  Employment in financial services also registered a health increase of 700 jobs.

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

One year ago, we saw the first employment declines associated with COVID-19, with total nonfarm payrolls falling by 4,600 jobs (a modest decline compared to the 122,600 drop that came the following month).  Compared to that nearly-pre-COVID level of employment, several sectors have now seen net increases in employment.  Construction, Manufacturing, Retail Trade and Financial Services all have higher employment levels than in March 2020.  Other service sectors continue to lag, including Leisure & Hospitality Services and Education & Health Services (entirely attributable to Health Care & Social Assistance categories). Overall, the seasonally-adjusted statistics show employment down 26,100 from a year ago—approximately 2.0%.

The figure below compares the downturn and recovery for Arkansas with the U.S. total.  As of March 2021, employment in Arkansas was 2.3% below the employment peak of February 2020, while for the U.S., the net change in employment was -5.5%.

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. 

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Arkansas Home Sales

In the midst of the COVID-19 pandemic we haven’t been tracking home sales on a regular basis, but housing markets have been following a roller-coaster ride along with every other sector of the economy.  Housing Market Reports from the Arkansas Realtors® Association were intermittent for a time, but are now up-to-date through January 2021.  The data show that the number of homes sold in Arkansas were at an all-time high in 2020.  The cumulative sales figure for December 2020 was 42,980 new and existing homes sold, up 15.2% from the previous year.

Source: Arkansas Realtors® Association

The seasonal pattern of home sales was distorted by pandemic-related disruptions, with slow sales in April and May.  Compared to the same period a year earlier, sales were down 11.6% during those two months.  Those declines were more than offset by strong sales later in the year:  Sales hit a record-high 4,577 in July, and the average year-over-year growth rate averaged 24.3% over the second half of the year.  January is always the slowest month of the year for home-sale closings, but markets had plenty of momentum going into 2021:  Sales in January 2021 were up 9.4% from January 2020.

Source: Arkansas Realtors® Association; Seasonally adjusted by the Arkansas Economic Development Institute

Looking at quarterly averages, the contrast between the sales slow-down in the second quarter and the resurgence over the second half of the year is even more evident.

Source: Arkansas Realtors® Association; Seasonally adjusted by the Arkansas Economic Development Institute

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Arkansas Consumer Spending in 2020

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

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

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

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

Figure 1:

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

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

Table 1:

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

Figure 2:

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

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

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

Figure 3a:

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

Figure 3b:

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

Figure 3c:

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

Figure 3d:

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

Figure 3e:

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

Figure 3f:

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

Figure 3g:

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

Figure 3h:

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

Figure 3i:

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

Figure 3j:

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

Figure 3k:

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

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

Figure 3l:

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

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

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

Figure 3m:

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

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

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

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

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

Figure 4a:

Figure 4b:

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

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

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

Figure 5:
[https://www.datawrapper.de/_/kTAX2/]

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

Figure 6:

[https://www.datawrapper.de/_/COQdV/]

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

Figure 7:

[https://www.datawrapper.de/_/9SM1S/]

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

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

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

# # #

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

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

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

A PDF File of this Report is available HERE.

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Special Reports: Impact of Covid-19 on the Arkansas Economy

Arkansas Consumer Spending in 2020
One of the most significant and unexpected features of the Arkansas economy during the COVID-19 pandemic has been the robust behavior of consumer spending…
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Leisure and Hospitality Industries in Arkansas–2020
Of all the sectors of the economy hat have been disrupted by the COVID-19 pandemic, industries in the Leisure and Hospitality category have been among the hardest-hit…
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Forecast Update (July)
“Incoming data have continued to show a more rapid recovery from the COVID-19 shutdowns than previously expected.”
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Forecast Update (June)
Information since May has suggested that Arkansas has not been as severely impacted as other parts of the country, and that the sharp declines in national employment have abated.
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Forecast Update (May)
“The economic impact of the COVID-19 pandemic continues to be more rapid and more severe than initially expected… In this updated report we present new projections for the Arkansas economy.”
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Forecast Update (April)
“In this note we update that forecast with new estimates of the magnitude of the downturn. We also update and extend our previous guidance on how the forecast is likely to impact sales tax receipts of local governments.”
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Implications for Local Government Sales Tax Collections
“In this note, we focus on consumer spending and the outlook for sales tax collections by county and municipal governments.” Read more…

Arkansas Economic Outlook (March)
“It appears that a dramatic downturn in economic activity over the remainder of 2020 is unavoidable for the nation and for Arkansas.”  Read more…

 

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