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Economy in Brief
Composite PMIs...the Best of Times; the Worst of Times-Really?
PMI data now rank observations on their range of values since December 2016...
U.S. Housing Starts Rise Again in December
Housing starts increased 5.8% (5.2% y/y) during December to 1.669 million...
Philadelphia Fed Manufacturing Index Jumps in January
The Federal Reserve Bank of Philadelphia Factory Sector Business Conditions Index jumped to January to 26.5...
U.S. Initial Jobless Claims Ease, but Are Still High
Initial claims for unemployment insurance fell to 900,000 in the week ended January 16...
French Surveys Improve Despite Ongoing Virus Issues
The spread of the virus in Franc is still untamed...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Charles Steindel September 26, 2018
Yesterday BEA released its estimates of personal income at the state level for 2018:Q2. The numbers reflect the benchmark GDP revision. Income growth is rather dispersed. In the second quarter Texas led the nation, with a 6.0% growth rate (the national figure was 4.2%). Bringing up the rear was, surprisingly, Washington (state) with a meager 1.6% rate of growth. However, quarterly movements can be highly erratic—Washington’s weak second quarter followed outsized gains in both 2017:Q4 and 2018:Q1 (7.6% and 10.0%, respectively). Most likely the second quarter softness—largely due to a -.6 percentage point contribution from earnings in the professional, scientific, and technical services sector—was merely a correction following large year-end bonuses at some of the technology firms in the state.
Looking at the more stable four quarter growth rates, the Southwest and Rocky Mountain regions led, with the Plains well behind . Utah had the highest growth rate over the last year (6.7%)—and Washington was second, at 6.2%. The five slowest growing states were in the Plains: North Dakota, Kansas, South Dakota, Iowa, and at the bottom, Nebraska, which reported a gain of only 1.9%.
To reiterate, these are second quarter figures—the move to convergence in employment growth has been more evident in the monthly data from the summer. Moreover, personal income growth will be influenced by growth in average wages, which may accentuate or attenuate differences in employment growth. Finally, of course, growth in the nonwage components of income can diverge (and differences in population growth may also be reflected in aggregate income growth). An interested example that shows how large surface differences in labor markets may not be reflected in income is Alaska and Hawaii. Alaska has had the highest unemployment rate in the nation, and Hawaii the lowest. Yet, from 2017:Q2 to 2018:Q2 personal income in Alaska rose a tad more than Hawaii (3.3% vs. 3.2%--both well under the 4.6% national pace).