South Dakota personal income update.
Personal income on the national, state, and local level serves as one of the key economic indicators for evaluating economic performance. The Business Research Bureau at the University of South Dakota is a designated member of the Bureau of Economic Analysis (BEA) User Group of the United States Department of Commerce. As a member of this group, the Business Research Bureau regularly receives income releases from the BEA. The information in this article includes county data through 1990 which was released in April 1992 and income data through 1991 for states.
PERSONAL INCOME AND ITS COMPONENTS
Personal income as defined by BEA is income received by persons from all sources. It is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars. It primarily represents payments to individuals for productive services rendered. It includes:
* Private and government wage and salary disbursements--monetary
compensation for employees and corporate
officers, tips, commissions, bonuses and any
payments-in-kind that constitute income to the recipient
* Other labor income--represents employer contributions
to privately administered pension and welfare funds and
other small items such as directors' fees and compensation
of prison inmates
* Farm and nonfarm proprietors' income--monetary income
and income-in-kind of sole proprietorships and partnerships
and tax-exempt cooperatives
* Rental income of persons--monetary income of persons
from the rental of real property (excluding the income of
persons primarily engaged in the real estate business)
* Personal dividend income--measures the dividends received
by persons from all sources
* Personal interest income--interest income of persons
from all sources
* Transfer payments--payments to persons who do not
render current services. Included are payments by government
and business to individuals and to nonprofit institutions
* Less personal contributions for social insurance--consists
of payments by employees, the self-employed, and
other individuals who participate in the following programs:
federal old-age, survivors, and disability insurance;
hospital insurance; supplementary medical insurance; state
unemployment insurance; railroad retirement; government
employee retirement; veterans life insurance; and temporary
disability insurance. (State Personal Income: 1929-87, U.S.
Department of Commerce, Bureau of Economic Analysis)
TOTAL AND PER CAPITA PERSONAL INCOME
Table I offers a year-by-year comparison of total personal income in the U.S. and states of the Plains Region for a ten year period. From 1982 to 1991, South Dakota's personal income growth averaged 7.5 percent per year. This compares to an 8.1 percent average growth for the United States indicating that South Dakota grew at a slightly slower rate. For the same 10 year period, South Dakota exceeded the rate of growth of 6.7 percent in the Plains Region.
[TABULAR DATA I OMITTED]
As illustrated in Figure I which compares the percent changes on a year by year basis for South Dakota and the United States, South Dakota's gains have exceeded the rate of growth in the United States since 1989.
Per capita personal income is computed by dividing the annual total personal income of residents by the resident population. Because population estimates are measured at midyear the per capita personal income estimates can be misleading--particularly in areas where population changes rapidly. Personal income figures are measured as a flow over the year. Since 1989, many states have experienced a slowdown in per capita personal income growth according to the U.S. Dept. of Commerce's Bureau of Economic Analysis. For the nation per capita income growth in 1988 was 7.1 percent, slowing to 6.9 percent in 1989, 5.4 percent in 1990 and 2.1 percent in 1991. Similar changes occurred in most states, including South Dakota with income growth of 12.3 percent in 1989, 9.6 percent in 1990 and 3.2 percent in 1991. Table II provides a ten year summary for the United States and the Plains States.
[TABULAR DATA II OMITTED]
Individuals and also businesses and governmental bodies use the consumer price index (CPI) as a yardstick to measure the rate of inflation. The purchasing power of personal income is also affected by inflation. To adjust for this, personal income in current dollars is divided by the consumer price index to convert it into a figure that better reflects changing purchasing power. Table III, which summarizes the impact of inflation on personal income, shows that during the past 10 years growth in South Dakota's real personal income failed to keep pace with rising prices except in 1984, 1986, and 1989.
[TABULAR DATA III OMITTED]
DISPOSABLE PERSONAL INCOME
Disposable personal income is total personal income less personal tax and nontax payments, such as tuition, donations, and fees paid to government-operated schools and hospitals. Disposable income represents the income available to persons for spending or saving. (State Personal Income: 1929-87) As shown in Table IV, South Dakota averaged a 7.9 percent increase per year during the past ten years, the highest increase among the Plains States.
[TABULAR DATA IV OMITTED]
Comparing per capita disposable income as a percent of per capita personal income shows South Dakota with the highest average percentage of any of the Plains States. This is due mainly to the absence of a state personal income tax. Table V presents comparisons for the past 10 years for the Plains States and the U.S.
[TABULAR DATA V OMITTED]
MAJOR SOURCES OF PERSONAL INCOME
Personal income, analyzed by its major sources, reveals a gain of 6.1 percent in nonfarm personal income, but a decrease of 9.1 percent in farm income for 1990-91. Industries with the strongest gains for the 1990-91 period included finance, insurance & real estate, 12.7 percent; services, 9.1 percent and manufacturing up 8.2 percent. Manufacturing of durable goods was particularly strong registering a 10 percent increase for this period. (See Table VI.)
[TABULAR DATA VI OMITTED]
Figure II, on page 12, illustrates the percent distribution of earnings by major industrial source in South Dakota. The service sector comprised 22.4 percent of total earnings, followed by government and farming 17.5 and 14.9 percent respectively in 1991.
COUNTY PERSONAL AND PER CAPITA INCOME
Total personal income and per capita income for South Dakota counties and regions for the years 1988-1990 along with county rankings are found in Tables VII and VIII. County data for 1991 will be available in April 1993.
[TABULAR DATA VII AND VIII OMITTED]
As shown in Table VII, Region IV and V stood out in the overall relative growth in personal income for the 1989-1990 period, exceeding the 9.5 percent increase for the state. More detailed data on county personal income by major source may be obtained from the Business Research Bureau.
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|Publication:||South Dakota Business Review|
|Date:||Jun 1, 1992|
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