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Duke Tran (202) 606-5344 (Analysis)
Marian Sacks 606-9274 (Estimates)

All 50 states had growth rates in personal income in the first quarter of 1998 that were above the nation's inflation rate, according to estimates released by the Commerce Department's Bureau of Economic Analysis. The five states with the fastest growth in personal income were Alaska, South Carolina, Massachusetts, Colorado, and Arizona.

For the nation, personal income grew 1.6 percent in the first quarter of 1998, the same rate as in the fourth quarter of 1997. Personal income grew faster in the first quarter in the Southwest, Far West, Rocky Mountain, and Southeast regions and grew slower in the New England, Great Lakes, Plains, and Mideast regions. Prices paid by U.S. consumers (as measured by the price index for personal consumption expenditures) increased 0.1 percent in the first quarter, after increasing 0.3 percent in the fourth quarter.

Fastest growing states

In the first quarter of 1998, the five states with the fastest growth in personal income were Alaska (2.3 percent), South Carolina (2.3 percent), Massachusetts (2.1 percent), Colorado (2.1 percent), and Arizona (2.1 percent). In all five states, earnings (see "Definitions" on page 5) contributed substantially more to personal income growth than transfer payments or dividends, interest, and rent (see table 1, contribution to percent change in personal income).

In all five states, private services-producing industries were the major contributor to growth in earnings (see table 3).

• In Alaska, of the 2.6-percent increase in earnings, private services-producing industries, mainly "services" and retail trade, contributed 1.4 percentage points; private goods- producing industries contributed 0.7 percentage point; and government contributed 0.4 percentage point.
• In South Carolina, of the 2.7-percent increase in earnings, private services-producing industries, mainly "services," contributed 1.7 percentage points; private goods-producing industries contributed 0.7 percentage point; and government contributed 0.2 percentage point.
• In Massachusetts, of the 2.6-percent increase in earnings, private services-producing industries, mainly "services" and finance, insurance, and real estate, contributed 1.6 percentage points; private goods-producing industries contributed 0.9 percentage point; and government contributed 0.1 percentage point.
• In Colorado, of the 2.4-percent increase in earnings, private services-producing industries, mainly "services" and finance, insurance, and real estate, contributed 1.4 percentage points; private goods-producing industries contributed 0.8 percentage point; and government contributed 0.2 percentage point.
• In Arizona, of the 2.4-percent increase in earnings, private services-producing industries, mainly "services" and retail trade, contributed 1.9 percentage points; private goods- producing industries contributed 0.4 percentage point; and government contributed little.

Note: In Alaska, South Carolina, and Arizona, contributions from industry groups do not add to the percent changes in earnings due to rounding.

Slowest growing states

In the first quarter of 1998, the four states with the slowest growth in personal income were North Dakota (0.4 percent), Delaware (0.5 percent), Vermont (0.5 percent), and Arkansas (0.7 percent).

In all of these states except Delaware, negative contributions of private goods-producing industries were offset or more than offset by positive contributions of private services- producing industries and of government (see table 3).

• In North Dakota, of the 0.4-percent increase in earnings, private goods-producing industries, mainly farms, contributed -1.7 percentage points; private services-producing industries contributed 1.8 percentage points; and government contributed 0.2 percentage point.
• In Arkansas, of the 0.4-percent increase in earnings, private goods-producing industries, mainly farms, contributed -0.9 percentage point; private services-producing industries contributed 1.1 percentage points; and government contributed 0.2 percentage point.
• In Delaware, of the 0.2-percent decline in earnings, private goods-producing industries, mainly manufacturing, contributed -0.5 percentage point; private services-producing industries contributed 0.3 percentage point; and government contributed 0.1 percentage point.
• In Vermont, where earnings did not change, private goods-producing industries, mainly manufacturing, contributed -1.1 percentage points; private services-producing industries contributed 0.9 percentage point; and government contributed 0.2 percentage point.

Note: In North Dakota and Delaware, contributions from industry groups do not add to the percent changes in earnings due to rounding.

Dollar changes by region and state

For the nation, personal income increased $112.0 billion (see table 1). More than three-fifths of the increase was accounted for by three regions -- the Southeast, Mideast, and Far West (see chart). Within these regions, the increase in personal income was largely accounted for by these states: Florida, Virginia, North Carolina, and Georgia in the Southeast; New York and New Jersey in the Mideast; and California in the Far West.

Most of the $112.0 billion increase in U.S. personal income was in net earnings, which increased $80.6 billion. Transfer payments increased $20.0 billion, and dividends, interest, and rent increased $11.4 billion.

U.S. earnings by place of work increased $88.4 billion; increases were registered in each major industry except farms, where proprietors' income declined. Nearly two-thirds of the increase was accounted for by services, by finance, insurance, and real estate, and by construction.

More than three-fifths of the increase in U.S. earnings in services was accounted for by the Southeast, Far West, and Mideast regions. Within these regions, the increase was largely accounted for by these states: Florida, Virginia, Georgia, and North Carolina in the Southeast; California in the Far West; and New York and Pennsylvania in the Mideast.

Three-fifths of the increase in U.S. earnings in finance, insurance, and real estate was accounted for by the Mideast, Southeast, and Far West regions. Within these regions, the increase was largely accounted for by these states: New York in the Mideast; Florida, North Carolina, Georgia, and Virginia in the Southeast; and California in the Far West.

Nearly three-fifths of the increase in U.S. earnings in construction was accounted for by the Southeast, Far West, and Mideast regions. Within these regions, the increase was largely accounted for by these states: Florida, Georgia, Virginia, and North Carolina in the Southeast; California in the Far West; and New Jersey and Pennsylvania in the Mideast.

Definitions

Personal income is the income received by all persons from participation in production, from government and business transfer payments, and from government interest. Personal income is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and transfer payments. Net earnings by place of residence is earnings by place of work the sum of wage and salary disbursements (payrolls), other labor income, and proprietors' income -- less personal contributions for social insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis. Personal income 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).

The personal income level for the United States in this release is derived as the sum of the state estimates; it differs from the national income and product accounts (NIPA) estimate of personal income because, by definition, it omits the earnings of federal civilian and military personnel stationed abroad and of U.S. residents employed abroad temporarily by private U.S. firms. It can also differ from the NIPA estimate because of different revision schedules.

Private goods-producing industries are defined to consist of farms; agricultural services, forestry, and fishing; mining; construction; and manufacturing. Private services-producing industries are defined to consist of transportation and public utilities; wholesale trade; retail trade; finance, insurance, and real estate; and "services."

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BEA's major national, regional, international, and industry estimates; selected articles from the Survey of Current Business; and BEA news releases are available on BEA's web site:

STAT-USA maintains an electronic bulletin board (EBB) and an Internet site, which contain BEA estimates, BEA news releases, and the Survey of Current Business. The information available through STAT-USA is often more detailed and more timely than that available from other sources. To subscribe to STAT-USA's World Wide Web system, go to: http://www.stat-usa.gov. Subscriptions for single-user unlimited access to STAT-USA's Internet information are $50.00 for 3 months or $150.00 for 1 year. For further information, call (202) 482-1986.

Summary BEA estimates are available on recorded messages at the time of public release at the following telephone numbers:

     (202) 606-5306   Gross domestic product
           606-5303   Personal income and outlays
           606-5362   Summary of international transactions

Most of BEA's estimates and analyses appear in the Survey of Current Business, BEA's monthly journal. The printed Survey of Current Business is available from the Superintendent of Documents, U.S. Government Printing Office, Washington D.C. 20402. First class mail: Annual subscription $88.00 domestic. Second class mail: Annual subscription $39.00 domestic, $48.75 foreign; single issue $14.00 domestic, $17.50 foreign.

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Next state personal income release -- September 14, at 9:00 AM EDT for 1998 State Per Capita Personal Income and State Personal Income (revised)