Note: These data have been updated. To see the most recent data and analysis, visit Fiscal 50.
States’ economies have improved at different paces since the Great Recession, as reflected by the combined personal income of all residents. Utah for the first time tied with consistent front-runner North Dakota as of the second quarter of 2019, with growth almost four times faster than last-place Mississippi over the longest economic recovery on record. Over the past year, all states experienced gains, despite economic turbulence in the farming sector.
Since the recession started in late 2007, oil-rich North Dakota and a group of Southern and Western states, particularly Utah, have recorded the strongest growth in the sum of all personal income received by their residents. Many of those states also gained residents the fastest over the past decade, a trait typically associated with a strong labor force and economic expansion.
While North Dakota and Utah tied for the lead with long-term growth rates equivalent to 3.4 percent a year, Mississippi recorded the weakest recovery with a growth rate equivalent to 0.9 percent a year, after adjusting for inflation. The rates represent the constant pace at which inflation-adjusted state personal income would need to grow each year to reach the most recent level.
Personal income sums up all the money and benefits that residents receive from work, certain investments, and other sources such as government benefits and is one way to track a state’s economic trends. Those matter to state governments because tax revenue and spending demands may rise or fall along with residents’ incomes.
Nationally, growth in total personal income since the recession began has been off its historic pace, rising the equivalent of 2.1 percent a year compared with the equivalent of 2.7 percent over the past 30 years, after accounting for inflation. Over the past year, U.S. personal income in the second quarter of 2019 grew the equivalent of 3.2 percent from a year earlier, after adjusting for inflation.
As with the long-term trend, the fastest growth over the past year was concentrated in the West, especially in the Mountain region, including Utah, Arizona, Colorado, Idaho, Nevada, Wyoming, and New Mexico. The Midwest lagged the country, with all its states growing more slowly than the U.S. as a whole. In fact, almost half of the Midwestern states—Illinois, Kansas, Nebraska, North Dakota, and South Dakota—were among the 10 slowest-growing in the nation in 2019’s second quarter, compared with a year earlier. The sluggish economies reflect the region’s dependency on agriculture amid low commodity prices, adverse weather conditions, international trade disputes, and decreased assistance payments in the second quarter of 2019 to farmers affected by trade disputes, which contributed to drops in the farming income in most of those states. Results for the second quarter of 2019 are based on estimates and subject to revision, as is Pew’s ranking of growth rates for state personal income.
Wages and salaries account for about half of personal income, and the rest is from other income received by state residents, such as earnings from owning a business and property income, as well as benefits provided by employers or the government, such as Social Security checks and Medicaid and Medicare coverage. State personal income does not include realized or unrealized capital gains, such as those from stock market investments. These statewide sums are aggregates and should not be used to describe trends for individuals and households.
Growth since the start of the recession
The constant annual growth rate for each state’s aggregate, inflation-adjusted personal income since the fourth quarter of 2007 (when the 2007-09 recession began) to the second quarter of 2019 shows:
- North Dakota and Utah tied for the strongest annualized growth (both 3.4 percent) since the start of the recession. North Dakota’s biggest gains occurred after new fracking technology led to an oil boom shortly before the Great Recession began, and more recently, growth has fluctuated with the price of oil. Utah’s total personal income has steadily risen to the top on the back of one of the most diverse state economies in the nation. Utah also boasts the fastest-growing population of any state over the past 10 years.
- The next-largest growth rates since late 2007 were concentrated in the West and the South: Washington (3.2 percent), Texas (3.1 percent), Colorado (3.0 percent), California (2.8 percent), Idaho and Oregon (both 2.7 percent), and South Carolina (2.5 percent).
- Mississippi’s growth was the weakest of any state, the equivalent of 0.9 percent a year since the end of 2007. One culprit is the state’s lagging construction industry. Construction employment has mostly trended downward over the past decade.
- The other slowest-growing states were Illinois (1.1 percent) and Connecticut, Rhode Island, and West Virginia (each 1.2 percent).
Growth over the past year
Estimated change in each state’s aggregate, inflation-adjusted personal income in the second quarter of 2019 from a year earlier (subject to data revisions) shows:
- For the second consecutive quarter, and the fifth time over the past year and a half, personal income grew in every state.
- Nationally, total personal income rose 3.2 percent in the second quarter of 2019 compared with a year earlier, below its post-recession peak of 5.3 percent growth at the start of 2011.
- Mostly Western states led the pack over the past year, with the fastest growth in Washington (4.7 percent), Utah (4.6 percent), Arizona (4.5 percent), Colorado (4.4 percent), Idaho, Nevada, Texas and Wyoming (each at 4.2 percent), New Mexico (4.1 percent), and South Carolina (4.0 percent).
- The slowest growth was in Nebraska (1.3 percent), South Dakota (1.5 percent), and Kentucky and Mississippi (both 1.9 percent).
- Twenty-two states outpaced U.S. growth in personal income.
Ups and downs since recession
This analysis’ use of constant annual growth rates allows comparisons of states’ economic performance since the recession, which lasted from December 2007 to June 2009. However, personal income did not actually change at a steady pace, instead falling in some years and rising in others.
Viewed by calendar year, inflation-adjusted personal income fell in seven states in 2008 but in 49 states in 2009—all except Delaware, according to the most recent data that was revised back to 1998. No state escaped the 18-month recession without a calendar-year drop. The country rebounded over the next three years until 2013, when personal income fell in 38 states, in part because many taxpayers shifted the timing of income in reaction to federal tax changes. Weak earnings in industries such as farming and energy weighed down personal income and helped account for declines in 11 states in 2016. Every state had an increase in total personal income in 2018, just the third time that has happened since the onset of the recession.
Six states boast the fewest decreases over the 11 years: Colorado, Idaho, Illinois, Mississippi, Utah, and Washington. Their personal income fell just once, in 2009.
What is personal income?
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. Likewise, growth in total state personal income should not be seen as a measure of how much the income of average residents has changed. Other measures should be used to approximate income growth for individuals, such as state personal income per capita or household income based on different data.
Looking at state gross domestic product, which measures the value of all goods and services produced within a state, would yield different insights on state economies.
Download the data to see state-by-state growth rates for personal income from 2007 through the second quarter of 2019. Visit Pew’s interactive resource Fiscal 50: State Trends and Analysis to sort and analyze data for other indicators of state fiscal health.
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