October 1, 2015
The U.S. Bureau of Economic Analysis (BEA) released estimates of state personal income through the second quarter of 2015 on September 30. Personal income is an economic statistic: a broad measure of economic activity in California. It measures wages and salaries and various other types of income, but it excludes capital gains (income resulting from sales of assets, such as stocks and homes).
California Second Quarter Growth Ranks 4th Among U.S. States. According to BEA's estimates (which are seasonally adjusted at an annual rate), personal income in California in the second quarter of 2015 (2015Q2) was up 1.2% from 2015Q1. This growth rate ranks 4th among the states, trailing only Washington State, Nevada, and New York. Nationwide, personal income grew by 0.9% in 2015Q2, compared to 2015Q1. Personal income grew in every state except Oklahoma in 2015Q2. As shown in the BEA map below, second quarter personal income growth was heavily concentrated in the west.
To convert the quarterly growth rates shown on the map and mentioned elsewhere in this post to annual growth rates, multiply by 4. For example, California’s 1.2% growth rate in 2015Q2 is the equivalent of about a 4.8% annual growth rate. In other words, the annual growth rate would be 4.8% if the 2015Q2 pace continued over the next 3 quarters.
Technology and Other Services Fueled 2015Q2 Growth. BEA breaks down the growth of "earnings by place of work," a major component of personal income, on an industry-by-industry basis each quarter (see Tables 4 and 5 in the BEA release). For 2015Q2, California earnings by this measure are up by $11.4 billion, compared to 2015Q1. Of that $11.4 billion, $3.3 billion came from the technology-heavy professional and technical services sector, which is focused in the Bay Area. This $3.3 billion of growth represented a 1.8% growth rate for the quarter in this California sector. State and local government earnings were up by $1.5 billion, followed by health care and social services (up $1.2 billion). Earnings in the information sector, which includes the movie industry, telecommunications, and some internet businesses, fell by about $1 billion in the 2015Q2 data. In percentage terms for 2015Q2, fast-growing earnings sectors in California included the management sector (up 2.8%) and federal government civilian employment (up 2.1%). Farm earnings in California grew by 2.0% in 2015Q2. The weakest earnings sectors in California were utilities (down 3.8%) and mining (generally oil, down 3.2%), the latter mirroring a national trend connected with lower oil prices.
Over Last Year, California Personal Income Growth Ranks 1st in U.S. The table below shows that seasonally-adjusted personal income for California is up 5.5% over the past year (that is, from 2014Q2 to 2015Q2), which is stronger than the 4.1% growth for the nation as a whole. By this annual measure, California's personal income growth rate (5.52%) is the fastest of any state in the nation, leading #2 Oregon by two one-hundredths of a percentage point. California and Oregon are followed by #3 Nevada (5.19%), #4 Utah (5.16%), and #5 Washington State (5.13%). Among the other largest state economies, Florida ranked 8th by this measure (up 4.9%), Texas ranked 9th (up 4.7%), and New York ranked 22nd (up 3.9%).