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Per capita personal income: continued widening of regional differences in 1988.

Per Capita Personal Income: Continued Widening of Regional Differences in 1988

IN 1988, the gap in per capita personal income (as a percent of the U.S. average) between the highest income region-New England-and the lowest income region-Rocky Mountain-was wider than in any year since 1969. The widening of regional differences in per capita income continued the pattem of the current economic expansion. In each year since 1982, per capita income in the high-income regions of New England and the Mideast has increased faster than the U.S. average; in the low-income Rocky Mountain and Southwest regions, it has increased slower than the average. In contrast to this widening,in the three other expansions since 1969, regional differences in per capita income had narrowed.'

By slipping into last place in 1988, the Rocky Mountain region became the first region to record a per capita income below that of the Southeast region, which had been in last place since 1929-the earliest year for which BEA estimates regional per capita income (chart 9). Rocky Mountain per capita income, at $14,282 in 1988, was 13 percent below the U.S. average of $16,444, the region's lowest relative level since 1937. In the Southeast, per capita income was $14,331; in the Southwest, it was $14,365. In the Rocky Mountain and Southwest regions, the below-average growth in per capita income since 1982 reflects the continuing weakness in oil and gas exploration.

The above-average increase since 1982 in per capita income in the New England and Mideast regions reflects rapid growth in total personal income combined with below-average population growth (table 1). Per capita income in New England, at $20,013 in 1988, was 22 percent above the U.S. average, the region's highest relative level since 1942.

Per capita income in the Plains region was below U.S. per capita income in each year of the current expansion, and it increased more slowly than the U.S. average in most of these years. In the Far West, Great Lakes, and Southeast regions, per capita income relative to the U.S. average has changed little since 1982.

Growth in high-income regions, 1982-88

In the New England and Mideast regions, rapid growth in service and construction industry payrolls boosted the growth of both total and per capita personal income. Population growth was dampened by relatively high housing costs, which discouraged workers from migrating to these regions despite increased job opportunities. Population growth in both regions was doser to the U.S. average in 1988 than earlier in the expansion.

In the Far West region, rapid population growth more than offset rapid growth in total personal income, resulting in a gain in per capital income slightly below the U.S. average.

Growth in low-income regions, 1982-88

In the Great Lakes region, a gain in per capita income equal to the U.S. average reflects offsetting growth in total personal income and in population.

In the Plains region, slow growth in total personal income led to a belowaverage gain in per capita income. Population also grew slowly, despite accelerations in 1987 and 1988. Weakness in the farm economy, particularly in the drought year of 1988, has held down personal income growth.

In the Southwest and Rocky Mountain regions, slow growth in total personal income contributed to belowaverage gains in per capita income. Weakness in oil and gas exploration and in related activities, such as construction and financial services, dampened personal income growth. From 1982 to 1986, population migration to the Southwest was substantial despite reduced job opportunities in energyrelated industries; after 1986, migration slowed considerably. Population in the Rocky Mountain region grew slower than the U.S. average from 1984 to 1987 and dechned in 1988, following above-average growth earlier in the expansion.

The Southeast was the only lowincome region in which per capita income grew faster than the U.S. average. Above-average gains in per capita income in the States along the Atlantic Coast and in Tennessee more than offset below-average gains in the other Southeast States; the net result was a gain in regional per capita income shghtly above the U.S. average. In each of the Atlantic Coast States, rapid growth in durables manufacturing, construction, and service industry payrolls accounted for above-average gains in per capita income, despite rapid growth in population. In the States with below-average gains in per capita income, slow growth in total personal income was the restraining factor; population also grew slowly.

Per capita income by State

A similar picture of a widening of differences in per capita income from 1982 to 1988 emerges when the focus is on States instead of on regions. In 8 of the 10 States with the highest per capita income in 1988, per capita income as a percent of the U.S. average was higher in 1988 than in 1982 (table 2). Most of the high-income States are in the New England and Mideast regions. Similarly, in 9 of the 10 States with the lowest per capita income in 1988, per capita income as a percent of the U.S. average was lower in 1988 than in 1982. Most of the low-income States are in the Rocky Mountain and Southeast regions.
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Title Annotation:Regional Perspectives
Publication:Survey of Current Business
Date:Apr 1, 1989
Words:869
Previous Article:Alternative measures of real GNP.
Next Article:Growth in metropolitan and nonmetropolitan areas: an update.
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