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Personal income by state and region, first quarter 1993.

PERSONAL INCOME in the Nation declined 1.6 percent in the first quarter of 1993 after increasing 3.5 percent in the fourth quarter of 1992. These changes were affected by the payment in the fourth quarter of 1992 of yearend bonuses that typically would have been paid in the first quarter. Excluding the effect of these early payments, personal income in the Nation would have increased 1.5 percent in the first quarter after increasing 1.9 percent in the fourth.(1)

In the first quarter, personal income declined in 42 States and increased in 8 States; the 8 States with increases were Iowa, Alaska, Nebraska, Mississippi, South Dakota, Arkansas, New Mexico, and Louisiana. Excluding the effect of the early bonus payments, personal income would have increased in all States except North Dakota, Montana, and New Jersey.

The remainder of this article looks at the growth in State personal income during the current recovery and then briefly describes the revisions to the State personal income estimates for 1992. Tables 1 and 2 at the end of the article contain the quarterly estimates of total and nonfarm State personal income beginning with the first quarter of 1990.

[TABULAR DATA 1 and 2 OMITTED]

Personal Income Growth During the Current Recovery

In the first eight quarters of recovery following the business cycle trough in the first quarter of 1991, personal income in the Nation increased at an annual rate of 4.6 percent. By comparison, personal income increased at an average annual rate of 9.8 percent in the first eight quarters of the three previous recoveries that lasted at least as long as the current one.(2) From the first quarter of 1991 to the first quarter of 1993, the 4.6-percent annual increase in personal income exceeded the 3.2-percent annual increase in U.S. prices (measured by the fixed-weighted price index for personal consumption expenditures). By State, the annual increase in personal income exceeded 3.2 percent in all States except Connecticut.

The following discussion focuses on the 11 States with the fastest growth in personal income and on the 11 States with the slowest growth. The rankings of all States except New York were affected little by the early bonus payments; New York was shifted from the average growing group to the slowest growing group.

Fastest growing States

During the recovery, increases in personal income in the 11 fastest growing States ranged from 8.4 percent in North Dakota to 6.1 percent in Arkansas and Washington (table A and chart 1). These 11 States accounted for more than 10 percent of personal income in the Nation.

[TABULAR DATA A OMITTED]

In North Dakota, Nebraska, and Iowa, personal income growth was substantially boosted by rapid growth in farm income. In addition, increases in payrolls were above average in nondurables manufacturing, in construction, and in wholesale trade.

In Idaho, Kentucky, South Dakota, North Carolina, Mississippi, and Arkansas, changes in payrolls were above average in both durables and nondurables manufacturing and in construction. In addition, in all these States, increases in payrolls were above average in all private service-type industries except for the transportation-public utilities group in Mississippi.(3) In Kentucky and North Carolina, military payrolls rebounded strongly from low levels in the first quarter of 1991 that had reflected the effect of Operation Desert Storm. (The compensation of military personnel who are assigned abroad is excluded from State personal income.)

In Washington and Utah, increases in payrolls were above average or average in construction, in the private service-type industries, and in government.

In two of the fastest growing States, changes in payrolls were weak in a few major industries: In Idaho, the increase in farm income was weak, and in Utah, payrolls in manufacturing declined.

Slowest growing States

During the recovery, increases in personal income in the 11 slowest growing States ranged from 2.5 percent in Connecticut to 4.0 percent in Maine. These 11 States accounted for more than 40 percent of personal income in the Nation.

In Virginia, Maryland, Massachusetts, California, and Connecticut, personal income growth was dampened by declines in payrolls in construction and in durables manufacturing. The declines in construction payrolls were larger than the decline of 1.3 percent in the Nation; the State decline's partly reflected the lingering effects of the overbuilding of commercial and residential structures during the boom years of the 1980's. The declines in manufacturing payrolls partly reflected the cumulative effects of cutbacks in U.S. defense spending. In addition, all of these States had below-average changes in payrolls in retail trade and in government.

In Maine, Florida, and Hawaii, payrolls declined in durables manufacturing, and payroll changes were below average in the finance-insurance-real estate group and in government.

In New Jersey, New York, and Delaware, payrolls declined in construction, and increases in payrolls were below average in services. Additionally, nondurables manufacturing payrolls declined in New York and Delaware, and durables manufacturing payrolls declined in New Jersey.

In three of the slowest growing States, payroll increases were well above average in a few major industries: Increases were strong in government in New Jersey, in the transportation-public utilities group in Hawaii, and in durables manufacturing in Delaware.

Revisions to the State Personal Income Estimates

As is usual in July, the annual and quarterly estimates of State personal income for the preceding year have been revised to incorporate newly available data for the fourth quarter from the Bureau of Labor Statistics (BLS). For the fourth quarter of 1992, the BLS tabulations of wages and salaries of employees covered by State unemployment insurance showed unusually strong growth, largely reflecting the early payment of yearend bonuses. As a result, the U.S. total of State personal income estimates for 1992 has been revised up $34.9 billion from the $5,061.0 billion published in the April 1993 Survey of Current Business (table B).

[TABULAR DATA B OMITTED]

As explained in the note on page 28, incorporating the new fourth-quarter data raised the U.S. total of State personal income for all four quarters of 1992. The largest revision, $96.3 billion (annual rate), was to the fourth quarter and mainly reflected the early bonus payments.

For each State, the annual estimate of total personal income has also been revised upward; the largest revisions were to New York, Texas, California, Florida, and New Jersey. All the States except Delaware, Montana, and Wyoming had upward revisions in each quarter.

The estimates of total personal income and nonfarm personal income for the first quarter 1992 through the first quarter 1993 presented in this article differ from those issued in the news release on July 22, 1993. The changes reflect the correction of errors in proprietors' income for the construction industry and in personal contributions for social insurance. (1.) These percent changes are not at annual rates. (2.) For the three recoveries, the increases were 8.6 percent in 1982:IV-1984:IV, 10.6 percent in 1975:I-1977:I, and 10.2 percent in 1970:IV-1972:IV. (3.) Private service-type industries consist of wholesale trade, retail trade, the finance-insurance-real estate group, the transportation-public utilities group, and services.
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Author:Friedenberg, Howard L.; Tran, Duke D.
Publication:Survey of Current Business
Date:Jul 1, 1993
Words:1192
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