State Personal Income Growth Accelerates

New York had the largest uptick, turning a 4.2% drop in the second quarter into a 6.2% gain in the third—a 10.4 percentage point increase. Washington soared +8.5 points thanks to the vesting of some stock options at Microsoft. Rhode Island, Arizona, and Massachusetts also posted solid third-quarter improvements; partially a result of healthy hiring and wage gains in professional and business services. Minnesota, Nebraska, and Utah slowed the most, with weakness in transportation and warehousing playing a key role there.

Overall, annualized growth in the third quarter was strongest in Washington at 15.4% (because of Microsoft), along with New Mexico and Oklahoma (healthy wage increases), and Louisiana and Mississippi (Katrina rebuilding). Meanwhile the weakest performers—all under 4.5%—had poor job growth (Michigan), slow wage gains (Maryland and Connecticut), or both (Minnesota).

Over the past twelve months, growth has been strongest in a band of states stretching from Texas northwest to Washington, where job and wage gains have been robust. Utah continues to have the largest year-over-year (y/y) increase, but is starting to slow, as noted above. Meanwhile, income gains in Michigan remain anemic, rising just 3.4% y/y (and only 1.2% in real terms) as the state continues to suffer from layoffs in auto-making and other manufacturing industries. Weak wage and/or job growth has plagued the other northern states that occupy the bottom five.

by Dave Iaia

For a look at the data in these tables for all states, please click here: