LITTLE ROCK — Arkansas' per-capita income increased 3.7 percent to $34,014 last year compared with 2010, trailing the nation’s growth of 4.3 percent and the increases of 41 states, the U.S. Bureau of Economic Analysis said Wednesday.
Arkansas’ per-capita income — the total personal income divided by the state’s population — is $7,649 below the country’s income per person of $41,663.
That would put Arkansas’ per-capita income at 81.6 percent of the country’s average per-capita income. That is lower than the state’s percentage of the national per-capita income in 2009 and 2010, but higher than all other years dating to 1929. Arkansas’ per-capita income reached 82.5 percent of the national average in 2009, the highest level ever.
“Arkansas tends to outperform the nation during recessions, but not perform quite as well during the recovery,” said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville. “That was true back in the 2001 recession, too.”
Still, Arkansas’ per-capita income last year was higher than before the recession began, Deck said. The state’s per-capita income was $31,353 in 2007, or 79.4 percent of the country’s average. The recession began in December 2007 and ended in June 2009.
Arkansas’ growth of 3.7 percent last year was good but not as fast as growth rates in 2004 through 2007, Deck said.
“But you have to take into account that we are in this slow recovery phase,” Deck said.
That Arkansas was lagging behind the country last year is not surprising, said Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.
“We’re seeing weakness in labor market statistics,” Pakko said. “Employment and unemployment have given us pretty strong indications that Arkansas was having a subpar year compared with the rest of the country. This confirms that trend.”
A big part in the relative slowdown in Arkansas are the conditions in the agriculture sector, Pakko said.
Farm incomes declined by 17 percent last year, while nonfarm incomes were up 4 percent, Pakko said.
“That suggests that some of the weakness [for farmers] was related to the poor weather conditions last year,” Pakko said.
In 2004, a group of business and economic development leaders formed an organization known as Accelerate Arkansas with the goal of raising the state’s per-capita income to the U.S. average by 2020.
Jerry Adams, past chairman of Accelerate Arkansas and now chief executive officer of the Arkansas Research Alliance, said he remains optimistic about Arkansas gains. The alliance works to create economic development opportunities through research.
“We could be doing more, but I believe we’re building a solid foundation,” Adams said.
Adams mentioned gains the state is making in science, technology, engineering and mathematics education; in the forming of startup businesses; and in technology advancements.
Innovate Arkansas, which was established by the Arkansas Economic Development Commission to support instate startup companies that are high-paying and knowledge- or technology-based, has helped about 80 startup companies get off the ground, Adams said.
“Work like this shows up in per-capita income,” Adams said.
Per-capita income is the best indicator of a state’s overall economic well being, Deck said.
“But it is the hardest thing to move [to the national average],” she said. “It takes years of steadily larger growth than the nation to make progress on it.”
In 2000, Arkansas’ per-capita income was 74.5 percent of the national average.
“It is notable progress,” Deck said. “We have to keep doing things that make money, that increase our income as a state. Things like investments in education. [Education] is probably what is holding us back the most.”
Connecticut had the highest per-capita income in the country last year at $56,889, followed by Massachusetts at $53,621, New Jersey at $53,181, Maryland at $51,038 and New York at $50,545. Mississippi had the lowest per-capita income last year at $32,176, followed by Idaho at $33,326, West Virginia at $33,513, Kentucky at $33,667 and Utah at $33,790.
The Southeast was the worst performing of the country’s eight regions, with 3.8 percent growth in per-capita income. The region includes Arkansas, Alabama, Georgia, Florida, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia.
The Southeast, which has three of the five states with the lowest per-capita income, had an overall per-capita income of $37,472.
Every other region in the country surpassed 4 percent growth in per-capita income.
The Great Lakes region’ per capita income grew by 4.9 percent, followed by the Southwest by 4.7 percent, the Plains by 4.7 percent, New England by 4.6 percent, the Far West by 4.4 percent, the Rocky Mountain region by 4.3 percent and the Mideast by 4.2 percent.
Front Section, Pages 1 on 03/29/2012