Arkansas’ designation as the Natural State played a major role in the strongest economic expansion in the U.S. among all 50 states in the first quarter of 2016, according to data released Wednesday (July 27) by the U.S. Bureau of Economic Analysis (BEA).
Although agriculture, forestry, fishing, and hunting was not a significant contributor to real GDP growth for the nation, it had an important impact on economic growth in Arkansas, data from the BEA report shows.
Arkansas’ agriculture, forestry, fishing and hunting sector contributed 2.21 percentage points to the 3.9% growth in Arkansas – the fastest growing state in the first quarter. By contrast, this industry subtracted more than 3.4 percentage points from real GDP growth in Iowa, North Dakota, and South Dakota, which declined 2.6%, 11.4%, and 2.8%, respectively.
Greg Kaza called the economic accomplishment “significant,” saying he does not know the last time Arkansas led the nation in GDP growth.
“Arkansas’ number one rank in the nation is largely attributable to its agricultural, timber and tourism sector,” he said. “This is consistent with Arkansas’ nickname: ‘The Natural State.’”
The highest ranking in the nation is also attributed to Arkansas commercial interests operating in several private industry sectors, Kaza said. The other sectors contributing to Arkansas’ first quarter growth were information, retail trade, health care and social assistance, construction, non-durable manufacturing, and professional, scientific and technical services.
Still, many of the state’s blue collar-focused segments of the economy are still struggling to gain strength. Among other sectors, Arkansas saw negative growth in the state’s struggling oil and gas sector (mining), utilities, durable goods manufacturing, and transportation and warehousing.
Gov. Asa Hutchinson praised the report.
“For Arkansas to lead the nation in economic growth even for one quarter is the highest compliment to hard working Arkansans and to the job creation efforts of my administration. Very significantly, the positive growth in the GDP is being driven by growth in personal income, and that is great news for every Arkansan.”
The strong first quarter growth is also a surprise turnaround from the previous year. 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 the BEA information.
In 2014, 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.
NATIONAL SUMMARY, HIGHLIGHTS
Nationally, gross domestic product (GDP) increased in 37 states and the District of Columbia in the first quarter of 2016, according to the geographic breakout of GDP by the Department of Commerce’s research group. Real GDP by state ranged from 3.9% in Arkansas to a decline of 11.4% in North Dakota. Construction, health care and social assistance, and retail trade were the leading contributors to U.S. economic growth in the first quarter, BLS officials said.
Other top 10 states in the first quarter of 2016 in GDP growth were Washington and Oregon at 3.9%, followed by Colorado (3.6%), New Hampshire (2.9%), Arizona (2.6%), Michigan (2.6%), Utah (2.4%), Maine (2.3%) and Florida.
North Dakota, whose economy has been decimated by a downturn in that state’s oil and gas sector, lead the nation with negative GDP of 11.4%. Other states with negative growth were Wyoming (-4.9%) South Dakota (-2.8%), Iowa (-2.6%), West Virginia (2.5%), Nebraska (-1.9%), Alaska (-1%), and Louisiana, Montana and Illinois at -0.9%.
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. The U.S. ended 2015 with real GDP at 2.4%, the same rate as in 2014. In the first quarter of 2016, the nation’s GDP increased at a tepid annual rate of 1.1%, continuing a downward trend that began in the last three quarter of 2015.
Following are other data from the BEA report on state GDP.
• Construction grew at a strong 9% percent in the first quarter of 2016, the eighth consecutive quarter of growth for this industry. This industry contributed to growth in 47 states and the District of Columbia and 1.1 percentage points to the 1.7% growth in real GDP in Hawaii.
• Health care and social assistance grew 3.8% in the first quarter. This industry contributed to growth in every state and the District of Columbia.
• Retail trade grew 4.8% in the first quarter. This industry contributed to growth in 47 states and the District of Columbia and 0.59 percentage point to the 3.9% growth in Washington.
• Mining, which includes the oil and gas sector, contracted 11.1% for the nation in the first quarter. This industry subtracted 1.82 percentage points from real GDP growth in Wyoming, which declined 4.9%, and more than 2 percentage points from Alaska, North Dakota, and West Virginia, which declined 1%, 11.4%, and 2.5%, respectively.
• Transportation and warehousing slowed by 8.8% for the nation in the first quarter. This industry subtracted from real GDP growth in all states and the District of Columbia. This industry subtracted 1.06 percentage points from real GDP growth in Wyoming and 1.63 percentage points in North Dakota.
The BEA is expected to release its “advance” GDP estimate for the second quarter on Friday (July 29). The Atlanta Federal Reserve’s GDPNow model forecast for real GDP growth in the second quarter of 2016 is 2.3%, down from previous estimates.