The Norman Transcript

December 21, 2013

Furloughs slow personal income growth

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The Norman Transcript

NORMAN — State personal income growth slowed slightly to 1.1 percent in the third quarter of 2013, from 1.2 percent in the second quarter, according to estimates released this week by the U.S. Bureau of Economic Analysis. Growth slowed in 25 states, accelerated in 22 and was unchanged in 3 states and the District of Columbia.

Growth across states ranged from 0.4 percent in New Mexico to 1.9 percent in Mississippi. The national price index for personal consumption expenditures increased 0.5 percent in the third quarter after remaining unchanged in the second quarter.

Slightly more than half of the personal income increase in Mississippi — $1 billion—was a current transfer receipt representing a settlement for a class-action suit that alleged racial discrimination by the U.S. Department of Agriculture in its evaluation of farm loan applicants between 1981 and 1996. Farm operators in Alabama received slightly less than $1 billion while farmers elsewhere received the balance of the $3.4 billion national settlement.

Overall, earnings grew 0.7 percent in the third quarter of 2013, down from 1 percent in the second quarter. Earnings grew in every private-sector industry but the earnings of civilian federal employees fell 2.6 percent. Earnings grew in every state but earnings in the District of Columbia fell 0.3 percent.

The largest contributions to earnings growth in the third quarter were in construction (which increased $7.6 billion), finance (up $7.4 billion) and professional services (also up $7.4 billion). In contrast, civilian federal earnings declined $7.8 billion.

The third-quarter decline in civilian federal earnings was the largest of seven consecutive quarterly declines. It included a reduction of $5 billion due to furloughs that affected primarily the civilian employees of the Department of Defense. The fall in civilian federal earnings reduced personal income growth by 0.2 percentage point in Maryland and Hawaii and 0.3 percentage point in Virginia. The 0.6 percent personal income growth in these three states exceeded only New Mexico’s 0.4 percent growth.

Property income grew 1.9 percent in the third quarter of 2013, the net effect of a 3.6 percent gain in dividends, a 2.1 percent gain in rent and a 0.7 percent rise in interest income. In the second quarter property income grew 2.8 percent. The rate of property income growth in the third quarter exceeded personal income growth, which made its contribution to percent change in personal income larger in Wyoming and Florida, where property income represents a large share of personal income.

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