Global| Sep 26 2018State Personal Income
Summary
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 [...]
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).
Charles Steindel
AuthorMore in Author Profile »Charles Steindel has been editor of Business Economics, the journal of the National Association for Business Economics, since 2016. From 2014 to 2021 he was Resident Scholar at the Anisfield School of Business, Ramapo College of New Jersey. From 2010 to 2014 he was the first Chief Economist of the New Jersey Department of the Treasury, with responsibilities for economic and revenue projections and analysis of state economic policy. He came to the Treasury after a long career at the Federal Reserve Bank of New York, where he played a major role in forecasting and policy advice and rose to the rank of Senior Vice-President. He has served in leadership positions in a number of professional organizations. In 2011 he received the William F. Butler Award from the New York Association for Business Economics, is a fellow of NABE and of the Money Marketeers of New York University, and has received several awards for articles published in Business Economics. In 2017 he delivered Ramapo College's Sebastian J. Raciti Memorial Lecture. He is a member of the panel for the Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters and of the Committee on Research in Income and Wealth. He has published papers in a range of areas, and is the author of Economic Indicators for Professionals: Putting the Statistics into Perspective. He received his bachelor's degree from Emory University, his Ph.D. from the Massachusetts Institute of Technology, and is a National Association for Business Economics Certified Business EconomistTM.
