Note: These data have been updated. To see the most recent data and analysis, visit Fiscal 50
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 0.6 percent in Connecticut to 4.0 percent in North Dakota. In 10 states, personal income fell over the year ending in the second quarter of 2017 as U.S. growth remained slow—less than one-third 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 1.6 percent a year from the fourth quarter of 2007 through the second 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. Nevada had vied with Illinois for the slowest rebound since the start of the recession until the latest figures, which showed Connecticut slipping to last place. Since the end of 2007, personal income in 18 states has grown faster than that of the nation as a whole.
Looking at recent trends, one-year growth in U.S. personal income edged up slightly after slowing for two years. Inflation-adjusted U.S. personal income grew by 1.3 percent in the second quarter of 2017 from a year earlier, less than one-third its pace of 4.7 percent at the end of 2014.
Personal income growth in 23 states outpaced the U.S. rate for the year that ended in the second quarter of 2017. Elsewhere, personal income fell in 10 states. Lingering weakness in the farming industry, which was a primary drag on national growth, was the most common reason. Additional reasons were contractions in the total earnings of employers and employees within three industries: construction, management, and information production and distribution services, as well as among state and local government employees. 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. Personal income excludes capital gains.
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.
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. So can looking at household data, which are based on a different measure of income.
Download the data to see state-by-state growth rates for personal income from 2007 through the second 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.