State personal income third quarter of 2011.

Lenze, David G.

State personal income third quarter of 2011

State personal income growth slowed to 0.1 percent, on average, in the third quarter of 2011. (1) In the second quarter, growth averaged 0.9 percent. The third-quarter increase, which was the smallest since the recovery in personal income began 2 years ago (chart 1), was due to an increase in earnings--transfer receipts declined and property income was unchanged. Personal income growth rates in the third quarter ranged from -0.4 percent in West Virginia to 0.6 percent in Washington state. Personal income fell or was unchanged in 20 states and grew 0.2 percent, on average, in the other 30 states. Inflation, as measured by the national price index for personal consumption expenditures, decreased to 0.6 percent in the third quarter from 0.8 percent in the second quarter of 2011.

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State Personal Income

Earnings by state and industry

Earnings grew 0.4 percent in the third quarter, the smallest growth rate since the 0.4 percent increase in the fourth quarter of 2009. Earnings fell or remained unchanged in 4 states and in 7 of the 24 industries that BEA tracks on a quarterly basis (tables A and B). The biggest earnings decline--2.4 percent--was in the information industry. The decline reflected a 2-week strike by telecommunications workers in August and job losses in other information industries. The decline in earnings in the information industry ranged from 1.3 percent in Arizona to 4.6 percent in Hawaii. Only in Washington state did information earnings rise; the 4.7 percent rise in the state reflected the vesting of stock grants and the exercise of stock options, common forms of compensation among information technology firms.

Earnings in durable-goods manufacturing also grew briskly in the state of Washington--4.4 percent--while declining elsewhere or growing at a relatively subdued rate.

State and local government earnings fell in most states in the third quarter. The largest decline--2.9 percent--was in Minnesota, where much of the state government shut down for 20 days in July, leading to layoffs of nearly 60 percent of state government employees. State and local government earnings rose in four states: California, Mississippi, New York, and Oklahoma.

Federal civilian earnings fell in most states, with the largest declines in Kansas (1.3 percent) and Texas (1.2 percent). Until recently, job losses in the postal service have been offset by employment gains in other federal agencies so that total federal civilian earnings grew. In the third quarter, however, job losses in the postal service were accompanied by job losses in the rest of the federal civilian workforce, and earnings fell 0.2 percent nationally.

In contrast to most states, federal civilian earnings rose 1 percentage point or more in Colorado, Maryland, Montana, New Mexico, and Wyoming. The gain in Maryland represented a realignment of existing jobs from Walter Reed Army Medical Center in the District of Columbia (which closed) to the National Naval Medical Center in Bethesda, Maryland.

Construction earnings for the nation rebounded from a trough in the fourth quarter of 2010. Most of the rebound was due to fixed investment in nonresidential structures (which was up 9.0 percent). Investment in residential structures was up only 1.6 percent, while government expenditures were down 6.8 percent (chart 2). Construction earnings have risen in each quarter since the fourth quarter of2010 and are now 2.4 percent above that trough. About one-fourth of that earnings growth has been in California and New York, where earnings are up 2.9 percent and 4.0 percent, respectively, since the fourth quarter of 2010. The strongest growth, however, has been in North Dakota, where earnings were up 14 percent. Supported by its booming oil mining industry, North Dakota's construction industry was largely immune to the recent recession.

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Property income

Property income was unchanged in the third quarter of 2011, the net effect of a 2.4 percent gain in rents, a 1.6 percent gain in dividends, and a 2.2 percent decline in interest income as yields on interest-bearing assets declined (chart 3). (2) In the second quarter property income grew 1.7 percent. One of the largest third-quarter declines among the states--0.4 percent in Florida--reflected the relative importance of interest income for the retirees residing in that state. In contrast, property income increased 0.4 percent in New Mexico.

Current personal transfer receipts

Current personal transfer receipts fell 0.6 percent in the third quarter of 2011 after rising 0.8 percent in the second quarter. State unemployment insurance (UI) compensation fell $5.7 billion, or 5.3 percent (chart 4). Since peaking in the first quarter of 2010, state UI compensation has fallen 33 percent, while the number of unemployed persons has fallen only 7.5 percent. Some of the biggest declines in state UI compensation in the third quarter of 2011 were in states such as Florida (down 16.9 percent) and Arizona (down 13.8 percent). State UI compensation fell only 1.5 percent in Minnesota, where laid-off state employees collected unemployment benefits during the 3-week government shutdown.

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Transfers other than state UI compensation fell $8.0 billion (0.4 percent), a decline entirely accounted for by lower Medicaid receipts. Receipts under the American Recovery and Reinvestment Act of 2009 increased 7.3 percent to $45 billion in the third quarter (table C).

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(1.) Personal income is the sum of net earnings by place of residence, property income, and personal current transfer receipts. Quarter-to-quarter percent changes are not annualized. Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified

(2.) For example, the Federal Reserve reported that the constant-maturity yield on 10-year U.S Treasury securities fell to 2.43 percent in the third quarter from 3.21 percent in the second.

Table A. Growth of U.S. Earnings by Industry

                                  Percent change      Dollar change
                                                   (millions of dollars)

                                         2011              2011

                                    II      III        II         III

All industries                     0.6      0.4     59,240      37,071
  Private sector                   0.8      0.5     57,754      40,533
  Farm                             1.8     -1.0      1,685        -904
  Forestry, fishing, and
    related activities            -1.0      0.5       -233         101
  Mining                           1.7      0.2      1,633         186
  Utilities                        1.4     -0.6      1,047        -442
  Construction                     1.3      0.4      6,274       2,007
  Durable-goods manufacturing     -0.3      0.4     -2,031       2,534
  Nondurable-goods
    manufacturing                  0.6     -0.2      1,969        -696
  Wholesale trade                  1.6      0.1      7,389         713
  Retail trade                     0.3      0.0      1,617         -24
  Transportation and
    warehousing                    0.9      0.5      2,621       1,500
  Information                     -0.8     -2.4     -2,514      -7,298
  Finance and insurance           -2.1      0.1    -14,072         507
  Real estate and rental and
    leasing                        1.0      0.5      1,537         781
  Professional, scientific,
    and technical services         1.9      1.3     17,828      12,031
  Management of companies
    and enterprises                0.5      0.6      1,168       1,429
  Administrative and waste
    services                       1.7      1.5      6,204       5,605
  Educational services             1.7      1.4      2,551       2,182
  Health care and social
    assistance                     1.3      1.4     12,922      14,962
  Arts, entertainment, and
    recreation                     1.4      0.7      1,463         704
  Accommodation and food
    services                       1.9      0.7      5,529       1,993
  Other services, except
    public administration          0.9      0.8      3,167       2,661
Government sector                  0.1     -0.2      1,486      -3,462
  Federal government,
    civilian                       0.5     -0.2      1,461         -18
  Military                         0.3      0.2        595         436
  State and local government      -0.1     -0.3       -572      -3,278

Table B. Growth of Earnings by State

                            Percent change     Dollar change
                                               (millions of
                                                  dollars)

                                2011                2011

                           II        III       II        III

Alabama                      0.3       0.2       354       242
Alaska                       0.3       0.1        71        23
Arizona                      0.5       0.5       818       861
Arkansas                     0.2       0.1       101        96
California                   0.1       0.4     1,722     5,320
Colorado                     1.2       0.5     1,992       853
Connecticut                  1.4       0.1     2,058       116
Delaware                     1.8      -0.3       519       -89
District of Columbia         0.8       0.4       683       295
Florida                      1.0       0.3     4,631     1,309
Georgia                      0.0       0.1       -93       307
Hawaii                       0.4       0.2       185        75
Idaho                        0.9       0.3       335       108
Illinois                     0.6       0.3     2,302     1,320
Indiana                      0.5       0.2       828       289
Iowa                         1.4       0.3     1,184       228
Kansas                       0.9       0.3       787       291
Kentucky                     0.8       0.2       789       199
Louisiana                    0.9       0.7     1,150       896
Maine                       -0.6       0.3      -205       115
Maryland                     0.7       0.5     1,348     1,052
Massachusetts                1.6       0.5     4,161     1,274
Michigan                    -0.7       0.5    -1,765     1,293
Minnesota                    0.5       0.2       863       434
Mississippi                  0.5       0.2       315       119
Missouri                     0.7       0.2     1,204       303
Montana                      1.2       0.3       275        82
Nebraska                     1.2       0.5       675       299
Nevada                       1.5      -0.1     1,076       -51
New Hampshire                1.2       0.4       479       163
New Jersey                   0.9       0.4     2,848     1,355
New Mexico                   1.2       0.3       559       166
New York                    -0.3       0.3    -2,405     1,898
North Carolina               0.9       0.3     2,202       652
North Dakota                 2.2       0.8       555       197
Ohio                         0.7       0.5     2,208     1,474
Oklahoma                     1.8       0.6     1,782       603
Oregon                       1.2       0.2     1,230       181
Pennsylvania                 1.0       0.3     3,904     1,289
Rhode Island                 2.4      -0.1       709       -44
South Carolina               1.1       0.3     1,175       327
South Dakota                 1.8       0.5       416       119
Tennessee                    1.2       0.3     2,067       542
Texas                        1.1       0.8     8,461     6,259
Utah                         1.0       0.7       709       519
Vermont                      1.7       0.4       294        63
Virginia                     0.3       0.3       772       808
Washington                   0.4       1.2       874     2,524
West Virginia                2.5      -0.5       985      -199
Wisconsin                    0.5       0.3       833       466
Wyoming                      1.2       0.3       219        51
United States                0.6       0.4    59,239    37,071

NOTE. Earnings by place of work.

Table C. Special Factors in State Personal Income

[Millions of dollars, annual rate]

                                     2009      2010            2010

                                                         III       IV
Homeowner assistance payments
  in dividends, interest,
  and rent
  Louisiana                          600       500       400       200
  Mississippi                        400       350       400       200
  United States                    1,000       850       800       400
Current transfer receipts of
  individuals from the BP oil
  spill
  Alabama                              0        99        75       274
  Florida                              0       215       111       679
  Louisiana                            0       196       115       596
  Mississippi                          0        50        29       153
  Texas                                0        17         9        54
  United States                        0       578       340     1,756
Net effect of ARRA on personal
  current transfer
  receipts (1)
  Alabama                            975     1,255     1,130     1,157
  Alaska                              92       111        92        95
  Arizona                          1,540     1,692     1,480     1,522
  Arkansas                           673       700       613       627
  California                       9,653     7,444     5,598     5,924
  Colorado                         1,001       824       641       662
  Connecticut                      1,009       623       407       429
  Delaware                           185       160       130       134
  District of Columbia               201       163       134       137
  Florida                          4,422     4,533     3,751     3,946
  Georgia                          2,251     2,500     2,139     2,194
  Hawaii                             285       245       201       209
  Idaho                              341       309       260       266
  Illinois                         3,466     2,779     2,118     2,226
  Indiana                          1,890     1,381     1,077     1,103
  Iowa                               728       621       528       546
  Kansas                             565       494       399       411
  Kentucky                         1,107       963       810       827
  Louisiana                          692     1,147     1,070     1,097
  Maine                              267       229       194       201
  Maryland                         1,004       864       713       732
  Massachusetts                    2,067     1,182       772       821
  Michigan                         3,406     2,547     1,870     2,001
  Minnesota                        1,196       833       618       634
  Mississippi                        619       911       837       855
  Missouri                         1,276     1,218     1,032     1,063
  Montana                            182       171       145       148
  Nebraska                           250       261       230       236
  Nevada                             907       585       394       408
  New Hampshire                      192       156       125       127
  New Jersey                       3,083     1,733     1,056     1,108
  New Mexico                         397       485       423       436
  New York                         4,991     4,185     3,342     3,480
  North Carolina                   2,540     2,271     1,795     1,870
  North Dakota                        85        84        78        79
  Ohio                             2,759     2,459     1,979     2,040
  Oklahoma                           654       770       680       698
  Oregon                           1,184       845       629       662
  Pennsylvania                     3,799     2,523     1,834     1,910
  Rhode Island                       343       226       169       175
  South Carolina                   1,161     1,186       988     1,020
  South Dakota                        95       125       120       122
  Tennessee                        1,431     1,516     1,310     1,349
  Texas                            4,118     5,586     4,976     5,115
  Utah                               401       447       386       393
  Vermont                            135        97        77        80
  Virginia                         1,166     1,198     1,059     1,080
  Washington                       1,541     1,337     1,030     1,331
  West Virginia                      376       369       329       337
  Wisconsin                        1,362     1,030       771       811
  Wyoming                             84        78        62        64
  United States                   74,150    65,450    52,600    54,900

                                             2011

                                      I        II        III

Homeowner assistance payments
  in dividends, interest,
  and rent
  Louisiana                          200       200       200
  Mississippi                        200       200       200
  United States                      400       400       400
Current transfer receipts of
  individuals from the BP oil
  spill
  Alabama                            128        93        64
  Florida                            307       254       237
  Louisiana                          224       135       116
  Mississippi                         57        80        52
  Texas                               59        24        20
  United States                      775       586       489
Net effect of ARRA on personal
  current transfer
  receipts (1)
  Alabama                            944       950       975
  Alaska                              78        79        82
  Arizona                            934       939     1,002
  Arkansas                           510       513       526
  California                       4,343     4,328     4,947
  Colorado                           484       485       513
  Connecticut                        312       313       343
  Delaware                           110       110       115
  District of Columbia                91        92        92
  Florida                          3,089     3,089     3,424
  Georgia                          1,834     1,845     1,910
  Hawaii                             177       178       187
  Idaho                              206       207       212
  Illinois                         1,662     1,665     1,833
  Indiana                            845       851       874
  Iowa                               321       321       345
  Kansas                             313       314       327
  Kentucky                           670       677       685
  Louisiana                          943       949       972
  Maine                              161       163       170
  Maryland                           584       588       605
  Massachusetts                      592       593       663
  Michigan                         1,453     1,451     1,648
  Minnesota                          451       453       470
  Mississippi                        712       715       733
  Missouri                           839       844       875
  Montana                            118       119       121
  Nebraska                           188       189       194
  Nevada                             325       325       345
  New Hampshire                       98        99        99
  New Jersey                         795       794       873
  New Mexico                         360       362       376
  New York                         2,685     2,700     2,911
  North Carolina                   1,471     1,474     1,591
  North Dakota                        62        62        62
  Ohio                             1,573     1,585     1,659
  Oklahoma                           577       581       597
  Oregon                             482       485       525
  Pennsylvania                     1,405     1,410     1,558
  Rhode Island                       130       131       139
  South Carolina                     837       842       891
  South Dakota                        97        98        99
  Tennessee                        1,122     1,131     1,163
  Texas                            4,300     4,319     4,620
  Utah                               282       284       291
  Vermont                             62        63        64
  Virginia                           866       872       887
  Washington                         799       751       832
  West Virginia                      264       267       273
  Wisconsin                          593       594       651
  Wyoming                             48        48        50
  United States                   42,200    42,300    45,400

ARRA American Recovery and Reinvestment Act of 2009

(1.) Some ARRA funding, such as for Medicaid, replaced state funding
and had no net effect on personal current  transfer receipts.