One of the longest U.S. economic expansions has lifted personal income in all states above pre-recession levels. But growth has varied, ranging from a constant annual rate of 0.7 percent in Illinois and Nevada to 4.2 percent in North Dakota. In eight states, personal income fell over the year ending in the first quarter of 2017, as U.S. growth remained slow—less than half the rate seen two years earlier.
Since the recession began, national growth in personal income has been lower than its historical pace. Estimated U.S. personal income increased by the equivalent of 1.7 percent a year from the fourth quarter of 2007 through the first quarter of 2017, compared with the equivalent of 2.7 percent a year over the past 30 years, after accounting for inflation.
States have recovered at different paces. Only in mid-2015 did the final state—Nevada—recoup its personal income losses and return to its pre-recession level, after accounting for inflation. Since the end of 2007, personal income in 17 states has grown faster than that of the nation as a whole.
Looking at recent trends, one-year growth in U.S. personal income through the first quarter of 2017 was close to its lowest level in three years, according to preliminary data. Inflation-adjusted U.S. personal income rose by 1.8 percent in the first quarter of 2017 from a year earlier—the second-slowest one-year pace since the end of 2013, when personal income contracted. At the end of 2016, personal income rose a downwardly revised 1.5 percent from a year earlier, the leanest growth in three years.
Personal income growth in 20 states outpaced the U.S. rate for the year that ended in the first quarter of 2017. Elsewhere, personal income fell in eight states, as some were hit by lingering weakness in farming and mining. The construction and manufacturing industries and state and local governments also cut residents’ earnings to varying degrees. These results are based on estimates and subject to revision, as is Pew’s ranking of state growth rates.
Personal income estimates are widely used to track state economic trends. Trends in personal income matter not only for individuals and families but also for state governments, because tax revenue and spending demands may rise or fall along with residents’ incomes. Comprising far more than simply employees’ wages, the measure sums up all sorts of income received by state residents, such as earnings from owning a business or investing, as well as benefits provided by employers or the government.
Personal income has fluctuated since the recession, which lasted from December 2007 to June 2009. Growth in each calendar year shows the variation that occurred from 2007 to 2016. (See the “Year by year” tab for annual results in each state between calendar years 2007 and 2016.) By contrast, constant annual rates show the steady pace that income would have to rise each year to reach its latest level.
Personal income sums up residents’ paychecks, Social Security benefits, employers’ contributions to retirement plans and health insurance, income from rent and other property, and benefits from public assistance programs such as Medicare and Medicaid, among other items.
Federal officials use state personal income to determine how to allocate support to states for certain programs, including funds for Medicaid. State governments use personal income statistics to project tax revenue for budget planning, set spending limits, and estimate the need for public services.
Growth in personal income should not be interpreted solely as wage growth; wages and salaries account for about half of U.S. personal income. Personal income also differs from income measured at the household level.
Looking at personal income per capita or state gross domestic product, which measures the value of all goods and services produced within a state, can yield different insights on state economies.
Download the data to see state-by-state growth rates for personal income from 2007 through the first quarter of 2017. Visit Pew’s interactive resource Fiscal 50: State Trends and Analysis to sort and analyze data for other indicators of state fiscal health.
Sort and chart data about key fiscal and economic trends in the 50 states, and read Pew's insights.