State incomes grew 0.6 percent in the first quarter
Published 10:06 am Wednesday, June 25, 2014
By Adam Belz
Personal income resumed growth in Minnesota in the first quarter, but steep declines in farm earnings ate into the gains in the state and caused declines in neighboring states.
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Total personal income — which includes wages and salaries, investments, property rents and government assistance — rose at a pace of 0.6 percent to $261.4 billion in the first three months of 2014 in Minnesota, according to figures released Friday by the U.S. Department of Commerce. National growth was 0.8 percent.
Income grew in 46 states and growth accelerated in 24 of them, but farm income fell 17 percent nationally. About half of the decline was in or adjacent to the Plains region, hitting states like Minnesota, North Dakota, South Dakota, Nebraska and Iowa especially hard.
“The really interesting numbers are the farm earnings,” said Toby Madden, an economist at the Federal Reserve Bank of Minneapolis. “It’s a combination of the lower prices for the major commodities … as well as not much of an increase in output last year.”
Personal income in North Dakota fell 2.9 percent, the biggest decline in the nation in the first quarter, primarily because of a $1.8 billion decline in farm income. The state experienced its second straight quarter of declining income, and ranked last in the nation for growth. Rounding out the bottom five were South Dakota, Nebraska, Arkansas and Iowa, all states with economies reliant on agriculture.
After falling 0.7 percent in the fourth quarter of 2013, Minnesota income grew or held steady in all industries except farming and the much smaller category of forestry and fishing. Income from construction grew 3.3 percent in the first quarter, or $344 million, and income from professional, scientific and technical services grew 2.4 percent, or $394 million.
Minnesota income for workers and business owners fell slightly in the quarter, due to the decline in farm income. Gains from dividends and rent rose slightly, and income from personal transfer receipts –which included a Social Security cost of living adjustment, expanded coverage under the Affordable Care Act, and several refundable tax credits — rose 3.6 percent, or $1.4 billion.
The Bureau of Economic Analysis said that nationally, income in that category rose $41.1 billion in the quarter, compared to a rise of only $4.3 billion in the fourth quarter of 2013, due to those “special factors.”
The weak personal income growth reflected a national contraction in gross domestic product in the first quarter, which economists blamed on an unusually harsh winter.
“Weather probably played a role, not only in Minnesota, but for the United States overall,” Madden said. “We might be seeing kind of a rebound to that in the second quarter.”
Washington, Vermont, West Virginia, Kentucky and Hawaii saw personal income grow the fastest in the first quarter.
Personal income statistics provide a framework for analyzing economic conditions in each state. Federal agencies use the statistics as a basis for allocating funds and determining matching grants to states.
—Distributed by MCT Information Services