By GARRY RAYNO, InDepthNH.org
CONCORD – Government aid related to the pandemic helped bring the state’s personal income growth to its highest level in the first quarter since 1948, when the income indicator was first used, according to a study released Tuesday by the Pew Charitable Trusts to drift.
While New Hampshire posted record income growth in the first quarter, it lagged its northern New England neighbors and the national average.
That’s not unique, as New Hampshire income growth was below the national average from 2007 to 2020, the only exceptions in 2010 and 2016, according to the study.
“More than half of the states had their strongest personal income growth ever in the first quarter of 2021 as the economic recovery accelerated,” said Barb Rosewicz, Mike Maciag and Joe Fleming, who wrote the report. “Multiple rounds of pandemic-related government benefits resulted in year-over-year increases in each state, while revenue – the bulk of personal income – also increased in most states. The sharp rise in total personal income will be temporary, however, as federal aid payments expire. “
The national average for personal income growth for the first quarter of 2021 was 14.39 percent, while New Hampshire was 13.98 percent.
Maine led New England with a growth rate of 18.2 percent, Rhode Island was 15.4 percent and Vermont was 14.8 percent.
Massachusetts’ income growth rate was 13.4 percent slower than New Hampshire’s, and Connecticut’s 9.5 percent rate was among the lowest in the country.
Other low growth rates were New York with 9.5 percent and Wyoming with 9.4 percent, while Utah, Idaho and West Virginia had the highest growth rates, followed by Michigan and Mississippi with over 19 percent each.
Government personal income includes, but is not limited to, residents’ paychecks, social security benefits, employer contributions to retirement plans and health insurance, income from rent and other property, and benefits from public aid programs such as Medicare and Medicaid.
Personal income does not include unrealized capital gains.
The Pew Charitable Trusts used data collected by the US Bureau of Economic Analysis.
The state’s personal income is used to assess economic development. The data “is important to state governments as tax revenues and spending claims can go up or down along with income from residents,” the report said. “It summarizes all of the money residents receive from work, certain investments, income from owning a business and property, and government aid, including additional federal aid in response to the pandemic, as well as benefits from employers or the government. ”
Over the years, personal income growth generally spikes, but recessions can reverse the trend, as it did in 2009 and 2013, when it fell across the country and in New Hampshire, according to information included in the report.
The average change in personal income growth in the country exceeded 3 percent in 2011, 2014, 2015 and was 4.9 percent in 2020. In New Hampshire it was 3 percent in 2010 and 2016 and 2 percent in 2019, the last full year before the pandemic. The growth rate for 2020 for the state was 3.8 percent with the injection of federal aid.
However, the federal cash injection will soon end, and with it the surge in personal income, as aid related to the pandemic will decrease in the second quarter, according to the report.
The report said: “Recent national estimates by the US Bureau of Economic Analysis show that US personal income declined significantly in the second quarter of 2021 compared to the first quarter.”
The authors caution that state personal income should not be fully viewed as wage growth, as wages and salaries make up about half of the United States’ personal income.
And the authors said the state’s personal income growth should not be viewed as “a measure of how much the average resident’s income has changed”.
The share of personal earnings from earnings – which includes wages, health benefits and corporate profits – also rose, albeit far less than total state aid, the report said.
Revenue for the first quarter of 2021 was $ 177 billion higher than a year earlier, compared to a $ 2.8 trillion increase in revenue from all sources of government support.
However, revenues rose for the third straight quarter and are above pre-pandemic levels. All but 10 countries recorded year-on-year growth, according to the report.
Revenues plummeted during the pandemic.
The authors noted that state personal income is only a measure of economic activity.
“A look at the state gross domestic product, which measures the value of all goods and services produced within a state, would lead to different insights into state economies,” according to the authors.
Garry Rayno can be reached at firstname.lastname@example.org.