Arkansas’ real gross domestic product (GDP) output in the fourth quarter grew at a sluggish 1.6% and ranked 27th among the 50 states as the state’s economy produced nearly $125 billion in economic activity, according to information released Tuesday by the U.S. Bureau of Economic Analysis (BEA).
For the year, Arkansas grew at an annualized rate of only 1.5%, although the second and third quarters advanced at a robust 4.8% and 4.1%, respectively. However, the state’s economy decelerated into negative territory in the first quarter of 2015 at -4.7%, pulling down the state’s overall output for the remainder of the year.
By comparison, Arkansas is down six-tenths of a percentage point from GDP growth of 2.1% in 2014 when the state saw robust acceleration of 3.3% in the fourth quarter a year ago. However, economic output in the fourth quarter of 2015 was slightly better than the previous year, advancing to $124.7 billion from $122.7 billion in the same period of 2014.
Nationally, real gross domestic product – the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes – increased at an annual rate of 1.4% in the fourth quarter of 2015, according to the BEA’s third and final estimate.
Despite being ahead of the national economic output in the fourth quarter, Arkansas’ weak 1.5% annualized growth is still well behind both regional and national real GDP for the full-year. Overall U.S. real GDP increased 2.4% in 2015, while the 11-state Southeast regional economy advanced 2.2%.
NO MOMENTUM FOR ARKANSAS ECONOMY
According to the BEA figures for the past two years, Arkansas’ economy has been unable to sustain any momentum going back to the first quarter of 2014 when business growth hit the brakes and decelerated by 0.4%
Although the next three quarters were better than the national average with growth of 4.4%, 2.6% and 3.3%, respectively, the state’s economy hit a wall at the beginning of 2015 when growth fell deep into the red at -4.7%. Growth in the second and third quarters of 2015 rebounded to a strong 4.8% and 4.1% in the second and third quarters, respectively, but today’s GDP report shows business output lost pace again heading into 2016.
In the expansive Southeast economy that covers much of the South, Florida (2.7%), Kentucky (2.7%) and Georgia (2.5%) were the three biggest economic movers in the fourth quarter, while Louisiana’s flat economy was the biggest loser followed by West Virginia (0.3%) and South Carolina (1.3%). Arkansas was on the lower end of the 11-state Southeast economic scale behind Mississippi, Tennessee, Virginia, North Carolina and just ahead of Alabama.
Still, there were some bright spots in the fourth quarter of 2015, as several areas of the state’s business sectors saw strong growth despite the overall economic malaise. Overall, the information sector was the largest contributor to the state’s economic growth at 0.6%. Surprisingly, non-durable manufacturing, wholesale trade and construction followed at 0.4%, 0.29% and 0.28%, respectively. Retail trade and financing and insurance also eked out positive growth.
The leading loser was the state’s transportation and warehousing, which declined 0.23%. Other industries that shrank in the fourth quarter were mining (-0.17), which includes the state’s oil and gas sector, followed by utilities (-0.15) and agriculture, forestry, fishing and hunting at -0.11%. Durable goods manufacturing, which has been in a yearlong downturn, fell by -0.7%.
GDP GROWTH IN OTHER STATES
Nationally, real GDP increased in 41 states and the District of Columbia in the fourth quarter of 2015, according to statistics on the geographic breakout of GDP released by the BEA. Real GDP by state growth, at an annual rate, ranged from 3% percent in Indiana, followed by Ohio (2.9%), Utah and Colorado (2.8%), and Florida (2.5%)
Several state economies dipped into negative territory in the fourth quarter, led by oil sector-focused Wyoming (-3.4). Iowa (-2.9), Oklahoma (-2.8), Alaska (-1.3) and New Mexico (-1.1) were also among the bottom five.
According to the BEA data, information, construction, and professional, scientific and technical services were the leading contributors to real U.S. economic growth in the fourth quarter. The information industry group grew 10.6% in the fourth quarter of 2015, and contributed 0.50 percentage point to U.S. real GDP growth and contributed to growth in 49 states and the District of Columbia. This industry was also the leading contributor to growth in 16 states and contributed 0.90 percentage point to real GDP growth in California.
Construction grew 7.6% in the fourth quarter, contributing 0.30 percentage point to U.S. real GDP growth and contributed to growth in 46 states and the District of Columbia. Alaska, New Mexico, North Dakota, and West Virginia were the exceptions. This industry added a robust 1.02 percentage point to real GDP growth in Hawaii.
Professional, scientific, and technical services, which has seen strong growth in Arkansas over the past several years, grew 3.9% in the fourth quarter – the 11th consecutive quarter of growth for this industry. This industry contributed 0.28 percentage point to real GDP growth for the nation and contributed to growth in 48 states and the District of Columbia, where it added 0.92 percentage point to real GDP in the nation’s capital.
Following are other highlights from the GDP report for all 50 states.
• Nondurable goods manufacturing also made a significant contribution to real GDP growth in the fourth quarter, growing at a rate of 4.5% in the fourth quarter. The “soft” good manufacturing sector also contributed 0.24 percentage point to U.S. real GDP growth and contributed to growth in 45 states and the District of Columbia, including Arkansas. This industry was the leading contributor to growth in Indiana, the fastest growing state in the fourth quarter.
• Mining declined 10.7% for the nation in the fourth quarter, subtracting more than 2.2 percentage points from real GDP growth in Alaska, North Dakota, Oklahoma and Wyoming.
• Finance and insurance declined 3.1% in the fourth quarter, taking off 0.22 percentage point from U.S. real GDP growth and subtracted 0.75 percentage point or more from real GDP growth in South Dakota, Delaware and New York.