Arkansas Economy Hit Hard, But Not As Hard As Some Predicted
Numbers from Arkansas's monthly revenue report are beginning to show the economic impact of the coronavirus.
The report was released Monday by the state's Department of Finance and Administration. John Shelnutt, an economist with the department, pointed out the data represents transactions from March and social distancing measures were only in effect for half that month.
"We expected large losses in major categories, and, in most cases they were not as bad as we predicted." Shelnutt said.
As news of COVID-19 spread in early March, the department revised its financial forecast to help guide budget decisions. This month's report, based on unofficial data, indicates the state is nearly $207 million above the revised forecast, despite being almost $93 million below this same time last year. The state is 10 months into its fiscal year.
When pre-coronavirus months are removed from the totals, March data indicates a more significant drop. The state's revenue was $213 million less than the same month in 2019. As expected, the impact varied by sector. Tax revenue from the restaurant and motor vehicles industries showed the sharpest declines, while higher than expected taxes from the retail sector helped offset those drops.
Shelnutt said taxes from the retail sector received a boost from consumers who were stocking up on supplies as social distancing practices were just beginning. He also said some of Arkansas's major industries could help the state weather the economic storm better than some. Food processing plants, which provide 'value-added agriculture,' have not been hit as hard as the airline industry, for example.
"Until we see otherwise, [value-added agriculture] looks more stable than the heavy industry manufacturing where you have industries shutting down," Shelnutt said. "We don't have as much of that here, but we have three-and-a-half times the sector share in food processing compared to the U.S. average."
Next month's report will give a more clear picture of the economic toll taken by the coronavirus because data from that report will reflect an entire month in which social distancing was in effect.