Arkansas personal income up 4.82% (Updated)

Personal income in Arkansas during the first quarter of 2011 was $99.012 billion, up 4.82% compared to the first quarter of 2010 and up 1.9% compared to the fourth quarter of 2010.

The report released Wednesday (June 22) from the U.S. Bureau of Economic Analysis showed that overall personal income growth grew 1.8% in the quarter to reach $12.915 trillion. The BEA defines personal income as the sum of net earnings by place of residence, property income, and personal current transfer receipts (Social Security and other government payments to individuals).

Personal income, according to the BEA report, paced ahead of inflation.

Personal income increased in all states, with growth ranging from 0.7% in Iowa to 6.9% in North Dakota. Inflation, as measured by the national price index for personal consumption expenditures, increased to 0.9% in the first quarter from 0.4% in the fourth quarter of 2010.

Oklahoma’s personal income during the first quarter totaled $142.909 million, up 2.53% compared to the 2010 quarter.

Arkansas’ increase in personal income was driven by a 2.3% increase ($1.857 billion in real dollars) in net earnings, a 2.5 increase in dividend, interest and rental income ($1.278 billion) and a 0.6% increase in transfer receipts ($429 million).

Updated info: Michael Pakko, chief economist and state economic forecaster with the Institute for Economic Advancement at the University of Arkansas at Little Rock, said the BEA report indicates that 0.8 percentage points of the 1.9% growth was attributable to the 2% decline in the Social Security payroll rate approved by Congress in December as part of the Bush-era tax cuts.

And while the report shows positive growth in Arkansas, the 2010 changes reflect less personal income growth than previously reported.

“(I)ncome growth in Arkansas is not outpacing the U.S. as much as previous data had suggested. The slow income growth in the fourth quarter, in particular, represents a sharp downward revision to previously-published data,” Pakko noted, and added that Arkansas income growth was revised downward in each of the four quarters of 2010.

By industry, Arkansas’ personal income receipts are as follows.
Farm: -0.22% (-$172 million)
Forestry, fishing: 0.01%
Mining: 0.06%
Utilities: 0.02%
Construction: -0.01%
Durable goods manufacturing: 0.15%
Nondurable goods manufacturing: 0.01%
Wholesale trade: 0.04%
Retail trade: 0.01%
Transportation/warehousing: 0.04%
Information: 0%
Finance/insurance: 0.04%
Real estate: -0.02%
Educational services: 0%
Health care: 0.06%
Arts, entertainment, recreation: 0.01%
Accommodation/food services: 0.01%
Government/federal: -0.04%
Government/military: 0.04%
Government/state and local: 0.02%

The increase in durable goods manufacturing boosted quarterly personal income by an estimated $145 million compared to the fourth quarter of 2010 — the largest gain among all sectors in the state. Mining, likely a measure of natural gas production in the Fayetteville Shale Play, boosted quarterly personal income by $58 million.

Personal income changes in other closely watched state economic sectors were:
• Up $40 million in wholesale trade;
• Up $36 million in transportation/warehousing
• Down $17 million in real estate;
• Up $55 million in health care;
• Up $20 million in the two sectors that comprise the state’s tourism industry; and,
• Down $12 million in construction.

The BEA made the following observations about the national data.
• Mining and durable-goods manufacturing were the best performing industries in the first quarter. Overall, mining earnings grew 5.5% and durable goods earnings grew 2.8%. Earnings in all other industries combined grew only 0.8%.

• In the state of Washington durable-goods manufacturing contributed one half percentage point to personal income growth in the first quarter of 2011.

• In another 25 states durable goods contributed a smaller, but still substantial, amount that was greater than that of any other nonfarm industry. Four of these states (Mississippi, New Hampshire, Washington, and Wisconsin) were among the fastest growing states in the first quarter.

• The mining industry (which includes oil and gas extraction) contributed more than any other nonfarm industry to personal income growth in six of the seven fastest growing states (North Dakota, Wyoming, Texas, Montana, Oklahoma, and Alaska).

• In Wyoming, mining contributed 0.7 percentage point to first-quarter personal income growth. Mining was also the major contributor to personal income growth in Louisiana and West Virginia.

• Even with this recent strong growth, U.S. mining earnings remains 3.9% below its peak in the third quarter of 2008 and U.S. durable-goods earnings remains 4.7% below its peak in the second quarter of 2008.