State Personal Income

The first estimates of state personal income growth in 2018:Q3 indicate that, in general, as had been the case for employment for some time, states in the western part of the country were the fastest growing, with Nevada and Washington both reporting 6.2% rates of growth, and Arizona, Colorado, and Oregon clocking in over 5%. New Hampshire was the only other state to report growth above 5%, and the brisk third quarter pace followed a decline in the second quarter (the recent personal income growth rates in the Granite State have been as turbulent as the weather atop Mt. Washington, with the numbers starting in 2017:Q3 being 7.7%, 0, 9.3%, -0.8%, 5.1%.).

The soft areas were in the Ohio and lower Mississippi Valleys, with Kentucky, Missouri, Oregon, Louisiana, and Oklahoma all under 3%. New York was also below that mark, at 2.9%, but the softness there is completely attributable to a drop in transfer payments; income from current production was much stronger.

Even though there were strong and soft regions, the difference between the 2.1% rate of growth in the weakest state (Missouri) and the 6.2% highs was fairly moderate, as these things go. Thus, this report is consistent with other recent evidence that growth is tending to converge across the nation.

That said, quarterly state personal income figures can be revised substantially, as more definitive source data become available. The revisions in this release did change some of the particulars of the second quarter figures. Notably, the somewhat oddly low first number for Washington state (1.6%) was revised up to 4.5%, and Texas’s 6.0% gain was trimmed a bit to 4.2%. In that first report Washington had been listed as the most slowly growing state, while with the revision it’s now in the upper bracket, and Texas has been pushed out of the top spot for Q2 (indeed, both California and New York are now credited with faster growth in that quarter than Texas). These revisions are fairly small in the grand scheme of things (the numbers cited are for seasonally-adjusted annual growth rates) and really shouldn’t change any views on the absolute health of states’ economies. They do, however, show that one should take little note of specific state ranks in quarterly growth, especially those in the first estimates.