Oregon Office of Economic Analysis

Highlights:

• The underlying components are better than the headline story suggests
• Total personal income declined 0.06% in the third quarter (+4.49% y/y)
• Wages and Salaries grew 0.14% in the third quarter (+3.52% y/y)
• The decline in Transfer Payments (-0.99%) led the overall fall

This morning the U.S. Bureau of Economic Analysis (BEA) released quarterly personal income data at the state level for 2011 Q3, along with revisions to the quarterly figures for 2011. In the third quarter, Total Personal Income in Oregon declined 0.06 percent, marking the first decline after seven quarters of growth. The decline is entirely attributable to falling transfer payments to Oregonians; other major components, such as Wages and Salaries, continued to increase. The revisions, as seen in the graph below, were upward for both the first and second quarters of 2011. These revisions were primarily due to increased estimates for Wage and Salary Disbursements with Farm Proprietors’ Income also contributing significantly. All other income categories, essentially, summed to zero on the revisions.

Note: The red portion in the graph is our office’s forecast for personal income. While actual personal income came in slightly higher than forecast (due to revisions), the actual growth rate for the quarter is less than our forecasted rate.

Income is up in nearly all categories, except for unemployment benefits and farm income over the year and in the most recent quarter. Oregon’s quarter-over-quarter relative ranking among all states is 44th, however the year-over-year ranking is much better as the state ranks 9th best. The decline in transfer payments is not unexpected and even as these payments decline (particularly unemployment benefits), it will be a drag on overall income in Oregon. Ideally the fall in unemployment benefits will be more than offset by increased wages as individuals who are out of work find employment. However with job growth in Oregon remaining essentially zero over the past 10 months, the decline in unemployment benefits more likely reflects the loss of benefits due to exhaustion rather than transitioning to employment. In terms of strictly wages and salaries, Oregon’s relative rankings are 9th best over the year and 42nd best in the most recent quarter. For more information on the definition of each component, please see the BEA’s glossary.

The two charts below illustrate each state’s income growth and relative ranking over the past year (first graph) and over the past quarter (second graph).

Full year 2011 and fourth quarter 2011 data is scheduled to be released March 28, 2012.