WASHINGTON DC, June 28, 2013 - State personal income declined an average 1.2 percent in the first quarter of 2013 after growing 2.7 percent in the fourth quarter of 2012, according to estimates released today by the U.S. Bureau of Economic Analysis. Personal income declines ranged from 0.1 percent in Iowa to 2.5 percent in Wyoming. In contrast, personal income grew 1.6 percent in South Dakota, the only state with an increase in the first quarter. Inflation, as measured by the national price index for personal consumption expenditures, slowed to 0.2 percent in the first quarter from 0.4 percent in the fourth quarter of 2012.

The decline in first-quarter personal income reflected the effects of several special factors including the expiration at the beginning of 2013 of the payroll tax holiday (a temporary two-percentage point reduction in the personal contribution rate for social security) and the acceleration of the receipt of income, especially personal dividends and salary bonuses, into the fourth quarter in anticipation of first-quarter changes in individual income tax rates.

Earnings. Overall, earnings growth slowed to $24.4 billion (0.2 percent) in the first quarter, down from a $213.1 billion (2.2 percent) increase in the fourth quarter. Earnings increased in 17 of the 24 industries for which BEA prepares quarterly estimates, with the largest increases in professional services ($15.3 billion) and construction ($15.0 billion). Construction earnings growth exceeded the 2.8 percent national average in New York (4.9 percent), Texas (3.4 percent), and California (3.3 percent).

U.S. farm earnings increased $5.5 billion (5.3 percent) in the first quarter after growing $2.8 billion (2.7 percent) in the fourth. Illinois, Iowa, and South Dakota accounted for the entire increase in the first quarter. Crop output, particularly of corn, in these states is rebounding from the drought-induced losses in 2012.

First-quarter earnings fell in 7 industries with the largest decreases in finance ($39.9 billion) and durable goods manufacturing ($11.7 billion).

The 5.4 percent first-quarter earnings decline in the finance industry followed an 8.7 percent boost in the fourth quarter. The swing reflected the impact of accelerated bonuses in anticipation of changes to individual income tax rates. Finance earnings fell in every state in the first quarter.

Earnings in the management of companies industry displayed a similar pattern in many states. In Colorado, for example, earnings rose 44.6 percent in the fourth quarter and fell 22.6 percent in the first.

Manufacturing earnings grew 2.4 percent in Washington State, the only state with an increase. The largest decline was in Oklahoma, where manufacturing earnings fell 3.8 percent.

Property income. Property income (dividends, interest, and rent) fell $96.1 billion nationally in the first quarter after growing $156.3 billion in the fourth quarter. Dividends accounted for the entire decline in the first quarter. Fourth-quarter personal dividend income was high because firms accelerated distributions and paid special dividends in anticipation of changes to individual income tax rates. First-quarter property income fell the most in California ($10.9) billion and Florida ($9.3 billion). For 22 states, with Florida and Wyoming the most prominent of them, the decline in property income contributed more to first-quarter personal income losses than the decline in earnings.

Revisions. Estimates for 2012:I to 2012:IV have been revised. All of the regional statistics underlying this news release, along with mapping and charting software, are available at www.bea.gov/regional/.

¹NOTE.— Quarter-to-quarter percent changes are calculated from unrounded data and are not annualized. Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified. Quarter-to-quarter dollar changes are differences between published estimates.

Personal income is the income received by all persons from all sources. Personal income is the sum of net earnings by place of residence, property income, and personal current transfer receipts. Property income is rental income of persons, personal dividend income, and personal interest income. Net earnings is earnings by place of work (the sum of wage and salary disbursements, supplements to wages and salaries, and proprietors income) less contributions for government 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 and the estimate for the District of Columbia; it differs from the estimate of personal income in the national income and product accounts (NIPAs) because of differences in coverage, in the methodologies used to prepare the estimates, and in the timing of the availability of source data.

BEA groups all 50 states and the District of Columbia into eight distinct regions for purposes of data collecting and analyses: New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont); Mideast (Delaware, District of Columbia, Maryland, New Jersey, New York, and Pennsylvania); Great Lakes (Illinois, Indiana, Michigan, Ohio, and Wisconsin); Plains (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota); Southeast (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia); Southwest (Arizona, New Mexico, Oklahoma, and Texas); Rocky Mountain (Colorado, Idaho, Montana, Utah, and Wyoming); and Far West (Alaska, California, Hawaii, Nevada, Oregon, and Washington).

State personal income statistics provide a framework for analyzing current economic conditions in each state and can serve as a basis for decision making. For example:

• Federal government agencies use the statistics as a basis for allocating funds and determining matching grants to states. The statistics are also used in forecasting models to project energy and water use.
• State governments use the statistics to project tax revenues and the need for public services.
• Academic regional economists use the statistics for applied research.
• Businesses, trade associations, and labor organizations use the statistics for market research.

BEA's national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

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Next state personal income release – September 30, 2013, at 8:30 A.M. for state personal income, second quarter 2013.