Personal Income Climbing
New report shows per-capita income doubled inflation in many states last year.
In Connecticut, it's Wall Street bonuses. In Texas, it's the hot computer market, plus rebounding trade with Mexico. In Kansas, it's a boom in aerospace orders - and in Nevada, it's tourist-fueled construction.
Welcome to the rising-tide economy, in which the boats of personal incomes are rising all across America. Almost every state in the Union saw a strong increase in per-capita earnings last year, according to the latest Commerce Department figures. Overall, US incomes surged at more than double the rate of inflation.
In fact, North Dakota was the only state that saw its residents' purchasing power decline. The problem: a wheat crop failure.
"North Dakota's [income] problems had nothing to do with the flood of the Red River," notes Duke Tran, an analyst with the Department of Commerce's Bureau of Economic Analysis. "The flood occurred before wheat was even planted."
For the nation, per-capita income was $25,436 in 1997. That represents a 4.8 percent increase from 1996's figure of $24,436.
Purchasing power - the amount of goods and services per- capita income will buy - increased faster in 1997 than it did the year previously, according to the preliminary Bureau of Economic Analysis figures. That wasn't necessarily related to the increase in incomes. But inflation was so low in '97, at just 2 percent, that purchasing power jumped 2.8 percent.
Northeast on top
Connecticut remained the richest state in the US, with a per- capita income of $36,263. New Jersey, Massachusetts, New York, and Delaware rounded out the top five. This order of the most prosperous provinces "has remained fairly stable throughout the 1990s," notes Mr. Tran.
Financial services were a heavy contributor to the success of the top tier. Connecticut is home to many investment bank firms that were eager to escape the New York City, for instance. Wall Street bonuses helped New York balance out some economic weakness upstate. Massachusetts, for its part, has a thriving mutual-fund industry.
Computer-related firms also spread economic benefits across the nation. Massachusetts has a big share of high tech, as do Utah and Colorado, two other states with a good rate of income increase.
Only two states made substantial jumps up the list of per-capita incomes in 1997, says the BEA analysis: Texas, which benefited from international trade as Mexico continues to rebound from its currency crisis of late 1994, and Louisiana. Texas, in fact, had the fastest-growing per capita income of any state. Others with high growth rates included Massachusetts, Washington, Oregon, Kansas, and Utah.
North Dakota was the only state were residents were on the whole worse off in 1997 than they were in '96. Personal income there went down 1 percent.
But the farm sector as a whole was economically weak throughout the year. Some other agriculture-heavy states, such as Iowa and South Dakota, thus had a disappointing year.
Hawaii, despite its paradisiacal reputation, was also an economic weak spot. Personal income gains there, at 2.7 percent, barely outplaced inflation.
"One industry, construction, accounted for much of the weakness in Hawaii," says Tran. Due to the Asian financial crisis "maybe tourism was down, so construction was down."
Similarly, Alaska was dogged by weakness in one industry. In this case, it was mining and oil and gas, as low petroleum prices kept income growth in the frozen north to 3.6 percent.
The poorest five states in the US as measured by personal income remain, in descending order, Montana, New Mexico, Arkansas, West Virginia, and Mississippi.