Personal income fell 0.2% in the first quarter as earnings for Arkansas workers failed to keep pace with inflation and Arkansas farms lost more than $1 billion, according to estimates released Tuesday (June 24) by the U.S. Bureau of Economic Analysis (BEA).
“First-quarter farm earnings declined more than $1 billion in North Dakota, Minnesota, Iowa, Arkansas, and Nebraska,” the BEA report said. “The declines reflect falling crop prices.”
Travis Justice, chief economist for the Arkansas Farm Bureau, said he concurred with the BEA’s report, but cautioned that the Labor Department’s first quarter snapshot doesn’t capture parts of the state’s largest industrial sector that are on the upswing.
“Yes, we have seen some declines in the grain sector as crop prices have drifted lower, but on the animal side of the picture – we are seeing record prices for hog and cattle (futures),” Justice said.
According to the National Crop Insurance Services, Arkansas’ agriculture industry contributes more than $10 billion to the state’s economy. A 2012 census by the U.S. Department of Agriculture shows that Arkansas has more than 45,000 farms and 13.8 million acres of farmland.
Justice said the agriculture sector’s economic and revenue picture could turn positive quickly, especially from quarter to quarter.
“We could come up spades in just a few months,” he said.
Nationwide, the BEA report shows that state personal income rose slightly to 0.8% on average in the first quarter of 2014, an acceleration from the 0.5% growth in the fourth quarter of 2013. The fastest growth, 1.4%, was in Washington state, Vermont, and West Virginia. Personal income fell 2.9% in North Dakota, 0.3% in South Dakota, and 0.2% in Arkansas and Nebraska.
Inflation, as measured by the national price index for personal consumption expenditures, was 0.3% in the first quarter, the same as in the fourth quarter.
The personal income report stands in contrast to another economic bellwether from the BEA earlier this month showing the state’s gross domestic product (GDP) grew at 2.4% in 2013, ranking Arkansas 16th among the 50 states. Arkansas’ GDP growth was well ahead of the U.S. average in 2013, which slowed to 1.8% in 2013 after increasing 2.5% in 2012, according to the statistics from the U.S. Labor Department analysis arm.
Nationwide, real gross domestic product (GDP) increased in 49 states in 2013, but the surprise takeaway from the yearly report is that U.S. growth was widespread but lost momentum. Per capita real GDP ranged from a high of $70,113 in Alaska to a low of $32,421 in Mississippi. Per capita real GDP for the U.S. was $49,115.
Overall, personal income grew $79.5 billion in the first quarter of 2014, after increasing $75.1 billion in the fourth quarter of 2013. Earnings grew in 19 of the 24 industries for which BEA prepares quarterly estimates, with the largest increases in professional services ($22.1 billion), construction ($19.4 billion), and finance ($9.2 billion).
Mining earnings grew $8.6 billion in the first quarter, compared with a $2.5 billion increase in the fourth quarter. More than half of the mining earnings growth (which includes earnings in the oil and gas industry) was in Texas. The contribution of mining to earnings growth was larger than every other industry in eight states including Texas, North Dakota, and West Virginia.
Construction earnings grew $19.4 billion in the first quarter, more than double the $9.5 billion fourth-quarter increase. More than one-fourth of this growth was in Texas and California. Construction made a larger contribution to earnings growth than any other industry in 20 states including Nevada and Utah.
Earnings fell in five industries: farming ($16.4 billion), information ($9.2 billion), management of companies ($2.6 billion), durable goods manufacturing ($1.7 billion), and forestry ($0.1 billion).
Information earnings fell $9.2 billion in the first quarter after rising $14.3 billion in the fourth quarter. Earnings declined $11.1 billion in six states and grew $1.9 billion elsewhere. California’s $11.0 billion first-quarter decline followed a $15.5 billion fourth-quarter increase that included special lump-sum bonuses.
Durable goods manufacturing earnings fell $1.7 billion in the first quarter, following a $2.2 billion increase in the fourth quarter. Bonuses and other special pay contributed to a $1.4 billion first-quarter rise in Washington, the first increase in that state in a year.