PERSONAL income growth for the Nation slowed to 0.8 percent in the third quarter of 2004 from a revised 1.6 percent in the second quarter. (1) The slowdown was evident across all eight BEA regions, as each region grew at a slower rate than in the second quarter. The growth in all regions, however, was fairly consistent, differing from national growth by about 0.2 percentage point or less. In contrast, in the second quarter, the Rocky Mountain region grew at nearly twice the pace of the Mideast region (chart 1).
Personal income growth in the third quarter features the following:
* Growth in all but seven states slowed, but much of the slowdown disappears when inflation is accounted for.
* Growth was highly concentrated in a few industries--two industries contributed about a third of the growth in earnings, and five industries contributed another third.
* Hurricane property damage reduced Florida's personal income growth rate 0.6 percentage point to 0.5 percent and Alabama's growth rate 0.2 percentage point to 0.6 percent (see the appendix for details).
Personal income growth in all regions slowed; the slowdowns ranged from 1.0 percentage point in the Far West region to 0.1 percentage point in the Mideast region. Personal income growth in all but seven states slowed. In Kansas, personal income increased at the same rate as in the second quarter, and in Alaska, Connecticut, Louisiana, Maryland, New Jersey, and New York, personal income growth accelerated slightly.
In the third quarter, Hurricanes Charley, Frances, Ivan, and Jeanne took their toll on personal income growth in Florida and in Alabama (for details, see the appendix). In 10 other states, the storm-related damage had little effect on total personal income growth, but it did affect some of the components of personal income, such as dividends, interest, and rent, proprietors' income, and personal current transfer receipts.
Estimates of personal income by major source and of earnings by industry are available on BEA's Web site at <www.bea.gov>.
Personal income growth by component
Net earnings. This component, which typically accounts for 69 percent of personal income, grew 1.1 percent in the third quarter after increasing 1.7 percent in the second quarter. However, this slowdown almost disappears when inflation is accounted for; real net earnings increased only 0.8 percent in the third quarter after increasing 0.9 percent in the second quarter. (2)