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State personal income, first quarter 1988.

PERSONAL income growth slowed in the first quarter of 1988, and the slowing was widespread by State and industry. Forty-seven States shared in the slowdown; only Montana, Idaho, and Oklahoma had larger income growth in the first quarter of 1988 than in the fourth quarter of 1987. Slowdowns occurred in all major industries except trade and government.

Two special factors had State-specific-rather than general-impacts on personal income but did not alter the picture of widespread slowing. The factors were Federal subsidies iii farming, which are part of farm proprietors' income, and profit sharing in the motor vehicles industry, which is part of wage and salary disbursements. In addition, payments from the Alaska Permanent Fund, which are part of transfer payments, affected personal income in Alaska.

Agricultural subsidy payments have substantial effects on State personal income patterns because crop production is usually concentrated in a few States, each crop is under a different subsidy program, and the subsidies are not paid out evenly over the year. Three States-Nebraska, Iowa, and Minnesota-had slower growth in the first quarter partly because subsidy

payments on the 1986 corn crop had boosted personal income in the fourth quarter. In contrast, subsidy payments boosted first-quarter personal income in the three States-Montana, Idaho, and Oklahoma-that had faster personal income growth in the first quarter than in the fourth. These payments included advance 1988 subsidy payments on the wheat crop (all three States), barley crop (Montana and Idaho), and cotton crop (Oklahoma).

Profit sharing payments in the motor vehicles industry-amounting to $2.7 billion (at an annual rate) in the first quarter-were concentrated in Michigan and Ohio. The payments, which were the largest since 1985, boosted durables manufacturing payrolls in these States; as a result, firstquarter slowdowns in personal income growth were less pronounced than for the Nation. The payments were distributed mainly by one major manufacturer and were based on profit performance in 1987.

The Alaska Permanent Fund, which is derived. from oil revenues, pays a portion of its net investment income to every Alaska resident. Payments from the Fund declined in the first quarter, reflecting the completion of 1987 payments. The decline in payments contributed to a first-quarter decline in personal income in Alaska.

Regional developments since first quarter 1987

From the first quarter of 1987 to the first quarter of 1988, personal income in regions along the Atlantic and Pacific coasts increased more rapidly than the national average; personal income in interior regions increased less rapidly.

[Percent change in personal income, 1987:I-1988:I]

United States............................................... 6.3

Coastal regions ........................................ 7.1

New England........................................ 8.2

Southeast ...................................... ........ 7.2

Mideast.................................................. 6.9

Far West ............................................... 6.7

Interior regions........................................ 5.1

Great Lakes.......................................... 5.9

Plains..................................................... 4.9

Southwest............................................. 4.1

Rocky Mountain .................................. 3.6 This pattern of relatively fast growth in coastal regions and slow growth in interior regions has prevailed throughout the current economic expansion.

Since the first quarter of 1987, payrolls in private service-type industries showed strength in each co as tal region; construction payrolls also were strong. Both durables and nondurables manufacturing payrolls were strong in the Southeast and Far West regions, in part reflecting the pickup in exports due to the cumulative effect of dollar depreciation against major foreign currencies.

Among interior regions, weak oil prices adversely affected mining and related construction and private service-type industries in the Southwest and Rocky Mountain regions. In addition, weak prices for crops and livestock adversely affected farming and related in dustries in the Plains region. Despite strength in exports, durables manufacturing payrolls in the Great Lakes region increased more slowly than in the Nation.

Estimates of State quarterly personal income follow. The quarterly estimates do not reflect the July 1988 revisions to the national income and product accounts that are presented earlier in this issue; those revisions will be incorporated in the estimates of State quarterly personal income that will be published in the October 1988 SURVEY OF CURRENT BUSINESS.
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Author:DePass, Rudolph E.; Friedenberg, Howard L.
Publication:Survey of Current Business
Date:Jul 1, 1988
Words:656
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