Arkansas again ranks first in GDP growth with 5.1% fourth quarter rise

The preliminary gross domestic product (GDP) and personal income report for the 50 states has Arkansas ranked first for GDP growth in the fourth quarter of 2024, and ranked 47th in personal income.

The U.S. Bureau of Economic Analysis (BEA) report posted Friday (March 28) has Arkansas GDP growth at 5.1%, which is the largest percentage growth in all 50 states. Arkansas also ranked first in the third-quarter report with 6.9% growth.

Among the states, GDP growth ranged from the 5.1% in Arkansas to 0.6% in Vermont, with GDP growth unchanged in Idaho and South Dakota. The U.S. GDP growth rate in the fourth quarter was 2.4%.

“Agriculture, forestry, fishing, and hunting, which increased in 17 states, was the leading contributor to growth in six states including Arkansas, Mississippi, and Alabama, the states with the first-, second-, and fifth-largest increases in real GDP, respectively,” according to the BEA report.

Analysis by Greg Kaza, executive director of the Arkansas Policy Foundation, points to areas of growth in Arkansas other than agriculture and forestry. The state’s utilities sector rose 0.42%, which ranked first in the nation, and was above the national growth rate of 0.16%. The state’s durable goods sector posted growth in the quarter of 0.35%, which also ranked first nationwide. Kaza noted that steel production, which is a growing part of the state’s economy, is included in the durable goods category.

“A Policy Foundation analysis of contributions by sector shows Durable Goods Manufacturing making an important contribution to growth. Arkansas led the nation in Durable Goods real GDP growth in the quarter (4Q-2024). Durable Goods are ‘tangible products that can be stored or inventoried and that have an average life of at least three years.’ They include motor vehicles and steel,” Kaza noted in a memo provided to Talk Business & Politics.

Kaza said the state ranking first in GDP growth in two consecutive quarters is “an unprecedented development for the state’s economy.”

However, Arkansas’ personal income growth rate was 3.6% in the fourth quarter, which ranked 47th. Indiana ranked 48th, Vermont was 49th, and Louisiana was 50th.

“In the fourth quarter of 2024, current-dollar personal income increased $281.8 billion, or 4.6 percent at an annual rate. Nationally, increases in earnings, transfer receipts, and property income (dividends, interest, and rent) contributed to the increase in personal income,” BEA noted in the report.

Dr. Michael Pakko, chief economist and state economic forecaster with the Arkansas Economic Development Institute, said a decline in the net earnings provision of total personal income was responsible for slower growth.

“The slower growth rate of earnings in Arkansas was, in turn, driven by lower growth in wage & salary components,” Pakko noted on his “Arkansas Economist” page. “In contrast, Proprietors’ Income surged higher, growing at an annualized rate of over 30% and contributing 1.5 percentage points to the personal income growth rate for the quarter. If you’ve been following the personal income statistics for a few quarters, the source of the surge in Proprietors’ Income should not be surprising: farm proprietors’ income accounted for the bulk of the increase. This component has been the source of volatility in Arkansas income growth statistics since 2020.”

He said Arkansas’ capital income component – dividends, interest, and rent – of personal income “contributed somewhat more to Arkansas’ growth rate than for the nation.”