U.S. personal income growth slowed sharply in the third quarter of 2008 with all states except New Jersey and Wyoming sharing in the slowdown, according to statistics released today by the U.S. Bureau of Economic Analysis. U.S. personal income remained unchanged from the second quarter which had been boosted by economic stimulus payments. The third quarter personal income growth was the weakest for the nation since the first quarter of 1994 and contrasts with the 1.6 percent increase in the second quarter of 2008. State personal income growth rates in the third quarter ranged from a 1.4 percent increase in Wyoming to a 1.6 percent decrease in Mississippi.
Inflation, as measured by the national price index for personal consumption expenditures, accelerated to 1.3 percent in the third quarter from 1.0 in the second. Inflation as high as the third quarter rate has not been seen since the fourth quarter of 1990. This increase in the prices households paid for goods and services was greater than the personal income increases in every state except Wyoming.
The lack of personal income growth in the third quarter reflects the concentration of Economic Stimulus Payments in the second quarter. Only $5 billion in economic stimulus payments were made in the third quarter, down from $113 billion in the second. This decline offset increases in the other components of personal income.
A clearer picture of current conditions emerges when personal income is adjusted for inflation and when the economic stimulus payments are removed. Nationally, personal income excluding economic stimulus payments in real dollars declined 0.3 percent in the third quarter after declining 0.4 percent in the second. Most states shared in this decline but energy producing states such as Alaska, Wyoming, and Texas continued to grow, albeit slowly.
NOTE.— Quarter–to–quarter percent changes are calculated from unrounded data and are not annualized. Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified. Quarter–to–quarter dollar changes are differences between published estimates.
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).
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 – March 24, 2009, at 8:30 A.M. ET for state personal income, fourth quarter 2008, annual 2008, and quarterly and annual revisions 2005-07.