South Dakota personal income update.
Total personal income is used as a broad indicator of a region's economic performance over a period of time. Estimates of total personal income, per capita personal income and disposable personal income through 1996 for the United States and Plains States are regularly produced by the federal government. County level estimates of total personal income and per capita personal income through 1995 are scheduled for release in August of this year. Due to benchmark revisions being done, the U.S. Department of Commerce, Bureau of Economic Analysis (BEA) has delayed the release of 1995 county level data.
Total and Per Capita Personal Income
In 1996, total personal income (TPI) for the Nation increased 5.4 percent compared to 1995. A total of twenty-two states exceeded the 5.4 percent increase with North and South Dakota being the only two states registering double digit growth (11.6 and 10.4 percent respectively). All states included in the Plains Region had above average gains. (See Table 3.) Of the eight regions, the Plains Region was the top performer with an overall increase of 7.3 percent. Substantial increases in farm earnings accounted for the gains in six of the Plains States including North and South Dakota, Iowa, Nebraska, Minnesota and Kansas. Increased levels of corn and wheat production (in South Dakota and North Dakota) contributed to the strong showing. Preliminary estimates for 1996 show South Dakota with record production levels during this decade for both corn and wheat. In [TABULAR DATA FOR TABLE 1 OMITTED] 1996, South Dakota ranked fourth in the U.S. for spring wheat production and had the distinction of first place for both oats and all hay production.
TABLE 2 Per Capita Personal Income United States and Plains Region (Dollars) 1992-1996 1992 1993 1994 1995 1996/P Iowa $18,508 $18,564 $20,150 $20,911 $22,560 Kansas 19,582 20,243 20,884 21,855 23,281 Minnesota 21,186 21,643 22,917 23,944 25,580 Missouri 19,215 19,689 20,654 21,836 22,864 Nebraska 19,284 19,714 20,526 21,450 23,047 North Dakota 16,944 17,052 18,166 18,621 20,710 South Dakota 17,249 17,766 18,921 19,564 21,516 Plains Region 19,495 19,913 21,008 21,989 23,448 United States 20,582 21,223 22,045 23,196 24,231 P = Preliminary Source: Bureau of Economic Analysis, U.S. Dept. of Commerce
Most of the Plains States had increases in both the construction and service sector that exceeded the national average of 6.3 percent for construction and 7.9 percent for the service sector. In addition, earnings increases in durable goods manufacturing in South Dakota (13.9%) and Kansas (12.9%) were more than double the national average of 4.5 percent for this sector. Minnesota had a strong showing in wholesale trade earnings registering a 14.3 percent gain.
Per capita personal income (PCPI) is often used as a tool for measuring the relative economic position of areas. For the 1995-96 period, U.S. population increased 0.9 percent. In the Plains States, population increased less than or was equal to the U.S. gain. For the Nation, PCPI increased 4.5 percent from $23,196 in 1995 to $24,231 in 1996. "The increase in per capita income was more than double the 2.2 percent increase in prices paid by U.S. consumers (as measured by the chain-type price index for personal consumption expenditures). "(Survey of Current Business, "Personal Income and Per Capita Personal Income by State and Region," Duke Tran, May 1997). The states in the Plains Region had increases ranging from 4.7 percent in Missouri to 11.2 percent in North Dakota. South Dakota registered the second largest increase of 10.0 percent. (See Tables 2 and 3.) Further comparisons show that in 1996, South Dakota's PCPI was 88.8 percent of the U.S. average. It has fluctuated from 82.4 percent in 1991 to 88.8 percent of the national average in 1996 during this decade.
TABLE 3 Percentage Change Comparisons United States and Plains Region 1995-1996 Total Per Capita Pers Inc. Pers Inc. Iowa 8.2% 7.9% Kansas 6.9% 6.5% Minnesota 7.8% 6.8% Missouri 5.5% 4.7% Nebraska 8.3% 7.4% North Dakota 11.6% 11.2% South Dakota 10.4% 10.0% Plains Region 7.3% 6.6% United States 5.4% 4.5% Source: Compiled from data in Tables 1 and 2.
Disposable Personal Income and Per Capita Disposable Personal Income
Disposable personal income (DPI) excludes nontax payments such as tuition, donations, and fees paid to government-operated schools and hospitals. Personal tax payments such as income, estate and gift, personal property and some license taxes are excluded as well as tax payments, i.e., personal contributions to social insurance, real estate taxes (these are considered a business expense and have been deducted from gross rent when TPI is calculated), and sales tax which are considered part of personal consumption expenditures.
Since 1992, disposable personal income has shown a steady growth pattern in South Dakota, with growth spurts [TABULAR DATA FOR TABLE 4 OMITTED] on a year to year basis occurring in 1994 and 1996 at 8.5% and 10.6%, respectively. The 10.6 percent gain in 1996 was more than double the U.S. increase of 4.9 percent. The rebound in 1994 was due in part to increased crop production, particularly for corn and soybeans and reflected a recovery from the 1993 floods. (See Tables 4 and 7.)
As shown in Table 5, South Dakota's disposable personal income (DPI) represented a larger percentage of total personal income (TPI) than it did for the U.S. and other states in the Plains Region. DPI in South Dakota stood at 90.1 percent of TPI in both 1992 and 1996 compared to 87.6 and 86.6 percent for the United States.
TABLE 5 Disposable Personal Income as a % of Total Personal Income 1992 and 1996 1992 1996 Iowa 87.7 87.4 Kansas 88.1 86.9 Minnesota 85.7 84.4 Missouri 88.3 87.1 Nebraska 88.5 87.6 North Dakota 89.2 88.6 South Dakota 90.1 90.1 Plains Region 87.6 86.6 United States 87.6 86.6 Source: Compiled from data in Tables 1 and 4.
South Dakota had the second lowest per capita disposable personal income (PCDPI) in the Plains States as noted in Table 6. South Dakota's PCDPI stood at $19,381 in 1996 compared to the national average of $20,979. South Dakota did register a strong gain of 10.1 percent in PCDPI for the 1995-96 period. This was more than double the national increase of 4.0 percent and the second largest gain among the Plains States.
Major Sources of Personal Income in South Dakota
Table 8 shows annual estimates of personal income by source and earnings by industrial source. Personal income is presented by place of residence (credited to the recipient's residence; while labor and proprietors' income (earnings) is presented by place of work (earnings are credited to the area in which the earning activity actually takes place). It is interesting to note the shifts in earnings sources from 1993 to 1996. Of the total earnings by industry in 1993, farm earnings accounted for 9.6 percent compared to 10.5 percent in 1996. Manufacturing also made gains moving from 11.6 percent of the total to 13.1 percent in 1996. The manufacture of durable goods outpaced that of nondurable goods. In 1993 durable goods accounted for 66 percent of the manufacturing sector, while in 1996 it moved to 70 percent. Nondurable goods went from 34 percent to 30 percent for this same period. The service sector also made slight gains. Of total earnings by industry, the service sector comprised nearly 24 percent, followed by government with 15 percent in 1996. However, the government sector comprised only 15.3 percent of total earnings in 1996 compared to 18.1 percent in 1992, further evidence of cutbacks occurring in this sector. [ILLUSTRATION FOR FIGURE 1 OMITTED].
TABLE 6 Per Capita Disposable Personal Income United States and Plains Region (Dollars) 1992-1996 1992 1993 1994 1995 1996/P Iowa $16,222 $16,183 $17,675 $18,293 $19,723 Kansas 17,256 17,795 18,281 19,051 20,225 Minnesota 18,166 18,459 19,536 20,337 21,597 Missouri 16,965 17,350 18,150 19,090 19,906 Nebraska 17,061 17,371 18,090 18,832 20,180 North Dakota 15,118 15,047 16,142 16,452 18,351 South Dakota 15,540 15,913 17,103 17,597 19,381 Plains Region 17,076 17,371 18,325 19,100 20,298 United States 18,035 18,551 19,239 20,178 20,979 P = Preliminary Source: Bureau of Economic Analysis, U.S. Dept. of Commerce TABLE 7 Percentage Change Comparisons United States and Plains Region 1995-1996 Total Per Capita DPI DPI Iowa 8.1% 7.8% Kansas 6.5% 6.2% Minnesota 7.2% 6.2% Missouri 5.0% 4.3% Nebraska 8.0% 7.2% North Dakota 11.9% 11.5% South Dakota 10.6% 10.1% Plains Region 7.0% 6.3% United States 4.9% 4.0% Source: Compiled from data in Tables 4 and 5.
Increased production of corn and soybeans caused farm earnings to accelerate in 1994. Again, in 1996, large increases in farm earnings, mainly reflecting the high level of corn and wheat production following low levels in 1995, caused this sector to increase a remarkable 130.7 percent.
The trends analyzed reveal that the impact of the surge in the farm sector was instrumental in South Dakota's 10.4 percent increase in total personal income in 1996. The erractic behavior of farm income is apparent when reviewing this sector for the past few years. South Dakota's relative position among the Plains States shows the state ranking first with farm income comprising 7.4 percent of total personal income. Missouri ranked last with less than 1 percent. Further comparisons among the Plains States show nonfarm income in South Dakota comprising 92.6 percent of total personal income placing the state in seventh place among the area states. The increase in nonfarm earnings in 1996 of nearly 6 percent did not quite keep pace with the Plains Region, showing an average gain of 6.2 percent. This area will need to show some improvement in South Dakota, especially if the volatile farm sector is unable to maintain its recent record gain. It will be interesting to see if the growing impact of manufacturing will be able to maintain its momentum.
[TABULAR DATA FOR TABLE 8 OMITTED]
SOUTH DAKOTA LOCAL CONDITIONS INDICATORS (% Change Like Period Previous Year) Housing Postal Employ- City Starts/1 Indicator/2 ment/3 Aberdeen -86.4 9.7 0.0 Belle Fourche 0.0 -5.5 0.0 Brookings 0.0 -4.0 0.6 Canton 3.2 0.0 0.0 Chamberlain 0.0 0.3 0.0 Deadwood 1.9 0.0 0.0 De Smet 0.4 0.0 0.0 Elk Point 0.0 2.9 0.0 Hot Springs 0.4 0.0 0.0 Huron 0.0 10.2 1.5 Lead 0.0 1.9 0.0 Madison 0.0 -0.3 0.0 Milbank 0.0 1.9 0.0 Mitchell 846.2 -8.4 2.5 Mobridge 0.0 0.0 -1.7 Pierre -46.1 27.2 1.2 Rapid City -20.4 18.5 4.7 Sioux Falls -28.8 -5.9 3.2 Spearfish -37.6 1.9 0.0 Sturgis -78.2 0.1 0.0 Vermillion 6.1 -3.1 0.0 Watertown -73.8 9.5 3.8 Winner 0.0 0.1 0.0 Yankton -8.5 -2.1 -1.0 1/Percentage change for Jan-Mar 1996 and 1997. Data represents the estimated housing start value. 2/Percentage change for January-March 1996 and 1997. Included in postage indicators are: postage sales, postage meters for customers, meter imprint postage (3rd class regular), and second class postage. 3/Percentage change from March 1996 and 1997 based on county data. PRICES RECEIVED BY FARMERS FOR COMMODITIES SOLD South Dakota March 1996 and March 1997 Prices ($) % Chg Mar *Mar Mar 96- Commodity and Unit 1996 1997 Mar 97 Wheat Bu $4.93 $3.85 -21.9 Com Bu $3.39 $2.51 -26.0 Oats Bu $2.13 $1.75 -17.8 Barley Bu $3.09 $2.46 -20.4 Flaxseed Bu $5.30 /2 N/A Soybean Bu $6.62 $7.80 17.8 All Hay (Baled) Ton $56.00 $91.00 62.5 Cattle/1 Cwt. $55.00 $66.60 21.1 Calves Cwt. $60.90 $79.20 30.0 Hogs Cwt. $48.90 $50.30 2.9 Sheep Cwt. $31.90 $39.60 24.1 Lambs Cwt. $90.40 $101.00 11.7 1/ "Cows" and "Steers & Heifers" with allowance where necessary for slaughter bulls. 2/ Not published. Insufficient sales. Source: South Dakota Crop & Livestock Reporter CONSUMER PRICE INDEX(*) United States January-March 1997 (1982-1984=100) Unadjusted % Chg Jan Feb Mar Jan-Mar All Items 159.1 159.6 160.0 0.6 Food & beverages 156.9 156.9 157.1 0.1 Food 156.5 156.5 156.6 0.1 Alcoholic beverages 161.1 161.8 162.1 0.6 Housing 155.1 155.8 155.9 0.5 Shelter 173.6 174.6 175.2 0.9 Renters' costs 182.7 185.3 186.8 2.2 Homeowners'cost 179.1 179.5 179.8 0.4 Fuel & other utilities 130.8 131.0 129.9 -0.7 Fuels 119.1 119.2 117.2 -1.6 Fuel oil, & other 111.5 109.6 105.5 -5.4 household fuel Gas (piped) & electricity 124.9 125.3 123.4 -1.2 Other util. & pub. services 159.7 160.2 160.5 0.5 Household furn. & operation 124.9 125.2 125.4 0.4 Apparel & upkeep 129.6 131.9 134.5 3.8 Transportation 145.0 144.8 144.9 -0.1 Private transportation 141.8 141.9 141.5 -0.2 Public transportation 185.8 182.4 188.1 1.2 Medical care 231.8 232.7 233.4 0.7 Entertainment 161.3 161.8 162.1 0.5 Other goods and services 220.0 220.7 221.4 0.6 * Consumer Price Index for all Urban Consumers Source: Bureau of Labor Statistics, U.S. Dept. of Labor
Definitions of Data
Personal Income and Its Components
Personal income is defined by the Bureau of Economic Analysis as income received by persons from all sources, including from government and business transfer payments, from participation in production, and from government interest. It 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). Included in personal income are:
* 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 (i.e., medicaid, food stamps, etc.) and to nonprofit institutions serving individuals.
* 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, disability and hospital insurance; supplementary medical insurance; state unemployment insurance and temporary disability insurance; railroad retirement; government employee retirement and veterans life insurance.
Per capita personal income (PCPI) is estimated by dividing total personal income of residents by the resident population as of July 1 of a particular year.
Disposable personal income (DPI) measures the personal income available to residents of an area after personal tax and nontax payments have been deducted from their total personal income. DPI represents the income available to persons for spending or saving.
Per capita disposable personal income (PCDPI) is estimated by dividing the disposable personal income of an area by its resident population. It allows direct comparisons of the disposable income available to residents of an area.
About the author:
Nancy Nelson is an Administrative Assistant at the Business Research Bureau, University of South Dakota in Vermillion.
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|Publication:||South Dakota Business Review|
|Date:||Jun 1, 1997|
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