WASHINGTON DC, March 24, 2009 – U.S. personal income growth slowed to 3.9 percent in 2008 from 6.0 percent in 2007 with all states except Alaska sharing in the slowdown, according to preliminary estimates released today by the U.S. Bureau of Economic Analysis. The U.S. growth was the slowest since 2003. Inflation, as measured by the national price index for personal consumption expenditures, rose to 3.3 percent in 2008 up from 2.6 percent in 2007.
The range of state growth rates was wide. The high end included oil producing states such as Alaska, Wyoming, Oklahoma, and Texas which benefitted from the rise in oil prices, which peaked in the first half of 2008. Annual employment levels in 2008 in these states exceeded their 2007 levels. At the other end, personal income growth was less than the 3.3 percent national inflation rate in 13 states in 2008. These states include Florida, Arizona, Michigan, and Nevada which had among the largest percentage declines in employment in 2008.
Per capita personal income (personal income divided by population) grew 2.9 percent nationally in 2008 down from 4.9 percent in 2007. Across states, per capita personal income growth rates ranged from 0.4 percent in Arizona (down from 1.7 percent) to 9.0 percent in North Dakota (down from 11.9 percent).
Disposable per capita personal income increased 3.8 percent, nearly one percentage point more than per capita personal income. The faster growth is largely a result of federal income tax rebates associated with the Economic Stimulus Act of 2008 (disposable personal income is personal income less personal current taxes). This measure represents the amount the average person has available for saving or for consumption. Across states, disposable per capita personal income growth rates ranged from 1.3 percent in Arizona (the same as in 2007) to 9.9 percent in North Dakota (down from 11.9 percent).
Fourth quarter personal income.1 Personal income declined nationally and in 41 states in the fourth quarter of 2008. The 0.2 percent national decline was the first since 1994Q1 and contrasts with a 0.2 percent increase in the third quarter. Personal consumption prices fell 1.3 percent in the fourth quarter of 2008, the largest quarterly decline ever.
The largest contributors (by industry) to the decline in personal income were the cyclically sensitive manufacturing and construction sectors as well as the trade sector, at both the wholesale and retail levels.
The change in state personal income in the fourth quarter ranged from a 0.9 percent rise in Alaska to a 1.8 percent fall in North Dakota. Despite falling oil prices, the energy producing sector (mining) in Oklahoma, New Mexico, West Virginia, Texas, Louisiana, and Alaska continued to expand in the fourth quarter enabling those few states to register positive personal income growth.
Quick links to all of the regional statistics underlying this news release along with mapping and charting software and a detailed methodology are available at http://www.bea.gov/regional/quick.cfm.
NOTE.–Quarter-to-quarter percent changes are calculated from unrounded data. They are seasonally adjusted but not annualized.
Personal income is the income received by all persons from all sources. Personal income is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and personal current transfer receipts. Net earnings is earnings by place of work (the sum of wage and salary disbursements (payrolls), supplements to wages and salaries, and proprietors' income) less contributions for government 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).
Per capita personal income is calculated as the total personal income of the residents of a state divided by the population of the state. In computing per capita personal income, BEA uses the Census Bureau's annual midyear population estimates.
Disposable personal income is personal income less personal current taxes. It is the portion of personal income that is available for spending and saving.
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 (NIPAs) 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 national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.
Next state personal income release – June 18, 2009, at 8:30 A.M. ET for state personal income, first quarter 2009.