Idaho Personal Income Grows by Less Than 3 Percent in 2008

Idaho’s total personal income grew by less than 3 percent last year, the U.S. Bureau of Economic Analysis reported on Tuesday.

Declines in personal income during the final two quarters as job losses accelerated in response to the national recession left the state’s income growth at 2.9 percent from 2007, a full percentage point below the national increase and the smallest annual growth rate since 2002 and 2003.

Only five other states had lower growth rates.

During the final three months of 2008, total personal income in Idaho fell 0.3 percent, marking the first time the state has seen personal income decline in consecutive quarters since 1960.

As the national recession worsened last fall, wages and business profits fell and dividend and other investment earnings eroded to drive total personal income down to $49 billion on an annualized basis from nearly $49.2 billion in the third quarter.

Nationally, personal income -- the total of all wages, business owner profits, investment earnings and transfer payments like Social Security and pensions – dropped 0.2 percent during the October-December quarter.

In Idaho, the fourth quarter decline combined with a 0.2 percent drop from the second to third quarters pulled personal income down below $49 billion for all of 2008.

Per capita income – personal income divided by every man, woman and child in Idaho – rose just 1 percent to $32,133 as population growth outstripped the gains in earnings. Only Arizona had a lower growth rate.

Idaho also experienced a decline in personal income during first three months of 2008. It was followed by a 1.7 percent increase in the spring quarter due to an infusion of hundreds of millions of dollars into the state through the federal rebate checks sent to taxpayers in May and June. Without those rebate checks, Idaho would have posted the first four consecutive quarters of declining personal income since the late 1940s after World War II. Income was off 0.3 percent in the first quarter of 2008 from the last three months of 2007.

Declines in Idaho’s retail trade, manufacturing and construction sectors during the October-December quarter were primarily responsible for the drop in earnings. Wages and profits were essentially stagnant in the other sectors.

Over the entire year, wages and profits were off significantly in construction; durable manufacturing, primarily high technology components; agriculture, especially the dairy sector; and more modestly in several other sectors. These declines were more than offset by substantial increases in health care and professional services and lesser gains in information, utilities and a number of other sectors.
 

A state-by-state personal income table follows.