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Economy in Brief

State Personal Income in Q3 2020
by Charles Steindel  December 17, 2020

State personal incomes fell back in Q3, reflecting the lessening of the extraordinary level of income support in Q2. Every state registered a decline, ranging from Georgia’s fractional 0.6% rate of loss to West Virginia’s 29.9%. In general, poorer states such as West Virginia saw steeper declines—the Q2 aid, especially the $1200 checks, would have been substantially more important to their aggregate income than in higher-income states (among other things, a higher fraction of their populations would have received the full $1200).

More fundamentally, every state saw a rebound in Q3 in “net earnings”—employee compensation received by residents (less payroll taxes) plus proprietors’ income. Oklahoma and Wyoming were the only states in which the contribution to overall income of this aggregate was less than 10 percentage points; in Georgia the contribution was a full 25 percentage points, which accounts for aggregate income in the Peach State being nearly unchanged, despite the plunge in transfer payments.

Unsurprisingly, incomes earned in service industries that were effectively shut down in many parts of the nation in the spring rebounded in Q3. For instance, there was growth in real estate, health care, and accommodation and food services in every state, and only a few fractional declines in state income from some other industries, such as education and entertainment.

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