State personal income rose an average 3% in 2010 after falling 1.7% in 2009, according to estimates released today (March 24) by the U.S. Bureau of Economic Analysis.
State personal income growth ranged from 0.3% in Nevada to 4.2% in New Mexico. Inflation, as measured by the national price index for personal consumption expenditures, increased to 1.7% in 2010 from 0.2% in 2009.
All three major components of personal income (earnings, property income, and personal current transfer receipts) grew in 2010. In 2009 only transfers grew as lower employment reduced earnings and lower interest rates and profits reduced property income (dividends, interest, and rent). The 7.6% growth of transfer receipts in 2010 was larger than the 2.4% growth of earnings and the 0.6% growth of property income.
Earnings in 10 states (Arkansas, Kentucky, Louisiana, Maryland, New Mexico, North Dakota, Pennsylvania, Vermont, Virginia and West Virginia) rebounded in 2010 above their previous peaks after falling in the recession. Earnings in these states grew 2.9% on average in 2010 having declined 1.5% 2009. Earnings in Alaska, the only state to avoid a decline in 2009, grew 3.2% in 2010 up from 2.4% in 2009. Earnings in the other states rose 2.3% in 2010, following a 4.5% decline in 2009.
Professional services is the only industry (of those which declined) to recover from the earnings downturn. Even so, 2010 earnings in professional services are just 0.2% higher than before the decline. Earnings in 14 industries (including manufacturing and finance) grew in 2010 but remain below 2008 (or earlier) peaks. Two industries, construction and real estate, continued to decline in 2010.
The 4.8% decline in construction brought earnings in that industry to its lowest level since 2001 and the 2.3% decline in real estate brought its earnings to the lowest level since 2000. The other industries (including educational services, health care, and government) grew in both 2009 and 2010. Growth accelerated in 2010 in educational services and health care and slowed in government.
Health care increased its share of earnings to 11.2% in 2010 up from 11% in the previous year. Health care overtook manufacturing as the largest private industry in 2009 as it continued to expand through the recession while manufacturing earnings declined. The 2.7%increase in manufacturing earnings in 2010 kept its share steady at 10.2%.
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Study chart below which shows percentage growth for each state.