WASHINGTON, Aug. 7 — The U.S. Department of Commerce’s Bureau of Economic Analysis has issued the following news release:
Personal income growth slowed in 2008 in most of the nation’s metropolitan statistical areas (MSAs), according to estimates released today by the U.S. Bureau of Economic Analysis.
Personal income growth slowed in 322 MSAs, increased in 42, and remained unchanged in 2 MSAs. On average, MSA personal income grew 3.3 percent in 2008, down from 6.0 percent in 2007.
Personal income fell in five MSAs in 2008. In four of these areas (Dalton, Georgia; Monroe, Michigan; Elkhart, Indiana; and Kokomo, Indiana), manufacturing compensation was the major contributor to the decline.
Personal income also fell in Gulfport, Mississippi. The decline in Gulfport is accounted for by a tapering off in federal payments to rebuild residences destroyed or damaged by Hurricane Katrina. (The initiation of those federal payments made Gulfport the fastest growing MSA in 2007.)
Four of the five slowest-growing large MSAs – those with populations of at least one million – were in the Sunbelt: San Jose, California; Phoenix, Arizona; Jacksonville, Florida; and Tampa, Florida. Detroit, Michigan completes the group of five.
Although these MSAs sustained large declines in compensation in 2008, total personal income in each area was able to increase because of growth in other components of personal income, namely transfer receipts and property income.
Like the slowest growing of the small MSAs, manufacturing accounted for the weakness in San Jose and Detroit. In contrast, construction accounted for the weakness in Phoenix, Jacksonville, and Tampa.
The fastest growing MSAs in 2008 benefited from the high oil prices of the first half of the year (Midland, Texas; Odessa, Texas; and Grand Junction, Colorado) or from the military’s Grow the Force initiative (Jacksonville, North Carolina; Manhattan, Kansas; and Hinesville, Georgia).
Personal income grew 9 percent or more in these MSAs. All are relatively small, with populations less than 200 thousand.
Five of the six fastest-growing large MSAs were in Texas and Oklahoma.
Oil and gas extraction (mining) or construction, made important contributions to growth in four of these metropolitan areas: Oklahoma City, Houston, San Antonio, and Dallas. Austin, state capital of Texas, had relatively strong growth in the state and local government and professional services industries without the declines in retailing and construction that are hurting many other MSAs.
St. Louis, which ranked third among the fastest growing large MSAs, owed its strong performance to severance pay and other types of compensation associated with a recent business acquisition.
Per capita personal income. Per capita personal income growth rates ranged from 12.0 percent in Hinesville, Georgia to -3.7 percent in Gulfport, Mississippi. Per capita personal income growth is a measure which highlights differences in economic conditions across MSAs by removing the effect of differential population growth rates.
The labor market conditions already described account for many of the MSAs at either end of the growth rate range. In addition, the two Alaskan MSAs, Fairbanks and Anchorage, had relatively high per capita income growth because of the 98 percent increase in the Alaska Permanent Fund dividend to $3,269 per person. (A portion of oil lease rents and royalties received by the state are deposited in this fund).
Furthermore, since the income tax rebates authorized by the Economic Stimulus Act of 2008 were targeted toward lower income families, the contribution of these rebates to per capita personal income growth varied inversely with MSAs’ per capita incomes.
For example, the rebate contributed 1.7 percentage points to personal income growth in McAllen Texas in 2008 (the MSA with the lowest per capita income in the nation) but only 0.1 percentage point to growth in Bridgeport, Connecticut (with the nation’s highest per capita income).
Personal income is the income received by all persons from all sources. Personal income is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and personal current transfer receipts.
Net earnings is earnings by place of work (the sum of wage and salary disbursements, supplements to wages and salaries, and proprietors’ income) less contributions for government social insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis.
Personal income is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no adjustment is made for price changes).
Per capita personal income is calculated as the personal income of the residents of a given area divided by the resident population of the area. In computing per capita personal income, BEA uses the Census Bureau’s annual midyear population estimates.
The metropolitan area definitions used by BEA for its entire series of personal income estimates are the county-based definitions developed by the Office of Management and Budget (OMB) for federal statistical purposes and last updated in November 2008.
OMB’s general concept of a metropolitan area is that of a geographic area consisting of a large population nucleus together with adjacent communities having a high degree of economic and social integration with the nucleus. Personal income and per capita personal income estimates for the 366 metropolitan areas are shown in Table 1.
Tables omitted. (The complete tables can be viewed at: http://www.bea.gov/newsreleases/regional/mpi/2009/mpi0809.htm)