Arkansas’ economy only saw a moderate 1.1% change in real domestic product (GDP) growth in 2017 as the state’s economic output ranked 36th among the 50 states, according to a state GDP report posted Friday (May 4) by the U.S. Bureau of Economic Analysis (BEA).
Nationwide, real GDP grew in 47 states and the District of Columbia in 2017 as the U.S. economy expanded at an annual rate of 2.1%, generating total economic output exceeding $78.3 trillion. The percent change in real GDP ranged from 4.4% in Washington to a 0.2% decline in Louisiana.
Arkansas’ economy did pick up steam in the final three months of 2017 with GDP at 2.5%. However, that respectable growth spurt was not able to offset the decline into negative territory in the third quarter at -1.9%. State GDP in the first and second quarters was 1.1% and 2.3%, respectively.
In 2016, Arkansas also saw volatile swings GDP readings, closing out the fourth quarter of that year with robust expansion at 4.2%. However, that GDP anomaly preceded an roller-coaster expansion in the first three quarters of 2016 at 0.4%, 2.6% and –3.2%, respectively.
The tepid annual GDP growth of 0.91% and 1.1% over the past two years has left Arkansas in the bottom tier among the 50 states and D.C. That largely mirrors weak GDP growth of 1.3% and 0.4%, respectively, in 2014 and 2015.
“On an annual basis, this growth rate leaves Arkansas where it has spent the last few years around the 1% annual GDP growth mark,” said University of Arkansas economist Mervin Jebarai. “The volatility in the agricultural industry’s growth contributes to the slow growth, and the talk of tariffs is only going roil this industry further.”
However, Jebaraj, director of the Center for Business and Economic Research at the university’s Walton College of Business, also said the improving fourth quarter data shows there is some positive momentum from the Arkansas economy going into 2018.
“The GDP growth in fourth quarter (2017) was an improvement from third quarter growth as several sectors recorded growth …,” Jebaraj said of Arkansas’ 26th-ranking for the three-month period ended Dec. 31. “In particular, the state’s largest industry agriculture recorded positive growth in fourth quarter, while utilities and construction also turned around to positive growth in fourth quarter after ‘declining’ in the previous quarter. Manufacturing in Arkansas also grew at its fastest pace in fourth quarter.”
Over the last four years, Arkansas’ GDP output has shown brief signs of breaking out of the economic doldrums, notably a nation-leading 3.9% growth spurt in the first quarter of 2016 that was subsequently revised downward to only 1.7% and later to 0.4%, BEA data shows. Similarly, the robust 4.8% reading in the fourth quarter of 2016 was also later revised downward six percentage points to 4.2%
Among key industries, nondurable and durable manufacturing, management of companies and enterprises, construction, utilities and professional and business services were the top contributors to the state’s $126.2 billion economic output in the fourth quarter.
Other sectors that saw moderate quarterly growth were agriculture, forestry fishing and hunting, retail and wholesale trade, transportation and warehousing, real estate, educational services, health care and social assistance and other services. However, government, accommodation and food, arts and entertainment and recreation, mining and information fell off slightly or were mostly flat in the three-month period closing out 2017.
For the year, healthcare and social assistance was the state’s fastest growing sector with 0.29% GDP growth. Nondurable and durable goods manufacturing, construction and wholesale trade were the other top advancers at 0.22%, followed by professional and business services and retail trade at 0.18% and 0.12%, respectively.
Key industry decliners in 2017 were the state’s mining and agriculture, forestry, fishing and hunting sector, which fell by 0.2% and 0.16%, respectively. Government, education services, finance and insurance and construction also declined by less than 0.1%.
Following are stats from the BEA’s annual GDP report for all 50 states and D.C.
• Durable goods manufacturing increased 7.2% nationally and contributed to growth in every state and the District of Columbia. This industry was the leading contributor to the increases in real GDP in five of the ten fastest growing states.
• Construction increased 8.4% nationally and contributed to growth in 49 states and the District of Columbia. In addition to Texas, this industry also made a notable contribution to the increase in real GDP in Florida.
• Professional, scientific, and technical services increased 4.2% nationally and contributed to growth in every state and the District of Columbia.
• Mining increased 10% nationally — the fifth consecutive quarter of growth. In addition to Texas, this industry made notable contributions to the increases in real GDP in Oklahoma and Alaska.
• Agriculture, forestry, fishing, and hunting decreased 1.7% nationally — the fifth consecutive quarterly decline. This industry subtracted from growth in all the Plains states.