Arkansas personal income up in third quarter, U.S. GDP up 5%

A wide range of economic data has been released by the federal government in the days prior to the holiday break, with some figures showing a gain in Arkansas’ combined personal income during the third quarter and a healthy increase in third quarter U.S. GDP.

Figures released Dec. 19 by the U.S. Bureau of Economic Analysis show the estimate for Arkansas personal income at $112.5 billion, better than the $109.264 billion in the third quarter. It was also a gain over the $109.74 billion in the second quarter of 2014.

Several components of personal income in the third quarter had significant change compared to the second quarter. Net earnings were down $55 million, or 0.1%. Income from dividends, interest and rent was up $230 million, or around 1%. Transfer receipts, typically payments to individuals from government sources, were up $543 million, or 2.1%.

NATIONWIDE PERSONAL INCOME
Nationwide, personal income growth slowed 1.2% compared to the second quarter of 2014.

“The slowdown in personal income growth in most states is primarily accounted for by smaller increases in net earnings and property income (dividends, interest, and rent) in the third quarter of 2014. Increases in personal current transfer receipts were also smaller in most states,” noted the BEA report.

The report noted changes in several key categories of personal income.
• Earnings grew $85.8 billion in the third quarter after growing $97.9 billion in the second quarter. Earnings grew in 21 of the 24 industries for which BEA prepares quarterly estimates, but farm earnings fell $10.2 billion, military earnings fell $1.2 billion, and forestry earnings fell $0.1 billion.

• Healthcare earnings growth in the third quarter exceeded that of all other industries in 19 states, including New York, where earnings increased $1.1 billion, and Florida, where earnings increased $0.6 billion. Healthcare also contributed the most ($12.3 billion) to national earnings growth.

• Construction earnings growth ranked third for the U.S., increasing $8.5 billion. However, construction accounted for only 5.7 percent of earnings nationally, down from an average of 6.2 percent since 1998.

• In Alaska, North Dakota, Oklahoma, Texas, and Wyoming, the mining industry (which includes oil and gas extraction) contributed the most to third-quarter earnings growth. North Dakota, Oklahoma, and Texas have been the 3 fastest growing states, as measured by percent growth of earnings, since the recession troughed in the second quarter of 2009.

• Earnings growth in the durable-goods manufacturing industry in the third quarter exceeded that of all other industries in Indiana and Michigan. The earnings increases, $358 million in Indiana and $300 million in Michigan, were exceeded only by the $404 million increase in California.

U.S. WAGES, GDP REPORTS
The BEA reported on Dec. 23 that personal income nationwide increased $54.4 billion, or 0.4%, and disposable personal income (DPI) increased $42.4 billion, or 0.3%, in November.

Personal consumption expenditures (PCE) increased $67.9 billion, or 0.6%. In October, personal income increased $49.8 billion, or 0.3%, DPI increased $39.7 billion, or 0.3%, and PCE increased $31.3 billion, or 0.3%, based on revised estimates.

The report also noted that private wages and salaries increased $38.7 billion in November, compared with an increase of $24.9 billion in October.

Goods-producing industries' payrolls increased $7.3 billion in November, the same increase as in October. Other anufacturing payrolls increased $3.9 billion in November, compared with an increase of $4.6 billion in October. Services-producing industries' payrolls increased $31.5 billion, compared with an increase of $17.6 billion.

Government wages and salaries increased $1.8 billion, compared with an increase of $1.2 billion.

The BEA also reported Dec. 23 that the U.S. real gross domestic product (GDP) grew at an annual rate of 5% in the third quarter. It was the third estimate for the closely watched economic report. The second quarter GDP grew at an annual rate of 4.6%. The GDP rate was 4.5% in the third quarter of 2013, 2.5% in the third quarter of 2012 and 0.8% in the third quarter of 2011.

Non-residential capital investment, federal government spending and exports were cited as the primary reasons for GDP growth in the third quarter.