Personal income per person remains well above the U.S. average in the “left coast” states of Washington and California, as well as in oil-rich Alaska.
Montana and Idaho by contrast remain relatively poor states, with incomes not much above the poorest of the poor: Mississippi, West Virginia and Arkansas. Note that low incomes in the Intermountain West are offset partly by much lower costs of living than in big West Coast metro areas.
The income rank of Oregon among the states rose a decade ago after the semiconductor industry invested billions in new Oregon chip plants. As some of that manufacturing activity has slipped offshore, Oregon’s relative standing has eroded.
Personal income is one of the most important and widely watched measures of a state’s economy. It includes wages, salaries, bonuses, proprietors’ income, rents, dividends and transfer payments such as Social Security and unemployment benefits and Alaska Permanent Fund dividends.
Capital gains on housing and securities are not counted as personal income in Uncle Sam’s bookkeeping. They show up on the balance sheets rather than income statements. This helps explain why household net worth remains at a record high despite the notoriously low U.S. savings rate.
Idaho and Washington ranked in the top 10 in the U.S. in 2006 in growth of total personal income. Montana and California weren’t far behind. Although Idaho’s share of total income remains relatively small, its standing has improved more than others over 10 years. California, Montana and Washington shares also improved. Oregon and Alaska shares have declined.
U.S. personal income rose 6.3% in 2006 measured in current dollars, the best gain since the nation’s economy began expanding following the short and shallow 2001 recession.
The booming construction industry was a major contributor to 2006 personal-income growth in Idaho, Washington and Oregon. So was manufacturing in all three states, especially of durable goods such as airplanes in Washington and computer chips in Oregon and Idaho.
In both Alaska and Montana, income surged in 2006 in the mining industry, including oil and gas exploration and production.
Personal income in Washington should continue to grow briskly at least for the next couple of years as Boeing head count and production continue to expand.
— Excerpted from Marple’s Pacific Northwest Letter, editor Michael Parks. For information on this biweekly report on Northwest economic trends, visit www.marples.com.