Arkansas’ blue collar manufacturing base was once again the main workhorse in the state’s 3% economic growth in the fourth quarter of 2013, according to new state Gross Domestic Product (GDP) statistics released Wednesday (Aug. 20) by the U.S. Bureau of Economic Analysis.
The new report is the first time the U.S. Department of Commerce breaks out the GDP figures by quarter for all 50 states and the District Columbia. In the past, GDP figures for Arkansas and other states were only available on an annual basis.
Greg Kaza, executive director and economist at the Arkansas Policy Foundation, said the stand-out for Arkansas’ economy was the state’s non-durable manufacturing sector – which produces “soft goods” that are immediately consumed or last less than three years.
“That one really stands out in terms of growth,” Kaza said. “It is not really sexy, but it is really important for our state’s economy.”
On the other side of the coin, the state’s agriculture and farming sector lost the most ground in the fourth quarter of 2013, falling 1.36 points as the state’s largest industry continued to face economic headwinds.
Creighton University economist Ernie Goss, who produces the regional Rural Mainstreet Index each month, said depressed crop prices are hitting farmers and rural communities in Arkansas and other Midwest states pretty hard.
“Any businesses in Arkansas that are linked to crop prices are suffering now,” Goss said, citing corn and soybean prices that have fallen to $3.70 and $10.48 per bushel.
That crisis has also caught the attention of Arkansas politicians. Arkansas House Speaker Davy Carter, R-Cabot, has asked House Agriculture, Forestry and Economic Development Committee chairman Rep. Matthew Shepherd, R-El Dorado, to convene his committee Friday to explore potential solutions to a brewing financial crisis rippling through the Delta farmland.
“Recently it has come to my attention that some of our Arkansas farmers may have been left holding breached commodity contracts executed by one or more commodity brokers in Arkansas. If this holds true, literally tens of millions of hard earned dollars that our farm families were expecting will have disappeared into the heavens,” Carter wrote in a recent letter to Shepherd.
In late June, the BEA reported that personal income fell 0.2% in the first quarter as Arkansas farms lost more than $1 billion, according to preliminary estimates.
“First-quarter farm earnings declined more than $1 billion in North Dakota, Minnesota, Iowa, Arkansas, and Nebraska,” the BEA report said. “The declines reflect falling crop prices.”
22ND IN NATIONAL GDP GROWTH
Overall, Arkansas ranked 22th in GDP growth in the U.S. for 2013, growing at an annual rate of 2.4%. The other key fourth quarter advancers besides non-durable manufacturing were mining, information technology, real estate, professional and technical services and business management. Kaza said mining, which grew at a rate of 0.93%, was lifted by record-setting natural gas production in the Fayetteville Shale.
“Our mining sector grew three times faster than the U.S. average,” he said.
The industrial sectors that contracted in the fourth quarter were government, finance and insurance, educational and other services.
Nationally, North Dakota and Wyoming saw the biggest economic growth in the fourth quarter with an 8.4% rise in GDP. West Virginia and Louisiana were next with fourth quarter growth rates of 7.5% and 5.4%, respectively. GDP increased in all other states except Mississippi and Minnesota, which declined by 3% and remained flat, respectively.
Still, after reaching a high of 4.2% in the third quarter, growth in GDP decelerated to 2.8% in the fourth quarter. U.S. real GDP by state increased 1.8% in 2013. GDP grew steadily in 24 states through all four quarters in 2013.
Just as it was the big winner in Arkansas, nondurable-goods manufacturing was the largest contributor to U.S. real GDP by state growth in the fourth quarter of 2013, jumping a whopping 18.6% after moderate growth of 2.9% in the third quarter. Nondurable-goods manufacturing was also the leading contributor to growth in 31 states in the fourth quarter, the BEA said, and it consistently led the growth in Louisiana, North Carolina, and Texas through the four quarters of 2013.
GDP by state is the counterpart of the nation’s gross domestic product (GDP), the Bureau’s featured and most comprehensive measure of U.S. economic activity. Real GDP by state is an inflation-adjusted measure of each state’s production based on national prices for those goods and services produced within each state.
Commerce Department officials said that releasing the regional GDP data for each state on a quarterly basis will provide businesses, entrepreneurs, taxpayers and policymakers “with the latest economic intelligence to inform their decision making.”
“The new regional economic statistics BEA released today provide more timely snapshots of each state’s economic health,” U.S. Secretary of Commerce Penny Pritzker said in a statement.