State personal income growth jumps 3.5% in 2010

BusinessFort SmithNews on the Wire

by The City Wire staff ([email protected]) March 23, 2011 11:08 am 60 views 

story info submitted by Wesley Brown
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Arkansas personal income rose by 3.5% in 2010, the 10th biggest gain among the 50 U.S. states and the District of Columbia, according to a U.S. Bureau of Economic Analysis release Wednesday.

However, Arkansas’ per capita personal income of $33,150 still ranked in the bottom five at 46th, which is 81.7% of the national average at $40,584.

“The estimates reflect a decline in rank from 2009 when Arkansas was 44th in the U.S. in PCPI,” noted Greg Kaza, executive director of the Arkansas Policy Foundation.

The BEA defines personal income as all income received by all persons from all sources, including net earnings by place of residence, property income, and personal current transfer receipts. Kaza also said estimates reflect the results of the annual revision to the national income and product accounts released in July 2010 and to incorporate newly available state-level source data.

Overall, the state’s total personal income was $96.6 billion, up from $93.3 billion in 2009 when the recession pushed Arkansas earnings below the previous peak of $93.4 billion in 2008, BEA statistics show.

Additionally, Arkansas’ personal income grew 0.9% in the fourth quarter of 2010, a slight decline from 1.1% growth in the third quarter.

Nationwide, state personal income grew an average 3% in 2010 after falling 1.7% in 2009, the BEA said. 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.

According to the U.S. Labor Department statistical arm, 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.

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.  Alaska was the only to avoid a decline in 2009, growing 3.2% in 2010 up from 2.4% in 2009.

Earnings in the remainder states rose 2.3% in 2010, following a 4.5% decline in 2009.

Kaza provided the following points as analysis.
• Connecticut, among states ranked first in the U.S. with a PCPI of $56,001, followed by Massachusetts (2), New Jersey (3), Maryland (4), and New York (5).  District of Columbia PCPI was $71,044.

• Arkansas PCPI ($33,150) ranked ahead of West Virginia (47), Utah (48), Idaho (49) and Mississippi (50), according to the estimates.

• New Mexico, with a PCPI of $33,837, retained its rank at 43rd in the U.S. in 2010. New Mexico, under Democratic Gov. Bill Richardson eliminated its grocery tax and significantly reduced its capital gains tax.

• Kentucky (44) and South Carolina (45) also ranked ahead of Arkansas.