5 States With the Biggest Q3 Drops in Personal Income
Personal income in the third quarter fell in every U.S. state and the District of Columbia, with 10 states experiencing declines of between 20% and 30%, the Department of Commerce reported Thursday. Other states ended the third quarter relatively unscathed: Georgia's personal income fell by just 0.6%, California's by 1.6%, and the District of Columbia's by 1.9%. Connecticut and Illinois saw drops of 4.4% and 4.5%. The report, prepared by the Bureau of Economic Analysis, said overall state personal income fell at an annual rate of 10% in the third quarter after surging by 35.8% in the previous quarter. BEA noted that third quarter decreases in personal current transfer receipts — which include Social Security, Medicare/Medicaid and unemployment insurance — and property income significantly outweighed an increase in earnings. Transfer receipts decreased $1.3 trillion for the nation in Q3, after increasing $2.4 trillion in the second quarter. The change reflected decreases in state unemployment insurance compensation and all other transfer receipts. According to the report, the decrease in state unemployment compensation came as employment partially rebounded following the economic shutdown in mid-March, and with the expiration in July of the $600 weekly federal government benefits provided by the Coronavirus Aid, Relief and Economic Security Act of 2020. The decrease in all other transfers reflected a decrease in the number of one-time $1,200 economic impact payments paid to individuals that started in the second quarter. Third-quarter property income decreased by 4% for the nation after falling by 8.2% in the second quarter, the report said. Every state experienced declines, ranging from 5.7% in Arkansas to 1.7% in Hawaii.
Earnings Increase
For the nation, earnings increased by 32.8% in the third quarter of 2020, compared with a decrease of 25.8% in the previous quarter, reflecting the gradual reopening of businesses following the partial economic shutdown. But the increase wasn't enough to offset the decrease in transfer payments. (Here's how personal income is calculated.) Health care and social assistance, accommodations and food services, and retail trade were the leading contributors to the overall earnings increase, according to the report. Increases ranged from 11.5% in Oklahoma to 55.3% in Nevada. See the gallery for the five states with the biggest drops in personal income. --- Related on ThinkAdvisor:
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