A forum for information and analysis on the Arkansas economy
Personal Consumption Expenditures – 2021
State-level data for Personal Consumption Expenditures (PCE), the most comprehensive measure of consumer spending, came out this week. The data are only available at an annual frequency, with the new data covering the year 2021. Arkansas growth was 12.8%, slightly outpacing the national average growth rate of 12.7%. Last year, we noted that Arkansas was one of only a handful of states that saw an increase in PCE in 2020 (albeit only 0.1%). The new data revise that figure upward to 0.6%.
Source: Bureau of Economic Analysis
The breakdown of expenditures by category shows that Durable Goods purchases led the growth surge, increasing by approximately 25% for Arkansas and the U.S. Nondurable goods purchases increased by 16.8% in Arkansas and 13.7% nationwide. After declining in 2020, spending on services rebounded in 2021, growing 9.0% in Arkansas and 10.2% for the U.S.
Source: Bureau of Economic Analysis
With the growth rates of goods purchases exceeding that of services, the share of services as a percent of total spending declined for a second year in 2021. The long-run trends in services shares have been increasing for decades. With two years of decline, however, the services share has dropped from 69% in 2019 to 65.4% for the U.S., and from 66.1% to 62.3% here in Arkansas.
Source: Bureau of Economic Analysis
Arkansas Personal Income – 2022:Q2
Last week’s release of new GDP data coincided with a new report on state-level personal income. The Bureau of Economic Analysis indicated that the two reports would be released simultaneously from now on. There is some logic in that plan: GDP and personal income statistics share many of the same original data sources and so the information is overlapping. One distinction between the two reports is that the highlighted GDP statistic is “real,” or inflation-adjusted, whereas the personal income statistics are in nominal terms. Regarding the GDP report, we noted that the implicit price index has been increasing faster in Arkansas than nationwide, boosting nominal measures of economic activity. This shows up in the personal income statistics as strong nominal growth.
The second quarter growth rate of personal income in Arkansas was 6.9% (annualized), compared to 5.8% for the U.S. The second quarter figure for Arkansas was revised significantly higher, with a growth rate that is now reported to have been 9.4%, up from the originally-reported rate of 5.5%. For the first two quarters of the year, the growth rate of Arkansas personal income was 8.1% (annualized), well-above the 4.4% national average. Among the 50 states, Arkansas’ growth rate ranked 5th highest in the nation.
Source: Bureau of Economic Analysis
Among the major components of personal income growth, Proprietors’ income increased dramatically, rising at a 53% rate. This increase contributed 3.3 percentage points to the state’s total personal income growth of 6.9%. The increase in proprietors income was entirely in farming. Nonfarm proprietors’ income declined slightly in the second quarter, while farm income rose at a 288% rate. Nationwide, the growth of personal current transfer receipts has slowed considerably with the winding down of covid-related transfer payments. In Arkansas, transfers continued to contribute to income growth.
Source: Bureau of Economic Analysis
Data Revisions
As was the case for GDP, the second-quarter data included revisions dating back to 2017. The cumulative effects of the revisions were relatively small, with the exception of proprietors’ income (revised upward) and Dividends, interest and rent (revised downward.) The revision to proprietors’ income affected only post-covid data. The revision to Dividends, interest and rent was large and persistent, with the revised data showing a smaller contribution from this component from 2017 onward.
Source: Bureau of Economic Analysis
Source: Bureau of Economic Analysis
Source: Bureau of Economic Analysis
Earnings by Industry
A breakdown of earnings by industry shows many of the same patterns that we saw for GDP. Total earnings contributed approximately 4.0 percentage points to total personal income growth, with 3.4 percentage points coming from the Farm sector. Industries with negative contributions to growth included retail trade and real estate. As was the case with GDP, a large negative contribution came from Management of companies and enterprises (following an unusual upward spike in the first quarter).
Source: Bureau of Economic Analysis
Arkansas GDP – 2022:Q2
New data for state GDP was released today by the Bureau of Economic Analysis. Arkansas GDP was reported to have declined at an annual rate of 3.0% in the second quarter compared to a more modest rate of decline of 0.6% for the United States. Arkansas GDP was previously reported to have declined in the first quarter of 2022 as well, but that statistic has been revised to show a growth rate of +6.5%. Arkansas’ second quarter decline was among the largest in the nation, exceeded only by Indiana (-3.3%), Connecticut (-4.7%), and Wyoming (-4.8%). Overall, GDP decreased in 40 states plus the District of Columbia.
Source: Bureau of Economic Analysis
Not only were the data for 2022:Q1 revised, but today’s release also included revisions back to 2017:Q1. The revisions increased the cumulative level of Arkansas GDP considerably: as of the first quarter, revised GDP was 3.9% higher than previously-reported estimates. The largest revisions were for 2020:Q1 (just before the pandemic-related downturn) and the revision for the first quarter of 2022.
Source: Bureau of Economic Analysis
With the upward revision to the path for Arkansas GDP, the state’s output shows even more indication of recovery since the pandemic recession. Cumulative growth from 2019:Q4 stood at 6.5% for Arkansas, compared to 3.5% for the U.S.
Source: Bureau of Economic Analysis
Breaking down the sources of the second quarter decline in GDP, we see that Construction, Manufacturing and Wholesale trade were substantial negative components for both Arkansas and the U.S. Nationally, Agriculture was a weak sector, although the positive contribution of agriculture to Arkansas GDP was substantial. The weakest sector for Arkansas, accounting for over three-quarters of the overall decline, was Management of Companies and Enterprises. It’s not clear how to account for this factor, but we can note that the second quarter decline represented a partial offset of a sharp upward spike in the first quarter.
Source: Bureau of Economic Analysis
One other interesting piece of information that can be gleaned from the GDP report regards inflation. GDP is reported for both nominal (dollar-value) and real (inflation-adjusted) measures. The ratio between the two defines an implicit price index for GDP. The chart below shows year-over-year changes for the implicit price index for private-sector GDP. It suggests that there was less disinflation in Arkansas than the rest of the country in 2020, and a higher rate of price increases since than. From 2021:Q2 to 2022:Q2, this measure of inflation was 9.7% for Arkansas compared to 8.2% for the U.S.
Source: Bureau of Economic Analysis
The data showing larger price increases for Arkansas GDP than for the U.S. could indicate the obvious conclusion: that inflation is running higher here in Arkansas. On the other hand, if the BEA’s price adjustments are overstating Arkansas inflation, then real GDP growth could be understated. There is certainly enough uncertainty about future data revisions to not rule out the latter possibility.
An Economic Impact Analysis of the Proposed Arkansas Adult Use Cannabis Amendment
At a press conference today, the results of a study by AEDI on the economic impact of the proposed Arkansas Adult Use Cannabis Amendment were presented. Here is a link to that article:
https://arkansaseconomist.com/wp-content/uploads/2022/09/Adult-Use-FINAL.pdf
Arkansas Employment & Unemployment – August 2022
The newest reports on employment and unemployment in Arkansas indicate some signs of weakening conditions in the state’s labor markets, but payroll employment continues to expand at a healthy pace.
The headline news was an increase in the unemployment rate from 3.3% to 3.4%. In light of the 0.2 percentage point increase in the national unemployment rate in August (to 3.7%), it is not surprising to see Arkansas’ rate edge up slightly as well.
Source: Bureau of Labor Statistics
The increase in the unemployment rate reflected an increase of 1,020 in the number of unemployed and a decline of 2,648 in the number of employed. August was the fifth consecutive month of increasing numbers of unemployed persons, up a total of 4,177 since March. The decline in the number of employed represents a departure from the rising employment trend that had prevailed since December of 2021. With the decline in employment exceeding the increase in unemployment, the total labor force (and the labor force participation rate) declined for the month.
Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)
Although the overall trend in the number of employed has been increasing for over two years, the household employment series has yet to recover to pre-pandemic levels.
Payroll Employment
In contrast to the relatively sluggish growth of household employment, nonfarm payroll employment continues to register strong gains. For August, payroll employment was up 3,700 and the gain for July was revised higher by 1,700 jobs (seasonally adjusted data). Although nonfarm payroll employment growth was sluggish in the early months of the year, there have been 13,400 net new jobs created since March—an increase of 1.0%.
Employment growth in service-providing sectors was generally strong in August; however, there were job losses in Construction, as well as in the Trade, Transportation and Utilities super-sector. Job gains were particularly strong in some of the sectors that have struggled to recover from the pandemic-recession, including Leisure and Hospitality Services (+1,100 jobs) and Other Services (+1,500 jobs).
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Compared to a year ago, payroll employment is up 39,000 or 3.0%.the only sectors that have contracted over the past year are Mining & Logging, Construction, and Retail Trade. Relative to the business-cycle peak of February 2020, most sectors have shown net increases, with the exceptions of Leisure and Hospitality Services and Other Services. Government employment is still down significantly from pre-pandemic levels, primarily reflecting employment in public schools, colleges and universities.
JOLTS Data
New state-level data from the Job Openings and Labor Turnover Survey (JOLTS) was also released this morning. Lagging the employment figures by one month, today’s report for July suggested some leading indicators of slightly weakening conditions.
Todays JOLTS report noted that Arkansas was among the states with the largest decline in job openings for the month (both in terms of numbers and rates). As a result, the number of job openings per unemployed worker fell below 2.0 for the first time this year.
Source: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey (JOLTS)
The JOLTS report also cited Arkansas as one of the states that showed a statistically significant decline in job separations, with the Separation Rate falling from 4.7% of the total number employed to 4.1%. The decline in separations was concentrated in the Quits Rate, which fell from 3.5% to 3.0%. Although the month-to-month decline in quits was statistically significant, the trend remains high, consistent with an ongoing process of labor market churning that has come to be known as “the great resignation.” The Quits Rate for Arkansas remains well above the national average.
Source: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey (JOLTS)
The decline in Job Openings, Quits, and overall Separations indicate some narrowing of the gap between job openings and available workers, and also suggest that the labor force might be settling into a more stable expansion path.
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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 – July 2020
The latest report on metro area employment and unemployment mirrors the statewide report released two weeks ago. Unemployment rates generally edged higher, while payroll employment surged.
As shown in the figure and table below, unemployment rates were unchanged in Northwest Arkansas and Texarkana but were higher in the state’s other metro areas. Hot Springs and Pine Bluff saw increases of 0.2 percentage points.
Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates
Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates
Although rates edged higher in July, they are still well below the levels of a year ago, having fallen by at least one-half of a percentage point over the past twelve months.
Payroll Employment
Nonfarm payroll employment increased sharply across the state. Hot Springs was the only exception, with payrolls unchanged for the month. In Little Rock and Texarkana, the percentage increase for July exceeded even the unusually-large 0/9% increase reported for the state. Compared to a year ago, employment increases range from 1.5% in Hot Springs to 5.4% in Northwest Arkansas. With the July gains, only Hot Springs and Pine Bluff remain below pre-pandemic employment levels.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
The figure below shows payroll employment trends since the start of 2020. Interestingly, the two metro areas that remain below pre-pandemic employment levels, Hot Springs and Pine Bluff, experienced the two opposite extremes during the pandemic months: Hot Springs was the hardest-hit in early 2020, declining by nearly 18% from February to April, while the downturn in Pine Bluff was less than 7%.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Arkansas Employment and Unemployment – July 2022
On its surface, the latest data on Arkansas employment and unemployment might appear disappointing, but the data also point to some positive developments.
The unemployment rate increased slightly, rising from 3.2% in June to 3.3% in July. Even with the uptick, the unemployment rate is still extraordinarily low and remains below the national unemployment rate (although the difference is not statistically significant).
Source: Bureau of Labor Statistics
Underlying the change in the unemployment rate, the data show that the number of unemployed Arkansans increased by 1,084 while the number of employed was essentially unchanged (-36). The rising number of unemployed is certainly a concern, particularly in the context of July being the fourth consecutive month of increase. On the other hand, the labor force has continued to expand. As net new entrants to the labor force expand the pool of workers, it is not surprising to see a transitory increase in the number of unemployed. Meanwhile, the stalling of employment growth in July appears to be more of a pause in steady growth, rather than a change in trend.
Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)
Payroll Employment
The monthly press release from the Arkansas Division of Workforce Services reported a net decline of 2,900 jobs in July. However, that not-seasonally adjusted number includes 10,800 in government employment, primarily reflecting the summer break at public schools and universities. Net of this sharp, but perfectly explicable and expected decline, payroll employment in other sectors showed healthy increases.
Looking at the seasonally adjusted data, Nonfarm Payroll Employment increased by 11,200 jobs, an increase of 0.9%. The news release from the Bureau of Labor Statistics noted that Arkansas had the second-largest percentage increase of employment in the nation (Hawaii’s growth for the month was 1.3% and Missouri tied with Arkansas at 0.9%). Increases were evident in nearly every sector, including seasonally-adjusted government employment. Gains were particularly notable in Health Services and Leisure & Hospitality Services. As a whole, the Trade, Transportation & Utilities super-sector gained 1,600 jobs Goods-producing industries also added jobs in July, with increases in Construction and both Durable- and Non-Durable manufacturing sectors expanding.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Compared to July 2021, payroll employment is up 36,600 jobs—an increase of greater than 2.8%. Some sectors are down from their highs from the summer of 2021, including Construction and Retail Trade. However, most sectors have shown significant growth, particularly those that continue to recover from the pandemic/recession (e.g. Leisure and Hospitality Services, Health Services and Transportation).
With the July increase of 11,200 jobs, along with an upward revision of 1,500 to June’s total, payroll employment is now 14,800 (2.0%) above the pre-pandemic/recession month of February 2020. Nationwide, payroll employment surpassed its February 2020 peak for the first time (barely) in July.
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 – June 2022
The latest report on metro area employment and unemployment was just about as un-newsworthy as the state-level report that came out two weeks ago. Unemployment rates were little changed from May to June, with up-ticks of one-tenth percent in Fayetteville, Fort Smith, and Jonesboro; and a one-tenth down-tick in Pine Bluff. Unemployment rates have remained remarkably low and stable. In the past six months, the only cumulative changes of more than one-tenth of a percentage point were in Memphis (-0.4) and Texarkana (-0.3). Compared to June 2022, unemployment rates are down by about one percentage point across the state. Unemployment rates in Memphis and Hot Springs have fallen the most in the past 12 months, attributable to the fact that rates in those metro areas were higher than others during the pandemic-recession.
Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates
Payroll Employment
Changes in nonfarm payroll employment were mixed across metro areas. Six of the eight metro areas saw increases in employment, with the largest gains in Pine Bluff (+1.0%) and Jonesboro (+0.7%). Employment in Little Rock declined by 0.4% and was down slightly in Fort Smith.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Compared to a year ago, employment growth has been relatively strong in all metro areas. The highest growth rates have been in Fayetteville (+5.3%), Memphis (+3.2%) and Jonesboro (+3.0%) Those three metro areas are also the only three where total employment was higher in June 2022 than it was in February 2020, just prior to the pandemic-recession.
Arkansas Employment and Unemployment – June 2022
Arkansas labor market conditions were little-changed in June. The unemployment rate was unchanged at 3.2%, paralleling the national unemployment rate, which was unchanged at 3.6%.
Source: Bureau of Labor Statistics
The number of unemployed workers crept slightly higher again in June, rising by 688 compared to the May figures. The number of unemployed has increased for three consecutive months, rising by approximately 2,000 since April. The number of employed rose by 2,050 in June pushing the labor force up by 2,738.
Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)
Payroll Employment
Nonfarm payroll employment increased by 4,100 in June, recovering from a downwardly revised decline of 4,400 in the previous month (seasonally adjusted data). Solid job-growth was seen throughout the goods-producing sector and in Trade, Transportation and Utilities. The only sectors where employment declined in June was Professional and Business Services, Leisure and Hospitality Services, Other Services and Government. The decline in Government employment was concentrated in the state and local government, associated with employment in education. The Department of Workforce Services also cited declines in temporary workers at schools as contributing to the decline in the Administrative & Support Services component of Professional and Business Services.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Construction employment increased by 1,100 jobs, but remains slightly below the level of a year ago. Retail Trade, Government Services,and Mining & Logging are also down from June 2021. Total employment over the past 12 months has increased by 32,500, representing an increase of 2.5%. Gains have been small in recent months, however. The cumulative increase in employment since January has been only 500 jobs. Compared to the business-cycle peak of February 2020, Arkansas employment is up by 9,200 (1.0%). A comparable calculation for the United States shows that the nation has yet to recover to pre-pandemic levels, remaining 0.3% below the employment total of 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.
Metro Area Employment and Unemployment – May 2022
The latest report on metro area employment and unemployment last week showed little change in unemployment rates across the state. The data for May showed unemployment rates unchanged from April in six of the state’s metropolitan areas, with rates ticking up one-tenth of a percentage point in Jonesboro and Pine Bluff. Compared to a year ago, rates are down by more than a full percentage point in all metros.
Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates
A comparison across metro areas shows that relative unemployment rates have returned to a pattern similar to before the pandemic/recession. Comparing May 2022 with May 2019, the relative ranking of unemployment rate is essentially unchanged, with lower rates today in Northwest Arkansas, Fort Smith and Jonesboro. In the remaining metro areas, unemployment rates are slightly higher than they were three years ago.
Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates
County Unemployment Rates
A comparison of unemployment rates across counties for May 2022 indicates that the relative rates across regions of the state have similarly returned to a pattern reminiscent of before the pandemic/recession. Rates are lowest in the north and west, with Benton and Washington Counties having the lowest rates in the state, 2.2%. The highest unemployment rates are in the south and east, where Chicot County has the statewide high of 7.4% and Ashley, Mississippi, and Phillips Counties all having unemployment rates of at least 6%.
As is the case with comparisons across metro areas, the counties with the highest unemployment rates also tend to be those where rates are higher than before the pandemic/recession. Unemployment rates in May 2022 exceeded rates of May 2019 by more than a full percentage point in Ashley, Desha, Mississippi, and Phillips Counties.
Metro Payroll Employment
On the nonfarm payroll side of the employment report there was somewhat more variation among metro areas. Hot Springs, Jonesboro and Pine Bluff showed monthly increases of at least 0.5%. Employment was up slightly in Little Rock, down somewhat in Memphis and Texarkana, and unchanged in Fayetteville and Fort Smith. All metro areas have shown solid growth over the most recent 12 months, with growth rates ranging from 1.3% in Pine Bluff to 5.3% in Northwest Arkansas.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Relative to the cyclical peak of February 2020, employment has not yet returned to pre-pandemic levels in Fort Smith, Hot Springs, Pine Bluff and Texarkana.