The document provides an overview and analysis of the Arkansas economy from 2007-2013 based on a presentation by Dr. Michael Pakko, Chief Economist for the Institute for Economic Advancement at UALR. It summarizes that Arkansas experienced a slow and uneven recovery from the recession, lagging the national economy in some measures like GDP growth. However, trends in home sales suggest reasons for optimism. The forecasts predict continued slow growth for Arkansas, with GDP growth around 2.5-3% annually through 2015 and steady but moderate job growth across most sectors.

1. The Arkansas Economic Outlook
Dr. Michael Pakko
Chief Economist and State Economic Forecaster
Institute for Economic Advancement, UALR
UALR Arkansas Economic Forecast Conference
November 6, 2013

2. Overview
Arkansas’ Recent Experience
•
•
•
•
•
•
•
Overview
GDP
Arkansas Coincident Index
Personal Income
Retail Sales
Home Sales (and Prices)
Employment & Unemployment
Arkansas Forecasts

3. Overview
Summary
• Arkansas has experienced a slow, bumpy
recovery
• By some measures, Arkansas has fallen
behind in the pace of expansion
• The broad macroeconomic outlook
suggests more of the same
• On the other hand … recent trends in
home sales suggest reason for optimism
• Forecast: On the high side of a slowgrowth scenario

4. Gross Domestic Product
U.S. Real Gross Domestic Product
15.8
Trillions of chained (2005) dollars
15.6
15.4
15.2
15.0
14.8
14.6
14.4
14.2
14.0
2007
2008
2009
2010
2011
Source: Bureau of Economic Analysis
2012
2013

5. Gross Domestic Product
U.S. Real Gross Domestic Product Growth
(Percent change, annual rates)
8
6
4
Percent
2
0
‐2
‐4
‐6
‐8
‐10
2007
2008
2009
2010
2011
Source: Bureau of Economic Analysis
2012
2013

6. Gross Domestic Product
Annual GDP Growth
3%
2%
1%
0%
-1%
-2%
U.S.
Arkansas
-3%
2006
2007
2008
2009
2010
Source: Bureau of Economic Analysis
2011
2012

7. Arkansas’ Experience
A bumpy recovery:
Coincident Index of Economic Activity ‐ Arkansas
102
Index, 2007Q4=100
100
98
96
94
92
90
2007
2008
2009
2010
2011
2012
Source: Federal Reserve Bank of Philadelphia
2013

8. Arkansas’ Experience
A bumpy recovery:
Arkansas Coincident Index - Growth Rates
4%
Monthly growth rate (SAAR)
2%
0%
-2%
-4%
-6%
2009
2010
2011
2012
Source: Federal Reserve Bank of Philadelphia
2013

9. Personal Income
Arkansas Personal Income ‐ 2013 Revisions
110
Billions of dollars
105
100
95
90
85
Previously Published
Revised
80
2007
2008
2009
2010
2011
Source: Bureau of Economic Analysis
2012
2013

10. Personal Income
Employee and Employer Contributions for Social Insurance
(as percentages of Wages and Salaries plus Proprietors' Income)
9.0%
8.0%
7.0%
6.0%
Employee and Self‐Employed
Employer
5.0%
2007
2008
2009
2010
2011
Source: Bureau of Economic Analysis
2012
2013

11. Personal Income
Dividends, Interest, and Rent
(as a percent of Total Personal Income)
20%
19%
18%
17%
Actual
Hypothetical
16%
2010
2011
Source: Bureau of Economic Analysis
2012
2013

12. Personal Income
Effects of Tax Policy Changes on Arkansas Personal Income
108
+2.5%
-0.9%
106
+1.9%
104
+0.7%
Actual
Billions of dollars
102
Adjusted
100
+3.7%
98
+2.7%
96
94
92
90
2010Q1
2011Q1
2012Q1
Source: Bureau of Economic Analysis
2013Q1

13. Personal Income
Source: Bureau of Economic Analysis

14. Personal Income
Source: Bureau of Economic Analysis

15. Personal Income
Source: Bureau of Economic Analysis

16. Personal Income
Source: Bureau of Economic Analysis

17. Taxable Sales
Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement.

18. Taxable Sales
Growth Rates of Arkansas Taxable Sales
(Seasonally Adjusted)
2012:Q3
Change from Previous
Quarter
ATS
ATSIG
‐2.5%
‐2.1%
Change from One
Year Earlier
ATS
ATSIG
‐0.5%
‐0.5%
2012:Q4
3.5%
3.3%
1.3%
1.2%
2013:Q1
0.2%
0.2%
0.5%
0.0%
2013:Q2
3.1%
2.4%
4.3%
3.8%
2013:Q3(P)
‐1.7%
‐1.7%
5.1%
4.2%
(P) = Preliminary
Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement.

19. Taxable Sales
Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement, Census Bureau.

20. Home Sales
Homes sold in Arkansas by Realtors®
(Not Seasonally Adjusted)
3,200
2,800
2,400
2,000
1,600
1,200
September observations
800
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
2008
2009
2010
2011
2012
Sources: Arkansas Realtors® Association, Institute for Economic Advancement.
2013

21. Home Sales
Homes sold in Arkansas by Realtors®
(Seasonally Adjusted)
3,200
Nov. 2009
Apr. 2010
2,800
2,400
2,000
1,600
1,200
800
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
2008
2013
2010
2011
2012
2009
Sources: Arkansas Realtors® Association, Institute for Economic Advancement.

22. Home Sales
ARA vs. NAR Home Sales, Arkansas
140
Index, 2009:Q1=100
130
120
110
100
90
NAR, Existing
ARA, New & Existing
80
2008
2009
2010
2011
2012
2013
Sources: Arkansas Realtors® Association, National Association of Realtors®, Institute for Economic Advancement.

23. Home Prices
FHFA House Prices
Expanded‐Data Indexes (Seasonally Adjusted)
105
Index, 2007:Q1=100
100
95
Arkansas
90
85
U.S.
80
75
70
2006
2007
2008
2009
2010
2011
Source: Federal Housing Finance Agency (FHFA)
2012
2013

24. Home Prices
Source: Federal Housing Finance Agency (FHFA)

25. Home Prices
FHFA House Price Changes (All‐Transactions Indexes, Seasonally Adjusted)
Percent Changes*
1 quarter 2 quarters 1 year
2 years
5 years
Fayetteville‐Springdale‐Rogers
2.2
3.9
5.0
6.6
‐11.0
Fort Smith
0.5
0.5
0.9
2.3
0.3
Hot Springs
0.8
1.1
2.9
0.6
‐5.6
Jonesboro
1.1
1.7
2.1
6.1
5.5
Little Rock‐N. Little Rock‐Conway
0.0
0.3
1.4
2.4
‐0.3
Memphis
0.9
1.3
1.4
1.6
‐10.4
Pine Bluff
2.8
1.0
1.0
0.5
‐2.6
Texarkana
3.5
‐0.2
3.2
1.9
6.1
Arkansas
0.7
1.4
2.8
3.1
‐2.8
United States
1.9
3.4
4.1
4.2
‐10.2
*Percent changes to 2013:Q2.
Source: Federal Housing Finance Agency (FHFA)

26. Building Permits
Single Family Building Permits
350
300
Index, 2009:Q1=100
250
200
150
100
50
ARKANSAS
Fayetteville MSA
Little Rock MSA
0
2007
2008
2009
2010
2011
Source: U.S. Census Bureau, Moody’s
2012
2013

27. Unemployment
Unemployment Rates, Arkansas and U.S.
11
10
U.S.
Percent
9
8
Arkansas
7
6
5
4
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
2008
2009
2010
2011
Source: Bureau of Labor Statistics.
2012
2013

28. Unemployment
Local Area Unemployment Statistics (LAUS) - Arkansas
Unemployment
112
Thousands
108
104
100
96
92
Jan
Apr
Jul
Oct
2010
Jan
Apr
Jul
Oct
2011
Jan
Apr
Jul
Oct
2012
Jan
Apr
Jul
Apr
Jul
Apr
Jul
2013
Employment
1,270
Thousands
1,260
1,250
1,240
1,230
1,220
Jan
Apr
Jul
Oct
2010
Jan
Apr
Jul
Oct
Jan
Apr
Jul
Oct
Jan
2013
2012
2011
Labor Force
1,380
1,370
Thousands
1,360
1,350
1,340
1,330
1,320
Jan
2010
Apr
Jul
Oct
Jan
2011
Apr
Jul
Oct
Jan
Apr
Jul
2012
Source: Bureau of Labor Statistics.
Oct
Jan
2013

29. Unemployment
Labor Force Participation Rates
67
66
U.S.
65
64
Percent
63
62
Arkansas
61
60
59
58
57
2006
2007
2008
2009
2010
2011
Source: Bureau of Labor Statistics.
2012
2013

30. Unemployment
Source: Bureau of Labor Statistics.

31. Employment
Source: Bureau of Labor Statistics.

32. Employment
Arkansas Employment
1,340
Thousands, Seasonally Adjusted
1,300
Household Survey
1,260
1,220
Payroll Survey
1,180
1,140
QCEW
1,100
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
2008
2009
2010
2011
Source: Bureau of Labor Statistics.
2012
2013

33. Employment
Current Employment Statistics:
Arkansas Nonfarm Payroll Employment - August 2013*
Employment changes (thousands of jobs) from:
Year ago
Feb 2010
Dec 2007
Mining & Logging
0.0
0.3
0.4
Construction
-0.3
-1.9
-9.5
Manufacturing
-0.6
-4.1
-33.4
Wholesale Trade
-1.7
-0.4
-2.6
Retail Trade
7.0
11.1
4.1
Transportation & Utilities
3.9
6.9
-1.5
Information Services
-0.1
-1.2
-3.4
Financial Services
0.5
0.4
-3.5
Professional & Business Services
2.0
8.6
7.1
Education & Health Services
4.9
11.7
20.2
Leisure & Hospitality Services
-0.9
3.9
0.4
Other Services
-1.3
-1.0
-3.5
Government
-1.2
0.0
2.4
TOTAL
12.2
34.3
-22.8
* Seasonally adjusted data.
Source: Bureau of Labor Statistics.

34. Economic Outlook
"I have seen the future and it is very
much like the present, only longer."
- Kehlog Albran, The Profit

35. Forecast Methodology
Model: Arkansas Baseline from Moody’s Analytics.
Structural econometric model of the U.S. Economy
Arkansas linked to US forecast, by sector
Forecast tied to Moody’s macroeconomic U.S. model
Alternative Forecast Paths:
Moody’s
Wells Fargo
NABE
Wall Street Journal
Macroeconomic Advisers
PNC Financial
Etc. …

36. Real GDP
U.S. Real Gross Domestic Product Growth
(Percent change, annual rates)
6
4
Q4/Q4
Growth (%)
2
2012
Percent
‐2
‐4
‐6
‐8
‐10
2007
2008
2009
2010
2011
2012
2013
2014
2015
1.9
2.3
2015
Forecast
2013
2014
0
2.0
2.8

37. Real GDP
Arkansas Real GDP Growth
4%
3.0%
3%
2.6%
2.6%
2.7%
2%
1.3%
1%
0.7%
0.3%
0%
-1%
-2%
-2.0%
Actual
Forecast
-3%
2008
2009
2010
2011
2012
2013
2014
2015

38. Personal Income
Q4/Q4
Growth (%)
2012
5.3
2013
2.0
2014
4.1
2015
4.5

39. Retail Sales
Q4/Q4
Growth (%)
2012
1.2
2013
2.0
2014
5.6
2015
4.6

40. Home Sales
Sales
(Pct. Change)
2011
24.4K
‐1.2%
2012
24.0K
‐1.1%
2013
26.7K
+13.8%
2014
28.6K
+7.2%
2015
28.8K
+0.8%

41. Employment
Q4/Q4 Growth
2011
+12.2K
+1.0%
2012
+4.2K
+0.4%
2013
+8.6K
+0.7%
2014
+22.5K
+1.9%
2015
+23.6K
+1.9%

42. Employment
Employment Growth Forecasts by Sector (Q4/Q4)
Thousands
Percent
2012
2013
2014
2015
2012
2013
2014
2015
4.2
8.6
22.5
23.6
0.4
0.7
1.9
1.9
Natural resources and Mining
‐1.4
0.1
0.1
0.1
‐12.0
1.5
1.0
1.2
Construction
‐2.1
1.5
2.3
1.4
‐4.4
3.2
4.8
2.9
Manufacturing
‐2.1
‐1.0
‐0.5
0.3
‐1.3
‐0.7
‐0.3
0.2
7.8
4.1
0.8
1.4
3.3
1.6
0.3
0.6
Wholesale Trade
0.8
‐0.6
0.2
0.4
1.8
‐1.3
0.5
0.8
Retail Trade
4.4
4.5
0.4
0.6
3.3
3.3
0.3
0.4
Transportation & Utilities
2.6
0.2
0.2
0.4
4.2
0.3
0.3
0.7
‐0.3
0.0
0.3
0.3
‐2.0
0.2
2.1
1.9
0.5
0.0
0.5
0.8
1.1
0.1
1.1
1.6
‐1.6
3.2
4.4
5.3
‐1.3
2.6
3.5
4.1
Education & Health Services
2.7
4.4
5.5
6.0
1.6
2.5
3.1
3.3
Leisure & Hospitality
1.4
0.6
4.4
4.6
1.4
0.6
4.2
4.3
Other Services
0.1
‐1.8
0.4
0.6
0.2
‐4.1
1.0
1.3
‐0.9
‐2.6
4.2
2.7
‐0.4
‐1.2
2.0
1.2
‐0.1
‐0.9
‐0.1
‐0.1
‐0.6
‐4.2
‐0.7
‐0.8
State government
0.4
0.6
2.1
1.5
0.5
0.8
2.7
1.9
Local government
‐1.1
‐2.3
2.3
1.3
‐0.9
‐1.9
2.0
1.1
Total Nonagricultural
Trade, Transportation & Utilities
Information
Financial Activities
Professional & Business Services
Government
Federal Government

43. Unemployment
End of Year
(Q4)
2012
7.2
2013
7.3
2014
6.6
2015
5.9

44. Arkansas Economist
For more information and analysis of the Arkansas Economy,
visit the Arkansas Economist: www.arkansaseconomist.com