Arkansas personal income rate slightly better than U.S. average, still below year ago

Second quarter personal income in Arkansas grew at a rate slightly better than the rest of the nation as total compensation for workers and households remains at nearly the same level as a year ago.

The report, released Wednesday (Sept. 28) by the U.S. Bureau of Economic Analysis, shows that for the three-month period ended June 30, personal income in Arkansas grew to 1.1%, up from 0.6% in the first quarter but slightly below 1.2% in the same period of 2015. Nationwide, state personal income growth accelerated to an average of 1% in the second quarter of 2016 from 0.3% in the first quarter, BEA data shows.

Unlike the other measures of U.S. wage growth, personal income calculations by the BEA takes into account income received by an individual. Personal income includes compensation from a number of sources including salaries, wages and bonuses received from employment or self-employment, as well as dividends and distributions received from investments, rental receipts from real estate investments and profit-sharing from businesses, according to Investopedia.

Michael Pakko, chief economist and state economic forecaster at the Institute for Economic Advancement (IEA) at the University of Arkansas at Little Rock, said the aspect of the report he will spend the most time investigating are the annual revisions. For example, he said, levels of total personal income were revised downward from 2013-2015.

“(Those) changes affect the growth path as well,” said the UALR economist.

According to BEA officials, the second quarter personal income report included revised quarterly and annual state personal income estimates for the 1998 first quarter to 2016 quarter periods. Revisions are usually made each September to incorporate the results of the annual revision of the national income and product accounts, and more complete state source data used for the quarterly estimates.

ARKANSAS INCOME GROWTH ‘BROAD-BASED’
Based on the revised series, Pakko said, Arkansas personal income was up 1.1% in the second quarter but the (revised) growth rate from the first quarter is 0.6%. Pakko also said the personal income growth rates for Arkansas growth rates are close to the national averages of 1% for the quarter and 3.2% from a year ago.

“My initial perusal of the data suggests that income growth was broad-based, with increases across all categories of income,” Pakko said.

Earnings growth by sector suggests that most industries are expanding, with notable exceptions of mining, construction and educational services, he said. Accommodation and food services were also down slightly.

Over the past four quarters, Arkansas’ personal income growth has been up and down since touching 1.2% in the second quarter of 2015, BEA data shows. In the following third and fourth quarters of 2015, the state’s personal income rate fell to 1% and 0.4%, respectively.

Total earnings in Arkansas grew at a rate of 0.75% in the second quarter. Nondurable manufacturing saw a surprising jump of 0.12% to lead all sectors, while wholesale trade and transportation and warehousing gained 0.06% and 0.05%, respectively. The biggest earnings decliners were construction and mining at -0.03% and -0.02%. The mining sector, which includes the state’s oil and gas industry, has lost 1,300 jobs in the past year.

Compared to other states in the BEA’s 12-state Southeast region, Arkansas personal income growth in the second quarter ranks only behind Florida and Louisiana (1.2%) and tied with North Carolina at 1.1%. Alabama, Georgia and Mississippi saw the slowest personal income growth at 0.8%.

ALL STATES SEE PERSONAL INCOME GAINS
Nationwide, the BEA reports shows that personal income grew in every state in the second-quarter with growth rates ranging from 0.4% in Alaska to 1.4% in Utah. Earnings increased 1.1% in the second quarter of 2016 and was the leading contributor to growth in personal income in most states.

For the nation, earnings grew in 22 of the 24 industries for which BEA prepares quarterly estimates. Health care, professional services, and transportation and warehousing were the leading contributors to overall growth in personal income. Mining earnings fell 2.2% nationally in the second quarter, the seventh consecutive quarterly decline.

Lower mining earnings was the leading contributor to below average earnings and personal income growth in four of the five slowest growing states: Alaska, Wyoming, Oklahoma, and North Dakota. Lower farm earnings were the leading contributor to below average earnings and personal income growth in South Dakota.

The BEA report on personal income follows the U.S. Census Bureau’s announcement on Sept. 13 that real median household income increased by 5.2% between 2014 and 2015. According to the report, median household income in the U.S. in 2015 was $56,516, an increase in real terms of 5.2% from the 2014 median income of $53,718. This is the first annual increase in median household income since 2007, the year before the Great Recession.

The report also noted that the U.S. poverty rate decreased 1.2 percentage points, while the percentage of people without health insurance coverage decreased.