Arkansas economy sees 3.5% GDP growth in second quarter; two previous quarters revised

by Wesley Brown (wesbrocomm@gmail.com) 158 views 

Arkansas’ economy continued to see robust growth in the second quarter of 2017 as the state’s non-durable manufacturing sector led a near across-the-board expansion in every part of the Natural State, according to data released Tuesday (Nov. 21) by the U.S. Bureau of Economic Analysis (BEA).

Although not as impressive as the revised 4.8% and 4% real Gross Domestic Product (GDP) growth in the fourth quarter of 2016 and first quarter of this year, respectively, the state’s economic growth of 3.5% still ranks Arkansas as the 14th fastest-growing state with $126.6 billion in current-dollar output. That represents about 1.7% of the total U.S. current-dollar GDP growth of $19.1 trillion in the second quarter.

In his analysis of the second quarter GDP data on his Arkansas Economist blog, University of Arkansas at Little Rock economist Michael Pakko said the composition of growth in the second quarter was similar for Arkansas and the U.S.

Pakko, director of UALR’s Arkansas Economic Development Institute, said sectors contributing to the higher growth rate in Arkansas included nondurable goods manufacturing and wholesale trade at 0.59% and 0.53%, respectively. Those two sectors were also the largest contributors to the overall growth rate in Arkansas, together accounting for more than a full percentage point.

“These new readings on Arkansas GDP growth, while subject to future revision, provide an auspicious view of recent developments in the Arkansas economy,” said Pakko, who will join St. Louis Fed President James Bullard at the Clinton Library on Dec. 1 to provide updates on economic conditions and the outlook for the state and the nation.

Gov. Asa Hutchinson also took note of the GDP report, tweeting on Tuesday that Arkansas was well ahead of the national average. “Great news for the Arkansas economy!” Hutchinson said on his Twitter feed.

The strong second quarter GDP report, together with the revision from the previous two quarters, shows that Arkansas’ economy is experiencing healthy expansion as the state’s labor pool continues to set new records. Last week, the state Department of Workforce Services reported that the state’s jobless rate rose one percentage point to 3.6% as civilian labor pool declined by 1,191 workers to 1,378,419, a result of 1,870 fewer employed and 679 more unemployed Arkansans. Still, the jobless rate and total employment figures are near recent all-time records of 3.4% touched in July and 1,330,975 in September.

Even with the revised 4.8% in the fourth quarter, Arkansas’ yearly GDP in 2016 averaged only 0.9%. A year ago, Arkansas’ GDP was only 2.5% after tepid growth of 0.6% in the first quarter. The state’s economy declined in the third quarter of 2016 with dismal growth of a negative 2.6%.

However, the state’s durable manufacturing sector has seen an incredible turnaround, adding some 5,300 jobs in industries that make so-called soft goods like food, clothing, cigarettes and cosmetics. BEA data shows the nondurable manufacturers in Arkansas saw GDP output spike by 0.59 percentage points.

Other sectors that also expanded were wholesale trade (0.53%), retail trade (0.42%), information (0.27%), mining and utilities (both at 0.24%), and transportation and warehousing (0.20%). Industries that lost ground during the quarter were finance and insurance (0.15%), construction (0.13%), durable goods manufacturing (0.13%), agriculture, forestry, fishing and hunting (0.05%).

Nationally, GDP growth increased in 48 states and the District of Columbia in the second quarter of 2017, according to BEA data. Real GDP by state growth in the second quarter ranged from 8.3% in North Dakota to a decline of 0.7% in Iowa.

Mining, which includes the nation’s oil and gas industry, increased 28.6% and was the leading contributor to growth for the nation and in the three fastest-growing states of North Dakota, Wyoming and Texas in the second quarter. Mining contributed to growth in 49 states led by increases in oil and natural gas production.

In addition to mining, professional, scientific, and technical services, health care and social assistance, retail trade, and information services were the leading contributors to U.S. economic growth in the second quarter. Professional, scientific, and technical services increased 5.1% nationally – the seventeenth consecutive quarter of growth. This industry contributed to growth in every state and the District of Columbia. It includes activities such as legal, accounting, engineering, and computer services.

Health care and social assistance increased 4.7% nationally. This industry contributed to growth in 49 states and the District of Columbia. Retail trade increased 5.6%, rebounding from a decrease in the first quarter, and contributed to growth in 49 states and the District of Columbia. Information services increased 7% in the second quarter and contributed to growth in 46 states and the District of Columbia.

The BEA, which is the statistic arm of the U.S. Department of Commerce, revised quarterly GDP by state statistics for first quarter of 2014 through the first quarter of 2017 and annual statistics for 2014 to 2016. Updates were made to incorporate source data that are more complete, BEA officials said.

Comments

comments