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Three Plains states — Nebraska, Kansas, and Iowa — and two western states — Nevada and Arizona — led the nation in personal income growth in the second quarter of 1999, according to estimates released by the Commerce Department's Bureau of Economic Analysis.

For the nation, personal income grew 1.3 percent in the second quarter. Prices paid by U.S. consumers (as measured by the price index for personal consumption expenditures) increased 0.5 percent. The District of Columbia and all states except West Virginia and Alaska had growth rates in personal income that were above the 0.5-percent increase in prices.

Fastest growing states

In the second quarter of 1999, the five states with the fastest growth in personal income were Nebraska (2.2 percent), Kansas (2.0 percent), Iowa (1.9 percent), Nevada (1.9 percent), and Arizona (1.8 percent). Except for Nevada, the strong growth in the second quarter reflected a rebound from declines or slow growth in the first quarter of 1999. In Nevada, personal income continued to grow well above the U.S. average.

While, as a group, these five states accounted for only 4.7 percent of U.S. personal income, they contributed 7.1 percent of the $92.6-billion U.S. growth in the second quarter of 1999 (see the table below and table 1).

                     States with the fastest growth in personal income in 1999:II
---------------------------------------------------------------------------------------------------------------
                ------------ Personal income --------------  ----------Type of income-----------     Percent
                                                                Dividends,                        share of U.S.
                                                                interest,                           personal
                1998:II  1998:III  1998:IV  1999:I  1999:II     and rent    Transfer    Net        income in
                                                                            payments  earnings      1999:II
                ---percent change from previous quarter----  ---percent change, 1999:I-1999:II--- -------------

United States...  1.3      1.3      1.5       1.2      1.3        1.1          0.5         1.5        100.0

Nebraska........  1.7      1.3      2.9       -.3      2.2        1.0           .6         2.8           .6
Kansas..........  1.5       .9      2.5        .5      2.0        1.2           .6         2.5           .9
Iowa............  1.1      1.3      3.6       -.8      1.9         .9           .4         2.5          1.0
Nevada..........  1.9      2.0      2.8       2.0      1.9        1.6          1.1         2.1           .7
Arizona.........  2.1      2.0      2.2       -.4      1.8        1.4           .6         2.2          1.5
--------------------------------------------------------------------------------------------------------------
Note.—Percent changes are expressed at quarterly rates.

By type of income, net earnings contributed more to the rapid growth in personal income in all five states than did transfer payments or dividends, interest, and rent. By industry, strong growth in earnings by place of work reflected growth in most major industries.

• In Nebraska, Kansas, and Iowa, earnings in farms was the major contributor to earnings growth. The second-quarter increase in farm earnings was accounted for by large increases in farm subsidy payments after a decrease in the first quarter of 1999 from an unusually high level in the fourth quarter of 1998. The high level in the fourth quarter reflected an acceleration in subsidy payments, authorized by the Federal 1998 Omnibus Budget Resolution. In addition, Iowa's earnings in manufacturing and services also contributed substantially to earnings growth in the second quarter.
• In Arizona, earnings in services and in finance, insurance, and real estate contributed substantially to earnings growth in the second quarter after a decline in the first quarter. The earnings decline in the first quarter mainly reflected weakness in earnings in manufacturing, in government, in transportation and public utilities, and in finance, insurance, and real estate.
• In Nevada, earnings in services and in finance, insurance, and real estate contributed substantially to earnings growth in the second quarter.

Slowest growing states

In the second quarter of 1999, the four states with the slowest growth in personal income were West Virginia (0.1 percent), Alaska (0.4 percent), North Carolina (0.7 percent), and New York (0.7 percent). Except for New York, the slow growth was a continuation of slow growth in the first quarter of 1999. The strong growth in the first quarter in New York mainly reflected unusually large lump-sum payments in the finance industry.

While, together, New York and North Carolina accounted for 10.6 percent of U.S. personal income, they contributed only 5.6 percent of the $92.6-billion U.S. growth in the second quarter (see the table below and table 1).

                    States with the slowest growth in personal income in 1999:II

---------------------------------------------------------------------------------------------------------------
                ------------ Personal income --------------  ----------Type of income-----------     Percent
                                                                Dividends,                        share of U.S.
                                                                interest,                           personal
                1998:II  1998:III  1998:IV  1999:I  1999:II     and rent    Transfer    Net        income in
                                                                            payments  earnings      1999:II
                ---percent change from previous quarter----  ---percent change, 1999:I-1999:II--- -------------

United States...  1.3      1.3      1.5       1.2      1.3        1.1          0.5         1.5        100.0

West Virginia...   .7      1.1       .5        .3       .1         .8           .3         -.2           .5
Alaska..........  -.4       .1      1.4       1.0       .4        1.0          1.1          .1           .2
New York........  1.7      1.0      0         3.3       .7         .9           .5          .7          8.1
North Carolina..  1.3      1.3      1.3        .8       .7        1.4           .7          .5          2.5
---------------------------------------------------------------------------------------------------------------
Note.—Percent changes are expressed at quarterly rates.

By type of income, weakness in net earnings contributed more to the slow growth in personal income in West Virginia and Alaska than did transfer payments or dividends, interest, and rent. By industry, weakness in earnings by place of work in all four states reflected declines or slow growth in earnings in most major industries.

• In West Virginia, declines in earnings in mining, construction, government, and transportation and public utilities contributed to the slow growth in earnings.
• In Alaska, declines in earnings in mining, construction, and manufacturing contributed to the slow growth in earnings.
• In North Carolina, a large decline in earnings in farms was a major contributor to slow growth in earnings.
• In New York, a substantial decline in earnings in finance, insurance, and real estate was a major contributor to slow growth in earnings. The decline followed strong growth in the first quarter, which mainly reflected unusually large lump-sum payments.

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 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 estimate of personal income in the United States is derived as the sum of the state estimates; it differs from the estimate of personal income in the national income and product accounts (NIPA's) because of differences in coverage, in the methodologies used to prepare the estimates, and in the timing of the availability of source data.

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