The Reliability of the State Personal Income Estimates

A new study by BEA finds that the quarterly estimates of state personal income were reliable indicators in the period 1991-2001. That is, they were generally successful in indicating whether a state’s economy was expanding or contracting, whether a state’s economy was accelerating or decelerating, and whether a state’s economy was growing at rates that were above, below, or near long-term trend. As a result, the estimates presented a consistent picture of a state’s economic growth. The paper is similar to an article in the December issue of the Survey of Current Business, but contains an expanded discussion of the sources and methods used by BEA to prepare the estimates, with particular emphasis on wages and salaries. Also, analysis in a new appendix finds that for most states there is a tendency to revise estimates of personal income toward longer-term trend growth rates and toward the national growth rate.