Arkansas’ unemployment rate remained unchanged at 7.8% in March (seasonally adjusted). The latest data from the Bureau of Labor Statistics and Arkansas Department of Workforce Services show that the number of unemployed rose slightly, but the number of employed rose by nearly 4,400. The change in March represents the eighth consecutive month of increases.
The household survey and the establishment survey can sometimes provide conflicting signals. However, the two surveys have recently been presenting a consistent picture of the Arkansas employment market. As shown in the figure below, both measures have generally been rising since the beginning of 2010. The household survey shows employment up by over 21,000 since December of 2009. Meanwhile the payroll survey shows employment up by about 24,600 since that series hit a trough in February 2010.
Source: Bureau of Labor Statistics
The latest reading on nonfarm payroll employment shows the number of jobs up by approximately 3,200 in March (seasonally adjusted). Monthly losses were recorded in several service-providing sectors, including two of the areas that have shown the most strength during the recovery, Education and Health Services, and Business and Professional Services. Construction and Manufacturing both showed increases for the month, but employment in these goods-producing sectors is down from a year ago. Total government employment is also down from a year ago, with lower Federal government employment relfecting (in part) the temporarily high Census Bureau employment of spring 2010.
Source: Bureau of Labor Statistics
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*Seasonally adjusted data for nonfarm payroll employment, reported in a format compatible with the monthly press release from the Arkansas Department of Workforce Services, are available here: Table – Seasonally Adjusted NFPE
Arkansas’ unemployment rate remained unchanged at 7.8% in February (seasonally adjusted). The latest data from the Bureau of Labor Statistics and Arkansas Department of Workforce Services show that the number of unemployed dropped for a second consecutive month, down by 768. The survey of households also showed that the number of employed increased by 3821 in February, and was up by nearly 16,000 from a year earlier.
Data from the payroll survey showed similar gains in February, with the number of jobs up by 2,000 for the month. The gains were exclusively in the service-providing sectors. Goods producing sectors showed a total decline of 2,900 jobs for the month. Large increases were recorded for Professional and Business Services (up 2,800) and Trade, Transportation, and Utilities (up 1,600).
Source: Bureau of Labor Statistics
A similar pattern can be seen in employment growth since February of last year. Total employment increased by nearly 23,000 jobs. Employment in the goods-producing sectors declined by about 3,500 jobs, with service-providing sectors adding 26,400 jobs.
Currently-available data suggest that February 2010 marked a low point in the employment series for both the U.S. and Arkansas (see chart below). The increase in Arkansas employment over the past 12 months represents a recovery of about 39 of the job losses recorded from the start of the recession (December 2007) through February 2010.
Sources: Bureau of Labor Statistics, Institute for Economic Advancement
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*Seasonally adjusted data for nonfarm payroll employment, reported in a format compatible with the monthly press release from the Arkansas Department of Workforce Services, are available here: Table – Seasonally Adjusted NFPE
The latest data on state personal income shows that Arkansas continues to be one of the states recovering most robustly from the recession of 2008-09. Annual figures from the Bureau of Economic Analysis show that personal incomes rose 3.5% from 2009 to 2010, placing Arkansas among the top ten fastest growing states for the year. For the nation as a whole, incomes were up 3.0% for the year.
The news release from the Bureau of Economic Analysis noted that ten states–including Arkansas–rebounded to income levels higher than their pre-recession peaks. If we look at the detailed quarterly data, Arkansas reached that point in the first quarter of 2010, and incomes in the state were 4% higher than the previous peak by the fourth quarter of the year.
Source: Bureau of Economic Analysis
As noted in previous posts (here and here), the composition of total personal income is often distorted during recessions. Government programs to help support incomes of the unemployed and others suffering from economic hardship tend to expand during recessions, both as automatic responses (more households eligible for assistance from existing programs) and with additional support programs (special economic stimulus programs). Hence, it is often informative to look at income net of current personal transfer payments.
As shown in the chart below, income net of transfer payments has been slower to recover than total income. Nevertheless, Arkansas has consistently outpaced the national average by this measure as well. As of the fourth quarter of 2010, income-less-transfers in Arkansas reached the same level as the previous peak in 2008:Q3. Meanwhile, the national average for this measure of income remains nearly 2% below its previous peak.
Source: Bureau of Economic Analysis
The composition of income gains was also encouraging. In the fourth quarter and for the year as a whole, Arkansas saw increases in wages and salaries; employer-provided benefits; proprietors’ income; and dividends, income & rent. One category of income that declined in 2010 was unemployment insurance payments. As the economic expansion matures and unemployment rates subside, we should expect to see unemployment and other transfer income to decline as wages and salaries increase.
The latest report on metro area employment and unemployment shows that job growth is picking up across most of the state, but Fort Smith and Pine Bluff appear to be lagging behind. This morning’s release from the Bureau of Labor Statistics includes new and revised data that show an improved outlook for central and northwest Arkansas in particular.
From December 2010 to January 2011, payroll employment declined by 0.5% in Fort Smith and by 1.1% in Pine Bluff. These two metro areas also showed year-over-year declines, and remain at employment levels far below those at the start of the national recession (in December 2007). The state’s other metro areas have shown varying degrees of progress toward recovering from job losses experienced during the recession. Jonesboro continues to lead with employment 0.4% higher than in December 2007.
Source: Bureau of Labor Statistics
These new employment figures include the annual “benchmark revisions,” in which past data are updated to incorporate information from more detailed sources. The revised data show that employment growth during 2010 was stronger than we realized at the time — particularly in the state’s two largest metro areas. In previously-reported data, both the Fayetteville-Springdale-Rogers MSA and Little Rock-North Little Rock-Conway MSA showed net job losses during 2010. The revised data show robust growth rates of over 3% in both metro areas. The revised data shows that much of this job growth ocurred in the first half of 2010, with slower gains during the second half.
Source: Bureau of Labor Statistics
The higher employment growth in Little Rock and Fayetteville are consistent with the pattern of unemployment rates across the state. Fayetteville has the lowest unemployment rate in the state — 6.2% in January (seasonally adjusted). The unemployment rate in Little Rock has fallen below 7% to approximately 6.8% in January. Pine Bluff continues to show the highest rate of unemployment, at 9.5%. Unemployment in the state’s other metro areas range from 7.2% in Texarkana to 8.2% in Fort Smith. The most recent data show that unemployment rates declined in all of the states MSAs in January, with rates down substantially since late summer and early autumn.
Sources: Bureau of Labor Statistics, Institute for Economic Advancement
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*Seasonally adjusted data for MSA Payroll Employment are available from the Bureau of Labor Statistics. However, data for unemployment rates are not. In order to facilitate comparisons over different months of the year, unemployment rates are seasonally adjusted by the Institute for Economic Advancement using the conventional Census-X12 ARIMA procedure.
The latest data on Arkansas employment and unemployment came out this morning. Today’s release includes new data for January 2011, along with updated and revised data for previous years.
The houshold survey showed a decline in the unemployment rate from 7.9% in December to 7.8% in January. More important, the components of the overall rate support an optimistic view: the total number of employed increased by nearly 1,700 and the number of unemployed declined by nearly 300. The resulting increase in the size of the labor force contributes to an ongoing trend: since July of last year, the Arkansas labor force has increased by more than 12,000, with the unemployment rate remaining fairly stable.
The unemployment figures released this morning incorporate recent revisions to the statistical methodology used to construct the monthly estimates. As shown in the figure below, these revisions had the effect of increasing the unemployment rate throughout much of 2009 and 2010. That is, the unemployment rate over the past two years has been running somewhat higher than the data were leading us to believe at the time. Most notably, the new data show that unemployment hit 8% for a brief period in early 2010. Since then, the rate has remained in the 7.8% to 8.0% range.
Source: Bureau of Labor Statistics
The payroll survey showed employment gains in most service-providing sectors, but indicated weakness in goods-producing sectors. Overall, nonfarm payroll employment was up by 1,200 in January (seasonally adjusted). Compared to January 2010, payrolls were up by approximately 17,000. The monthly figures showed small declines in both construction (-500) and manufacturing (-700). Service providing sectors, on the other hand, added 2,200 jobs. The only non-government service sector to show a monthly decline was Leisure and Hospitality (-1,900). However, the Leisure and Hospitality sector had been showing strength in the latter part of 2010, with employment up by 4,000 over the past year.
Source: Bureau of Labor Statistics
The payroll employment data were also subject to annual revisions. Last year, the revised data revealed a sharply larger rate of job-losses in 2009 than previously-published data had been suggesting. This year, totals for 2009 and 2010 were not revised substantially, but there were some changes to specific sectors that are notable. The previously-published data had shown sizable increases in construction and manufacturing employment in 2010. The revised data show a decline in construction jobs in 2010 and only a small increase in manufacturing employment. On the other side of the ledger, Trade, Transportation, & Utilities had been showing a net decline for 2010, but the revised data show a fairly strong gain for the year. The revised data also show larger gains for Professional & Business Services and Leisure & Hospitality Services. Employment growth in Education & Health Services has evidently been weaker than the original data were suggesting; however, that sector has continued to show positive growth throughout the recession and recovery.
Source: Bureau of Labor StatisticsSource: Bureau of Labor Statistics
*A note on seaonally adjusted data: With holiday shopping and travel subsiding and winter weather moving in, it is typical to see large employment declines in the payroll data for January. Therefore, it is not surprising that not-seasonally adjusted data for January 2011 show a decline of 19,900 jobs (as reported in the monthly press release from the Arkansas Department of Workforce Services) . The data presented here at the Arkansas Economist are adjusted by the Bureau of Labor Statistics to account for typical, recurring seasonal patterns. Seasonally adjusted data for nonfarm payroll employment, reported in a format compatible with the DWS press release, are available here: Table – Seasonally Adjusted NFPE
Earlier this week, Talk Businessinagurated a new tool for evaluating consumer sentiment in Arkansas– the Arkansas Consumer Confidence Report sponsored by Delta Trust and Bank. The report is based on a telephone survey that asks several questions about household economic and financial conditions, as well as perceptions about the economic environment. This is the first report in what is intended to be a regular quarterly series.
The results of the survey were characterized as expressing caution and concern. One might also view the findings as indicating downright pessimism. For instance, in response to the question “do you think that six months from now your personal financial situation will be better off, worse off, or about the same?” only 12% of the survey respondents said “better off,” while 38% said “worse off.”
One question that solicited a slightly more positive response was regarding future spending plans. A plurality of respondents – 41% – reported that they expected to spend more on goods and services over the next six months, while only 29% said they expected to spend less. This is good news for the economy if households plan to purchase more goods and services. However, the phrasing of the question leaves open the possibility that some respondents are simply expressing an expectation of higher prices.
In general, the pessimistic tone of the responses to the survey is at odds with economic data suggesting an improving economy. The economic recovery has now officially more than 20 months along, with signs of solid growth in measures of income, spending and production. Employment has been a problematic lagging indicator, but even that measure has been showing some improvement. As reflected in the survey, however, consumer expectations continue to be mired in a mindset that seems more indicative of ongoing recession.
There was one area of questioning that indicated a correspondence between perceptions and economic data: In response to a pair of questions about general business conditions, the survey showed significantly more pessimism about the national economy than the state economy. Slightly over half of the survey respondents characterized Arkansas’ business conditions as “good” or “normal.” On the other hand, nearly three-quarters considered U.S. business conditions to be “bad.”
Source: Talk Business, Consumer Confidence Report
It will be interesting to see how these survey findings evolve over time. The new Consumer Confidence Survey promises to be a useful tool for evaluating public perceptions about the state’s economic condition.
The full report, including analysis by Roby Brock of Talk Business and J. French Hill of Delta Trust and Bank, can be found here. A list of the survey questions and responses can be found here.
Recently released data from the Federal Housing Finance Agency (FHFA) shows that house prices in the U.S. continued to decline during 2010, with average house prices down 1.3 percent nationwide. Here in Arkansas, the decline was somewhat larger — down 2.2 percent.
As shown in the table below, the average price decline for Arkansas is skewed by price changes in the northwest part of the state. House prices in the Fayetteville-Springdale-Rogers metro area were down 4.1 percent and in Fort Smith prices were down 3.6%. In the state’s other metro areas, price declines were smaller than the national average. In Texarkana, house prices were up slightly.
Source: Federal Housing Finance Agency
This is the third year of statewide house price declines. The FHFA housing price index for Arkansas peaked in the first quarter of 2008. However, the pattern of price changes has differed from one metro area to another. From 2000 until the peak, house prices in the Fayetteville area had risen by 51 percent. Over the past 5 years, however, prices in that region are down nearly 10%. Prices in Hot Springs continued to rise well after the peak was reached in other markets, but have fallen sharply in the past two years. In the state’s other metro areas price gains in the first part of the decade were more modest — and recent price declines have been commensurately smaller. Over the past five years, cumulative price changes have been positive in all the state’s metro areas except Fayetteville.
It takes some time to compile comprehensive GDP statistics for the nation’s 366 Metropolitan Statistical Areas (MSAs). This morning, the Bureau of Economic Analysis released figures for 2009. Although the numbers are not necessarily representative of more current economic conditions, they provide information about how Arkansas fared during the recession. In that sense, they also give some indication of how the state’s MSAs were positioned to share in the nationwide economic recovery that began in the latter half of 2009 and into 2010.
As discussed in a previous post, Arkansas’ economy was one of only 10 states that showed positive GDP growth in 2009. As shown in the Table below, GDP contracted in six of the seven MSAs that have a central city in Arkansas. Only the Little Rock-North Little Rock-Conway MSA showed positive growth in 2009 (+2.4%). This suggests that much of the growth revealed in the state-level GDP report for Arkansas was concentrated in the central part of the state.
Source: Bureau of Economic Analysis
Although the state’s other six MSAs showed negative growth for the year, each compared favorably to nationwide averages. The BEA reported that real GDP declined in 292 of the nations 366 MSAs (80%). On average, the metropolitan areas of the nation contracted by 2.4%. Jonesboro, the Arkansas MSA that showed the largest decline, contracted at a slightly greater pace. Jonesboro was also the only Arkansas MSA that fell below the median growth rate. But even the disappointing performance of GDP growth in Jonesboro is tempered by the observation that its economy had expanded by more than 4% in the previous year (an upward revision from previously-released data). As shown in the map below, the relatively favorable performance of GDP growth in Arkansas’ MSAs fits within a nationwide pattern. MSAs that experienced above-average growth tended to be concentrated in the region west of the Mississippi River and east of the Rocky Mountains.
In the state-level GDP report, Arkansas growth was concentrated in some key sectors: Mining, Information Services and Management Services. The breakdown of sectoral contributions to GDP growth in Arkansas’ metro areas show similar patterns. For example, Natural Resources and Mining contributed 0.4 percentage points to growth in the Little Rock metro area. (This is undoubtedly related to natural gas extraction activities in the northern part of the MSA.) Specialized service sectors contributed positively to growth across the state. For example, Financial Activities expanded in Fayetteville, Jonesboro, Little Rock, Pine Bluff and Texarkana. Professional and Business services provided positive growth in Hot Springs and Jonesboro. Education and health services expanded in most of the state’s MSAs.
It will be another year before we see statistics for MSA GDP in 2010. However, the patterns revealed in the 2009 data (along with other, more recent indicators) suggest that a positive economic growth is likely to have emerged for most regions of the state.
HB1002 has become a controversial proposal before the state’s legislature. As reported by Talk Business, the sponsor of the bill — Rep. Ed Garner (R-Maumelle) — has cited “a UALR study” that shows the revenue impact of the proposed tax cut will be smaller than estimated by the Department of Finance and Administration.
The UALR report cited was written by yours truly. Representative Garner approached me with a request to take a look at the numbers and see if I had any additional insights to provide. I went through the numbers and came up with an alternative approach to estimating the revenue impact, using data from a simliar law that is on the books in Oklahoma.
In line with the mission of Arkansas Economist–providing information and analysis about the Arkansas economy–the report can be viewed here: HB1002 (PDF).
Which set of estimates is correct? Neither. There is a great deal of uncertainty associated with forecasting the impact of hypothetical policy changes. The estimates provided in my report should be viewed as an alternative that helps establish a plausible range of likely outcomes. I neither endorse nor oppose HB1002, but provide this analysis in the public interest.
Recent data on sales tax collections from the Arkansas Department of Finance and Administration (DFA) show that taxable sales growth stalled at the end of 2010. After adjusting for the timing of tax collections, changes in tax law, and recurring seasonal fluctuations, the latest tax collection data show that Arkansas Taxable Sales declined by 0.7% in the fourth quarter of 2010.* After revision of seasonal factors, the fourth-quarter decline almost exactly offsets a gain of 0.7% seen in the third quarter. For 2010 as a whole, total taxable sales were up 4.2 from the previous year.
Sources: Department of Finance and Administration, Institute for Economic Advancement
The fourth quarter decline was primarily attributable to a sharp drop-off in December. DFA reports sales tax collections as of the month they are received by the state — generally after a one month lag. Consequently, the decline in December sales corresponds to sales tax receipts for January, as reported by DFA yesterday. The DFA monthly general revenue report noted the decline, citing a 3.1 percent decline in gross receipts collections that resulted in a total that was 4.9 percent below forecast. The holiday shopping season is usually associated with a surge in December sales, so the process of seasonally-adjusting the data reinforces the unusual nature of the decline at the end of 2010.
Sources: Department of Finance and Administration, Institute for Economic Advancement
The weak sales growth in December is surprising given anecdotal information about the relative strength of the holiday shopping season. It is possible that the source of the weakness is in non-retail areas of sales and use tax collections. For instance, tax collections from utilities might have been low due to relatively favorable weather and low energy costs. It might also be the case that holiday shoppers spent more money on online purchases, for which sales and use tax collection is not always complete. However, there is really no solid evidence available to explain the downturn.
The fourth quarter decline in Arkansas Taxable Sales is surprising — and disconcerting. However, we should be cautious about putting too much emphasis on a single monthly data observation. We’ll just have to wait and see how the numbers come in for the first few months of 2011 before concluding that the December number represented either a change in trend or an anomaly.
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The Arkansas Taxable Sales series is calculated by IEA to serve as a timely measure of Arkansas retail sales. The series is derived from sales and use tax data from DFA, adjusting for the relative timing of tax collections and underlying sales, changes in tax laws, and seasonal patterns in the data.
