Every State Posted Economic Gains in Year Before the Pandemic

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Every State Posted Economic Gains in Year Before the Pandemic

Note: This data has been updated. To see the most recent data and analysis, visit Fiscal 50

Widespread income growth across states in 2019 marked what appears to be the end of the longest economic expansion on record and a high-water mark before the coronavirus pandemic upended much of the economy. Every state experienced gains for the year in the combined personal income of its residents, a key economic indicator, although growth slowed in most states.

Economic analysts are sounding alarms about a recession in 2020. But the fourth quarter of 2019, the latest for which there is 50-state data, was the last to escape severe disruptions before the pandemic triggered business shutdowns, a stock market plunge, and an unprecedented spike in unemployment claims, problems compounded by a sharp drop in oil prices.

Since the Great Recession, every state has seen its total personal income bounce back, although at different paces. After adjusting for inflation, North Dakota led all states with a long-term growth rate equivalent to 3.4 percent a year since the fourth quarter of 2007, when the 18-month recession began. It was followed by Utah (3.3 percent), Washington (3.1 percent) and Colorado and Texas (both 3 percent). Those states also gained residents the fastest over the past decade, a trait associated with a strong labor force and economic expansion. Connecticut and Mississippi recorded the weakest recoveries since the recession, with growth rates equivalent to 1 percent a year. 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. State personal income, a measure used to assess economic trends, matters 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 percent a year compared with the equivalent of 2.7 percent over the past 30 years, after accounting for inflation. 

Wages and salaries account for about half of personal income, while 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.

Results for the fourth quarter of 2019 are based on estimates and subject to revision, as is Pew’s ranking of growth rates for state personal income.

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Growth over the past year

The estimated change in each state’s aggregate, inflation-adjusted personal income in the fourth quarter of 2019 from a year earlier (subject to data revisions) shows:

  • Nationally, total personal income rose 2.4 percent in the fourth quarter of 2019 compared with a year earlier, well below its post-recession peak of 5.3 percent growth at the start of 2011.
  • About two-thirds of states experienced slower year-over-year growth than over the same period ending in the fourth quarter of 2018. The weaker gains took hold before the coronavirus pandemic in early 2020.
  • Western and Southern states recorded most of the strongest year-over-year gains. Those with the fastest growth rates were Utah (4.4 percent), Arizona (4.1 percent), New Mexico (4 percent), Washington (3.9 percent), Colorado and Idaho (both 3.8 percent), and Texas (3.7 percent).
  • The slowest growth rates were in West Virginia (-0.04 percent), Connecticut and South Dakota (0.7 percent), Rhode Island (0.8 percent), and Louisiana and North Dakota (both 1 percent).
  • Federal assistance payments to farmers hurt by retaliatory trade tariffs helped boost incomes in several agricultural states. Those receiving the most aid from the Market Facilitation Program were Illinois, Iowa, Kansas, Minnesota, and Texas.

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. 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. In both 2018 and 2019, every state reported an increase in personal income, after adjusting for inflation, the only time since the recession began that there were no decreases for consecutive years.

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.

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 fourth 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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