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Posted on 01/29/2004 7:06:30 AM PST by Starwind
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Home > News > News Release Archive > 2004 > News Release: Quarterly State Personal Income |
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News Release
EMBARGOED UNTIL RELEASE AT 8:30 A.M. EST, TUESDAY, January 27, 2004
State Personal Income: Third Quarter 2003
Personal income for the Nation grew 1.1 percent in the third quarter of 2003, compared with 1.0 percent in the second quarter and 0.8 percent in the first quarter (table 1). According to estimates released today by the U.S. Bureau of Economic Analysis, earnings for the Nation grew in every industry for the first time in more than two years. Chart 1
Personal Income Growth by Component
Nationally, faster growth in net earnings and in property income offset slower growth in transfer payments. Net earnings grew 1.2 percent in the third quarter, accounting for 0.79 point of the 1.1 percent growth in personal income. Net earnings growth in the third quarter was slightly faster than the growth in either the first or the second quarter of 2003. In addition, third quarter growth was more widespread than earlier growth, as net earnings increased in all states and the District of Columbia in the third quarter. Net earnings grew faster in the third quarter in 38 states, compared with the second quarter when net earnings accelerated in 23 states and the District of Columbia.
Partially reflecting the continued economic rebound, transfer payments grew more slowly in the third quarter of 2003 than in the second quarter. Only eight states experienced faster growth in transfer payments in the third quarter of 2003 compared with 46 states and the District of Columbia in the second quarter. Unemployment benefit payments, the most volatile component of transfer payments, increased only 4.1 percent nationally after increasing 8.6 percent in the second quarter of 2003. Unemployment benefit payments grew in 40 states and the District of Columbia. Together, all other transfer payments—which include old-age, survivors, disability, and other benefits—grew 2.0 percent. Property income (dividends, interest and rent) increased 0.1 percent in the third quarter, compared with a decline of 0.4 percent in the second quarter. A 2.4 percent increase in rental income and a 1.6 percent increase in dividends more than offset a decline in interest income.
Earnings Growth by Industry
Nationally, earnings grew in every industry for the first time in more than two years (table 3). Financial activities accounted for 0.28 percentage point of the 1.2 percent growth in earnings and contributed the most to earnings growth in 12 states (table 4). Education and health contributed 0.23 percentage point and contributed the most to earnings growth in 9 states. In Kansas and Oregon, financial activities and education and health services contributed the most to earnings growth, while in Virginia, financial activities and professional and business services were the largest contributors. Natural resources and mining was the largest contributor to earnings growth in nine states. Fast growth in farming was particularly important in Iowa, North Dakota, South Dakota, Montana, and Idaho, all of which were among the ten fastest growing states. Earnings growth in government was the largest contributor in eight states. Government was a major contributor to slow growth in Michigan, South Carolina, and Wisconsin.
After declining for four consecutive quarters, earnings in durables manufacturing increased slightly for the Nation. Earnings in durables manufacturing increased in thirty-three states and the District of Columbia in the third quarter of 2003, in contrast to the second quarter, when earnings increased in only 15 states and the District of Columbia. Earnings in nondurables manufacturing also increased slightly, with moderate declines in 18 states.
Year-to-Year Trends in Quarterly State Personal Income Growth
Because quarter-to-quarter changes in state personal income are subject to large swings, it is also useful to look at the change in state personal income in the current quarter relative to the same quarter a year ago. Chart 2 shows the year-to-year growth rates of quarterly state personal income from the third quarter of 2000 through the third quarter of 2003.
Year-to-year growth in personal income was higher in the top-quintile states than in the bottom-quintile states in the past ten quarters, where the quintiles are based on personal income growth from the second to the third quarter of 2003. The growth rate of the top quintile increased in each of the past five quarters, whereas the growth rate of the bottom quintile in the second and third quarters was below its first-quarter growth rate.
NOTE: The estimates of state personal income have not yet incorporated the new levels of personal income from the recently released comprehensive revision of the national income and product accounts (NIPAs). However, the quarterly movements in the component NIPA series are used as extrapolators to derive national control totals for the first three quarters of 2003. Revised state estimates, incorporating the improved NIPA estimates, will be released on April 27, 2004.
Definitions
Personal income is the income received by all persons from participation in production, from government and business transfer payments, and from government interest. Personal income is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and transfer payments. Net earnings is earnings by place of work (the sum of wage and salary disbursements (payrolls), other labor income, and proprietors' income) less personal contributions for social insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis. Personal income is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no adjustment is made for price changes).
The estimate of personal income in the United States is derived as the sum of the state estimates; it differs from the estimate of personal income in the national income and product accounts (NIPA's) because of differences in coverage, in the methodologies used to prepare the estimates, and in the timing of the availability of source data.
BEA groups all 50 states and the District of Columbia into eight distinct regions for purposes of data collecting and analyses: New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont); Mideast (Delaware, District of Columbia, Maryland, New Jersey, New York, and Pennsylvania); Great Lakes (Illinois, Indiana, Michigan, Ohio, and Wisconsin); Plains (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota); Southeast (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia; Southwest (Arizona, New Mexico, Oklahoma, and Texas); Rocky Mountain (Colorado, Idaho, Montana, Utah, and Wyoming); and Far West (Alaska, California, Hawaii, Nevada, Oregon, and Washington).
BEA's major national, regional, international, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA's Web site: |
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Note that Personal income is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no adjustment is made for price changes).
So the 'consumers income' (on which 70-80% of GDP growth depends) grew 1.1% during the blowout Q3 in which GDP grew 8.2% (adjusted in real dollars with hedonic pricing). Personal income growth did not keep pace with inflation.
Clearly, much of the consumer spending that propelled Q3 GDP was debt-based, not income based.
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