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NEWS RELEASE EMBARGOED FOR RELEASE: 8:30 A.M., EDT, THURSDAY, APRIL 24, 2014 Media: Technical: Jeannine Aversa Eric Figueroa E-mail: rpp@bea.gov (202) 606-2649 (202) 606-5620 BEA 14-16 Real Personal Income for States and Metropolitan Areas, 2008-2012 Today, the U.S. Bureau of Economic Analysis released real, price-adjusted estimates of personal income for states and metropolitan areas for 2008-2012. “For the first time, Americans looking to move or take a job anywhere in the country can compare inflation-adjusted incomes across states and metropolitan areas to better understand how their personal income may be affected by a job change or move. Businesses considering relocating or establishing new plants also now have a comprehensive and consistent measure of differences in the cost of living and the purchasing power of consumers nationwide. The Commerce Department’s ‘Open for Business Agenda’ prioritizes making our data more accessible and understandable so that it can continue powering both small and large businesses nationwide,” said U.S. Secretary of Commerce Penny Pritzker. The price-adjustments are based on regional price parities (RPPs) and on BEA’s national Personal Consumption Expenditure (PCE) price index. The RPPs measure geographic differences in the price levels of consumption goods and services relative to the national average, and the PCE price index measures national price changes over time (see Technical Note on page 4). Using the RPPs in combination with the PCE price index allows for comparisons of the purchasing power of personal income across regions and over time. These estimates are being released for the first time as official statistics1. Real Personal Income for States and Metropolitan Areas Real personal income across all regions rose by an average of 2.3% in 2012. This growth rate reflects the year-over-year change in nominal personal income across all regions adjusted by the change in the national PCE price index. On a nominal basis, personal income across all regions grew an average of 4.2% in 2012. In 2012, the U.S. PCE price index grew 1.8%. Growth in real state personal income from 2011 to 2012 ranged from a decline of 1.2% in South Dakota to an increase of 15.1% in North Dakota. These growth rates reflect the year-overyear change in the state’s nominal personal income, the change in the national PCE price index, and the change in the regional price parity for that state. After North Dakota, the states with the largest growth rates were Montana (3.7%), Indiana (3.7%), California (3.4%), and Mississippi (3.4%). South Dakota was the only state with a decline in real personal income. The states with the smallest growth rates were Maine (0.3%), Alaska (0.7%), and Alabama (0.8%). The District of Columbia’s growth rate was 0.4%. States with growth rates close to the national average were Delaware (2.4%), Georgia (2.2%), Illinois (2.4%), Minnesota (2.2%), and Oregon (2.4%). Growth in real metropolitan area personal income from 2011 to 2012 ranged from a decline of 3.8% in Kennewick-Richland, WA to an increase of 10.2% in Odessa, TX. After Odessa, TX, the metropolitan areas with the largest growth rates were Midland, TX (9.6%), Greenville, NC (9.0%), Jackson, TN (8.1%), and Columbus, IN (7.6%). After KennewickRichland, WA, the metropolitan areas with the largest declines were Watertown-Fort Drum, NY (-2.5%), State College, PA (-2.4%), Hanford-Corcoran, CA (-2.3%), and Sierra Vista-Douglas, AZ (-1.7%). Regional Price Parities Regional Price Parities (RPPs) measure the differences in the price levels of goods and services across states and metropolitan areas for a given year. RPPs are expressed as a percentage of the overall national price level for each year, which is equal to 100.0. In 2012, the District of Columbia’s RPP (118.2) was higher than that of any state. The states with the highest RPPs were Hawaii (117.2), New York (115.4), New Jersey (114.1), and California (112.9). Mississippi (86.4), Arkansas (87.6), Alabama (88.1), Missouri (88.1), and South Dakota (88.2) had the lowest RPPs among the States. States with high (low) RPPs typically have relatively high (low) price levels for rents. States with RPPs closest to the national average price level were Florida (98.8), Oregon (98.8), Illinois (100.6), and Vermont (100.9). 1 Prototype statistics were released for evaluation and comment by users on June 12, 2013. 2 In 2012, the metropolitan area with the highest RPP was Urban Honolulu, HI (122.9). Metropolitan areas with RPPs above 120.0 also include New York-Newark-Jersey City, NY-NJPA (122.2), San Jose-Sunnyvale-Santa Clara, CA (122.0), Bridgeport-Stamford-Norwalk, CT (121.5), Santa Cruz-Watsonville, CA (121.4), San Francisco-Oakland-Hayward, CA (121.3), and Washington-Arlington-Alexandria, DC-VA-MD-WV (120.4). The metropolitan area with lowest RPP was Danville, IL (79.4), followed by Jefferson City, MO (80.8), Jackson, TN (81.5), Jonesboro, AR (81.7), and Rome, GA (82.2). 2012 Regional Price Parity by State District of Columbia Hawaii New York New Jersey California Maryland Connecticut Massachusetts Alaska New Hampshire Washington Virginia Delaware Colorado Vermont Illinois Oregon 98.8 Florida 98.8 Rhode Island 98.7 Pennsylvania 98.7 Maine 98.3 Nevada 98.2 Arizona 98.1 Minnesota 97.5 Utah 96.8 Texas 96.5 Wyoming 96.4 New Mexico 94.8 Michigan 94.4 Montana 94.2 Idaho 93.6 Wisconsin 92.9 Georgia 92.0 North Carolina 91.6 Louisiana 91.4 Indiana 91.1 South Carolina 90.7 Tennessee 90.7 North Dakota 90.4 Nebraska 90.1 Kansas 89.9 Oklahoma 89.9 Iowa 89.5 Ohio 89.2 Kentucky 88.8 West Virginia 88.6 South Dakota 88.2 Missouri 88.1 Alabama 88.1 Arkansas 87.6 Mississippi 86.4 85.0 90.0 95.0 118.2 117.2 115.4 114.1 112.9 111.3 109.4 107.2 107.1 106.2 103.2 103.2 102.3 101.6 100.9 100.6 U.S. = 100.0 100.0 3 105.0 110.0 115.0 120.0 Technical Note on Regional Price Parities and Implicit Regional Price Deflators Price indexes commonly measure price changes over time. The BEA’s Personal Consumption Expenditure price index and the BLS’ Consumer Price Index (CPI) are two examples. Spatial price indexes measure price level differences across regions for one time period. An example of these type of indexes are purchasing power parities (PPPs), which measure differences in price levels across countries for a given period, and can be used to convert estimates of per capita GDP into comparable levels in a common currency. The regional price parities (RPPs) that BEA has developed compare regions within the United States, but without the need for currency conversion. An implicit regional price deflator (IRPD) can be derived by combining the RPPs and the PCE price index. Regional Price Parities. The RPPs are calculated using price quotes for a wide array of items from the CPI, which are aggregated into broader expenditure categories (such as food, transportation, or education). Data on rents are obtained separately from the Census Bureau’s American Community Survey (ACS). The expenditure weights for each category are constructed using the BLS’ Consumer Expenditure Survey and BEA’s Personal Consumption Expenditures2. The broader categories and the data on rents are combined with the expenditure weights using a multilateral aggregation method that expresses a region’s price level relative to the US3. For example, if the RPP for area A is 120 and for area B is 90, then on average, prices are 20% higher and 10% lower than the US average for A and B respectively. If the Personal Income for area A is $12,000 and for area B is $9,000, then RPP-adjusted incomes are $10,000 ($12,000/1.20) and $10,000 ($9,000/0.90) respectively. In other words, the purchasing power of the two incomes is equivalent when adjusted by their respective RPPs. Implicit Regional Price Deflator. The IRPD is a regional price index derived as the product of two terms: the regional price parity and the US PCE price index. Implicit regional price deflator for region i: P_i P_i, us ∗ P_us The first term on the right-hand side of the equation is P_i,us, which is the regional price parity for region i (using the US as the reference region4). The second term is P_us, the national PCE price index. The implicit regional price deflator will equal current dollar personal income divided by real personal income in chained dollars. The growth rate or year-to-year change in the IRPDs is a measure of regional inflation5. 2 To estimate RPPs, CPI price quotes are quality adjusted and pooled over 5 years. The ACS rents are also quality adjusted, and in the case of the metropolitan areas, pooled over 3 years. The expenditure weights are specific to each year. 3 The multilateral system that is used is the Geary additive method. Any region or combination of regions may be used as the base or reference region without loss of consistency. 4 A different reference region could be used as the base, as long as the time-to-time price index was consistent with the new base. 4 Detailed information on the methodology used to estimate the RPPs may be found in the article, “Real personal income and Regional Price Parities for States and Metropolitan Areas, 2007-2011”, in the August 2013 issue of the Survey of Current Business. Definitions Personal income is the income received by all persons from all sources. Personal income is the sum of net earnings by place of residence, property income, and personal current transfer receipts. These are current dollar estimates. Comparisons for different regions and time periods reflect changes in both the price and quantity components of regional personal income. Estimates of personal income in the United States are derived as the sum of the regional estimates. These differ from the estimates of personal income in the national income and product account (NIPAs) because of differences in coverage, in the methodologies used to prepare the estimates, and in the timing of the availability of source data. Regional price parities (RPPs) are regional price levels expressed as a percentage of the overall national price level for a given year. The price level is determined by the average prices paid by consumers for the mix of goods and services consumed in each region. Detailed CPI price data are adjusted to obtain average price levels for BLS-defined areas . These are allocated to counties in combination with direct price and expenditure data on rents from the ACS. County data are then aggregated to states and metropolitan areas. 6 Personal income at RPPs is current-dollar personal income divided by the price parity7 for a given year and region. A balancing factor is applied so that the sum of personal income at RPPs across regions equals the current dollar sum. Real personal income is personal income at RPPs divided by the national PCE chaintype price index. The result is real personal income in chained dollars (using 2008 as the reference year)8. Using Colorado in 2012 as an example: 5 The growth rate of the implicit regional price deflators will not necessarily equal the region or metro area price deflators published by the BLS. This is because the CPI deflators are calculated directly while the IRPDs are indirect estimates, and because of differences in the source data and the methodology. For a complete description see the BEA working paper titled “Note on estimating the Multi-year regional price parities by 16 expenditure categories: 2005-2009” (http://www.bea.gov/papers/pdf/notes_on_estimating_the_multi_year_rpps_and_appendix_tables.pdf) 6 The CPI represents about 87% of the total U.S. population, including almost all residents of urban or metropolitan areas. Rural area prices (exclusive of Rents) are assumed to be the same as those in the urban, non-metropolitan areas of the CPI. 7 RPP should first be divided by 100. 8 Real personal income estimates are in 2008 dollars, the first year of the series in this release. 5 (1) Personal Income is divided by the RPP (2) Personal income at RPPs is deflated by the US PCE Price Index 2012 Colorado Real Personal Income $237.5 / 1.016 = $233.8 $233.8 / 1.059 = $220.8 $220.8 Note. Dollar amounts are in billions. Estimates of real personal income in the United States are derived as the sum of the regional estimates divided by the U.S. PCE Price Index. Implicit Regional Price Deflator (IRPD) is the product of the RPP times the national PCE price index9. It is equal to personal income divided by real personal income. See also the Technical Note. * * * The tables in this press release are also available on the BEA website. Additional tables showing estimates of real income and regional price parities can also be found there for state metropolitan and nonmetropolitan portions, and metropolitan areas. BEA’s national, international, regional, and industry statistics; the Survey of Current Business; and BEA news releases are available without charge on BEA’s web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements. Next real personal income release – April 2015 for states, state metropolitan and nonmetropolitan portions, and metropolitan areas. 9 The IRPDs will equal the RPPs in the reference year, 2008. 6 Table 1. Real Personal Income and Implicit Regional Price Deflators by State, 2011 and 2012 Personal Income Millions of dollars 2011 United States Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 13,179,561 167,787 34,827 229,238 100,005 1,683,204 226,032 207,162 38,873 46,104 761,303 356,836 60,095 52,954 567,197 236,815 130,131 120,783 150,850 176,690 51,653 306,001 358,218 365,753 241,352 95,854 228,270 36,630 80,420 101,717 62,651 471,188 72,300 1,012,406 352,455 32,332 446,136 147,430 146,001 558,345 46,881 159,747 36,932 237,618 1,053,552 96,175 26,888 381,930 303,088 62,737 232,094 27,920 2012 13,729,063 173,236 36,160 237,513 104,508 1,768,039 237,461 214,297 40,558 47,281 792,255 371,488 62,330 55,022 590,094 249,198 135,063 124,137 156,131 184,340 53,283 316,682 372,026 378,443 252,413 100,465 235,661 38,753 83,521 105,450 64,885 487,437 74,416 1,041,931 369,704 38,390 462,424 154,958 152,722 575,425 48,184 165,595 37,819 250,189 1,111,110 101,163 27,886 396,005 317,575 65,091 241,201 29,147 Maximum 1,683,204 1,768,039 Minimum 26,888 27,886 Range 1,656,316 1,740,153 Source: U.S. Bureau of Economic Analysis Real Personal Income Millions of chained (2008) dollars Percent growth 2011 2012 Percent growth 4.2 3.2 3.8 3.6 4.5 5.0 5.1 3.4 4.3 2.6 4.1 4.1 3.7 3.9 4.0 5.2 3.8 2.8 3.5 4.3 3.2 3.5 3.9 3.5 4.6 4.8 3.2 5.8 3.9 3.7 3.6 3.4 2.9 2.9 4.9 18.7 3.7 5.1 4.6 3.1 2.8 3.7 2.4 5.3 5.5 5.2 3.7 3.7 4.8 3.8 3.9 4.4 12,670,133 184,281 31,686 224,381 109,913 1,430,212 214,906 182,483 36,575 37,628 739,169 373,328 49,551 54,616 541,432 249,422 139,994 129,263 163,899 186,955 51,018 264,482 319,250 372,860 239,548 106,266 248,780 37,479 86,224 98,566 57,116 397,749 73,263 844,330 371,148 34,869 480,076 158,458 142,547 545,333 45,372 169,599 40,997 253,494 1,053,124 95,583 25,863 356,882 283,739 68,230 240,443 27,749 12,958,961 185,792 31,892 228,740 112,726 1,479,356 220,778 185,116 37,461 37,787 757,737 381,708 50,245 55,561 554,445 258,572 142,567 130,490 166,058 190,667 51,195 268,936 328,017 378,704 244,719 109,854 252,687 38,864 87,558 101,444 57,745 403,804 74,147 853,317 381,336 40,136 489,788 162,898 146,033 551,039 46,113 172,448 40,523 260,645 1,087,533 98,737 26,121 362,744 290,802 69,438 245,355 28,583 2.3 0.8 0.7 1.9 2.6 3.4 2.7 1.4 2.4 0.4 2.5 2.2 1.4 1.7 2.4 3.7 1.8 0.9 1.3 2.0 0.3 1.7 2.7 1.6 2.2 3.4 1.6 3.7 1.5 2.9 1.1 1.5 1.2 1.1 2.7 15.1 2.0 2.8 2.4 1.0 1.6 1.7 ‐1.2 2.8 3.3 3.3 1.0 1.6 2.5 1.8 2.0 3.0 18.7 2.4 16.3 1,430,212 25,863 1,404,348 1,479,356 26,121 1,453,234 15.1 ‐1.2 16.3 Implicit Regional Price Deflators 2011 104.0 91.0 109.9 102.2 91.0 117.7 105.2 113.5 106.3 122.5 103.0 95.6 121.3 97.0 104.8 94.9 93.0 93.4 92.0 94.5 101.2 115.7 112.2 98.1 100.8 90.2 91.8 97.7 93.3 103.2 109.7 118.5 98.7 119.9 95.0 92.7 92.9 93.0 102.4 102.4 103.3 94.2 90.1 93.7 100.0 100.6 104.0 107.0 106.8 91.9 96.5 100.6 122.5 90.1 32.4 2012 105.9 93.2 113.4 103.8 92.7 119.5 107.6 115.8 108.3 125.1 104.6 97.3 124.1 99.0 106.4 96.4 94.7 95.1 94.0 96.7 104.1 117.8 113.4 99.9 103.1 91.5 93.3 99.7 95.4 103.9 112.4 120.7 100.4 122.1 96.9 95.6 94.4 95.1 104.6 104.4 104.5 96.0 93.3 96.0 102.2 102.5 106.8 109.2 109.2 93.7 98.3 102.0 125.1 91.5 33.7 Percent growth 1.8 2.4 3.2 1.6 1.9 1.6 2.3 2.0 1.9 2.1 1.5 1.8 2.3 2.1 1.6 1.5 1.9 1.8 2.2 2.3 2.8 1.8 1.1 1.9 2.4 1.4 1.6 2.0 2.3 0.7 2.4 1.9 1.7 1.8 2.1 3.2 1.6 2.2 2.1 2.0 1.1 1.9 3.6 2.4 2.1 1.8 2.7 2.0 2.2 1.9 1.8 1.3 3.6 0.7 2.9 Table 2. Real Per Capita Personal Income by State, 2011 and 2012 Per Capita Personal Income Real Per Capita Personal Income Dollars Chained (2008) dollars 2011 United States Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 42,298 34,929 48,114 35,446 34,032 44,666 44,179 57,758 42,805 74,480 39,896 36,366 43,606 33,436 44,106 36,342 42,470 42,079 34,545 38,623 38,880 52,401 54,218 37,032 45,135 32,193 37,988 36,716 43,654 37,396 47,542 53,333 34,782 51,914 36,520 47,218 38,657 38,960 37,744 43,813 44,621 34,183 44,843 37,129 41,103 34,173 42,911 47,126 44,420 33,822 40,648 49,212 Maximum 74,480 Minimum 32,193 Range 42,287 Source: U.S. Bureau of Economic Analysis 2012 Percent growth 2011 43,735 35,926 49,436 36,243 35,437 46,477 45,775 59,687 44,224 74,773 41,012 37,449 44,767 34,481 45,832 38,119 43,935 43,015 35,643 40,057 40,087 53,816 55,976 38,291 46,925 33,657 39,133 38,555 45,012 38,221 49,129 54,987 35,682 53,241 37,910 54,871 40,057 40,620 39,166 45,083 45,877 35,056 45,381 38,752 42,638 35,430 44,545 48,377 46,045 35,082 42,121 50,567 3.4 2.9 2.7 2.3 4.1 4.1 3.6 3.3 3.3 0.4 2.8 3.0 2.7 3.1 3.9 4.9 3.4 2.2 3.2 3.7 3.1 2.7 3.2 3.4 4.0 4.5 3.0 5.0 3.1 2.2 3.3 3.1 2.6 2.6 3.8 16.2 3.6 4.3 3.8 2.9 2.8 2.6 1.2 4.4 3.7 3.7 3.8 2.7 3.7 3.7 3.6 2.8 40,663 38,362 43,773 34,695 37,403 37,953 42,004 50,877 40,275 60,787 38,736 38,046 35,955 34,485 42,103 38,276 45,688 45,033 37,533 40,867 38,402 45,291 48,320 37,751 44,798 35,690 41,401 37,566 46,804 36,237 43,342 45,021 35,245 43,295 38,457 50,923 41,597 41,874 36,851 42,792 43,185 36,291 49,779 39,610 41,087 33,963 41,276 44,036 41,584 36,784 42,110 48,909 74,773 33,657 41,116 16.2 0.4 15.8 60,787 33,963 26,824 2012 41,282 38,530 43,601 34,905 38,223 38,888 42,559 51,559 40,848 59,759 39,225 38,479 36,087 34,818 43,063 39,553 46,376 45,216 37,909 41,432 38,516 45,702 49,354 38,317 45,494 36,803 41,961 38,665 47,188 36,769 43,722 45,552 35,553 43,603 39,103 57,367 42,427 42,701 37,451 43,173 43,905 36,507 48,626 40,371 41,733 34,580 41,726 44,313 42,164 37,425 42,846 49,587 59,759 34,580 25,179 Percent growth 1.5 0.4 ‐0.4 0.6 2.2 2.5 1.3 1.3 1.4 ‐1.7 1.3 1.1 0.4 1.0 2.3 3.3 1.5 0.4 1.0 1.4 0.3 0.9 2.1 1.5 1.6 3.1 1.4 2.9 0.8 1.5 0.9 1.2 0.9 0.7 1.7 12.7 2.0 2.0 1.6 0.9 1.7 0.6 ‐2.3 1.9 1.6 1.8 1.1 0.6 1.4 1.7 1.7 1.4 12.7 ‐2.3 15.0 Table 3. Regional Price Parities by State, 2012 Regional Price Parities Services All Items Goods Rents Other Alabama 88.1 96.7 64.3 93.1 Alaska 107.1 103.0 142.1 99.6 Arizona 98.1 100.6 93.6 98.0 Arkansas 87.6 95.6 63.0 92.4 California 112.9 103.1 147.4 105.6 Colorado 101.6 101.7 106.5 98.8 Connecticut 109.4 104.9 118.9 109.5 Delaware 102.3 102.3 98.9 104.4 District of Colum 118.2 107.0 157.2 112.0 Florida 98.8 98.3 104.8 95.9 Georgia 92.0 97.1 79.8 93.8 Hawaii 117.2 107.5 159.0 104.2 Idaho 93.6 98.7 78.8 96.7 Illinois 100.6 101.4 100.5 99.7 Indiana 91.1 96.6 75.8 93.9 Iowa 89.5 93.7 74.8 91.3 Kansas 89.9 94.7 75.0 91.7 Kentucky 88.8 95.3 68.1 92.5 Louisiana 91.4 96.9 77.4 93.2 Maine 98.3 98.6 99.5 97.5 Maryland 111.3 103.4 125.1 111.0 Massachusetts 107.2 98.0 121.4 110.9 Michigan 94.4 97.7 82.4 97.2 Minnesota 97.5 98.5 95.7 97.2 Mississippi 86.4 95.1 62.1 92.0 Missouri 88.1 92.8 74.1 90.5 Montana 94.2 99.2 80.3 95.6 Nebraska 90.1 94.5 76.2 91.9 Nevada 98.2 97.4 98.8 98.9 New Hampshire 106.2 98.1 123.4 107.3 New Jersey 114.1 101.4 136.8 115.5 New Mexico 94.8 97.9 83.2 98.1 New York 115.4 108.1 134.9 113.2 North Carolina 91.6 96.7 79.1 93.1 North Dakota 90.4 93.5 79.3 91.1 Ohio 89.2 95.1 73.9 91.9 Oklahoma 89.9 96.2 70.3 92.8 Oregon 98.8 98.3 99.1 99.3 Pennsylvania 98.7 100.0 89.8 102.1 Rhode Island 98.7 98.4 101.6 97.3 South Carolina 90.7 96.9 76.3 93.3 South Dakota 88.2 93.2 70.8 90.8 Tennessee 90.7 96.6 75.5 93.1 Texas 96.5 97.9 89.3 99.0 Utah 96.8 97.7 92.1 98.4 Vermont 100.9 98.6 116.6 97.1 Virginia 103.2 100.2 114.6 100.8 Washington 103.2 103.1 111.0 99.9 West Virginia 88.6 95.7 63.3 93.6 Wisconsin 92.9 95.7 87.6 92.1 Wyoming 96.4 99.0 90.6 95.9 All States 100.0 Maximum 118.2 Minimum 86.4 Range 31.8 Source: U.S. Bureau of Economic Analysis 99.4 108.1 92.8 15.3 101.2 159.0 62.1 96.9 100.0 115.5 90.5 25.0