Volume 100, Number 11  |  November 19, 2020

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The statistics discussed in this Regional Quarterly Report include the following: (1) state gross domestic product (GDP) statistics for 2019, (2) state personal income statistics for 2019, and (3) personal consumption expenditures (PCE) by state statistics for 2019.

David G. Lenze prepared the section on state GDP. David G. Lenze and Jeffrey L. Newman prepared the section on state personal income. Steven Zemanek and Christopher Lucas prepared the section on PCE by state.

Real GDP growth slowed in Florida, New York, Texas, and 36 other states in 2019 and accelerated in 11 states (including California). U.S. real GDP, which includes the real GDP of the overseas activity of the federal government, grew 2.2 percent, down from 3.0 percent in 2018.¹ The real GDP growth of states in 2019 ranged from 5.2 percent in New Mexico to 0.3 percent in Hawaii (table A).

Oil and gas extraction was the main contributor to New Mexico’s real GDP growth (2.7 percentage points); petroleum and coal products manufacturing was the next largest contributor (0.5 percentage point). Real GDP grew 44.9 percent in 2019 in New Mexico’s oil and gas extraction industry and 48.8 percent in petroleum and coal products manufacturing. This was the first year since 2014 that New Mexico GDP grew faster than U.S. GDP (chart 1).

The slow growth in Hawaii in 2019 was mainly attributable to declines in the administrative and support services, real estate, and petroleum and coal products manufacturing industries. These industries subtracted 0.5, 0.3, and 0.2 percentage points, respectively, from real GDP growth. In contrast, air transportation was the major contributor to Hawaii’s growth in 2019, contributing 0.3 percentage point. This was the second consecutive year that Hawaii GDP grew slower than U.S. GDP (chart 2).

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Of the 65 industries for which BEA publishes annual real GDP estimates by state, 46 grew in 2019, while 18 declined. (The percent change in the real GDP of construction in 2019 rounds to zero.) Real GDP growth rates in 2019 ranged from 20.7 percent for transit and ground passenger transportation to –6.1 percent for furniture and related product manufacturing (table B).

The growth of the transit industry was particularly strong in California, where it grew 58.9 percent in 2019, following a 26.8 percent increase in 2018. Growth was also strong in the state of Washington (39.5 percent) and West Virginia (23.6 percent). In contrast, the transit industry declined 16.5 percent in Nevada, its fourth consecutive year of decline (chart 3).

The percent decline of the furniture manufacturing industry was largest in Louisiana, which fell 13.6 percent in 2019, following a 1.3 percent decline in 2018. Other states with large percent declines were Indiana (12.2 percent), North Dakota (11.6 percent), Nebraska (11.1 percent), and Montana (10.6 percent). In contrast, furniture manufacturing rose 7.4 percent in New Mexico.

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Contributions to U.S. real GDP growth in 2019 ranged from 0.23 percentage point for miscellaneous professional, scientific, and technical services industry to −0.13 percentage point for wholesale trade (table B). Among states, real GDP growth in the miscellaneous professional services industry (in chained 2012 dollars) was greatest in California ($6.9 billion), Texas ($4.5 billion), and Massachusetts ($4.2 billion). The largest declines in wholesale trade real GDP were in Texas ($3.2 billion), New York ($2.4 billion), and Michigan ($1.6 billion).

Components of value added

The largest current-dollar declines in GDP were in petroleum and coal products manufacturing ($23.9 billion) and oil and gas extraction ($21.7 billion) (table C). The declines were due to falling prices (10.0 percent and 14.5 percent, respectively);² in contrast, real GDP increased $19.0 billion and $67.2 billion, respectively (table B). The decline in current-dollar GDP in these industries shows up in gross operating surplus, which fell $25.4 billion and $24.0 billion, respectively; compensation of employees and taxes on production and imports increased. By state, the largest declines in petroleum and coal products manufacturing current-dollar GDP were in Texas ($5.9 billion), California ($3.5 billion), and Louisiana ($2.3 billion). By state, the largest declines in oil and gas extraction current-dollar GDP were in Texas ($9.2 billion), Oklahoma ($3.5 billion), and Colorado ($1.8 billion).

The gross operating surplus of farms increased $3.3 billion, despite a $4.2 billion decline in current-dollar farm GDP, because of a $10.0 billion increase in farm subsidies. The $21.8 billion in farm subsidies in 2019 was the highest since the GDP by state statistics began in 1997. Farm subsidies for the Plains Region (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota) in 2019 were also a record high at $8.8 billion.

Taxes on production and imports increased in most industries in 2019 but fell $14.4 billion (30.0 percent) in the insurance carriers and related activities industry (table C). The decline resulted from a suspension of the federal health insurance providers fee imposed by the Affordable Care Act.

2019 annual update

Each fall, BEA typically revises the preliminary estimates of annual GDP by state released in the spring in order to incorporate the results of the annual updates of the National Income and Product Accounts (NIPAs), the GDP by industry statistics, and the state personal income statistics³ and to incorporate state source data that are more complete and more detailed than those previously available. This year, the annual estimates for 1997 to 2019 were revised. The newly available and revised source data, which became available after last year’s annual update in May 2019, include the following:

• U.S. Census Bureau, Economic Census for 2017 (retail, wholesale, and service industries only)
• U.S. Census Bureau, Annual Survey of State and Local Government Finances for fiscal years 2015–2017 (revised) and 2018 (new)
• Energy Information Administration, gas and electricity consumption for 2018 (revised) and 2019 (new)
• Energy Information Administration, oil, gas production and prices, and coal reports for 2018 (revised) and 2019 (new)
• Federal Deposit Insurance Corporation, branch office deposits for 2019 (new)
• Federal Home Loan Bank Board, income and expenses for 2019 (new)
• Federal Reserve Banks, income and expenses for 2019 (new) and data for foreign banking institutions for 1997–2019 (new data source)
• National Association of Insurance Commissioners, premiums and losses for 2019 (new)
• National Science Foundation, Business Research and Development Survey for 2018 (new)
• U.S. Department of Agriculture, Economic Research Service, farm income and expenses for 2015–2018 (revised) and 2019 (new)
• U.S. Department of Transportation, Bureau of Transportation Statistics, transportation finance, passengers, and freight for 2019 (new)
• U.S. Geological Survey, mineral resources for 2019 (new)
• BEA, compensation of employees and proprietors’ income from state personal income for 2015–2018 (revised) and 2019 (new)

Personal income growth slowed in every state in 2019 except New York and Rhode Island, where growth in 2019 maintained the same pace as in 2018 (table D).⁴ State personal income for the United States, which excludes the personal income of federal civilian and military personnel stationed abroad, grew 3.9 percent in 2019, down from 5.3 percent in 2018. Inflation, as measured by the national price index for personal consumption expenditures, slowed to 1.5 percent in 2019 from 2.1 percent in 2018. Personal income growth rates in 2019 ranged from 5.8 percent in Utah to 2.0 percent in West Virginia. Growth rates of per capita personal income, which adjusts for differential state population growth, ranged from 4.5 percent in California to 2.3 percent in Nevada.

Compensation of employees, the largest component of personal income,⁵ grew 4.4 percent in the United States in 2019, down from 5.1 percent in 2018, reflecting a deceleration in wage and salary employment growth to 1.3 percent from 1.6 percent. Compensation growth was fastest in the state of Washington (6.8 percent) and slowest in West Virginia (0.5 percent), where employment grew 2.0 percent and fell 0.7 percent, respectively.

The information industry was the primary contributor to Washington’s compensation growth (among two-digit North American Industry Classification System (NAICS) industries), accounting for $4.4 billion of the $19.8 billion increase. Within the information industry, employee compensation increased 39.8 percent for data processing, hosting, and related services, 11.4 percent for publishing industries (except internet publishing), and 27.6 percent for other information services.

In West Virginia, the compensation of construction employees fell 20.5 percent ($723 million) in 2019. Compensation also fell in farming (14.7 percent), mining (1.8 percent), information (0.4 percent), and professional services (2.1 percent) among two-digit NAICS industries. The two largest contributors to compensation growth were health care, which grew 3.9 percent ($265 million), and state and local government, which grew 4.0 percent ($257 million).

Cumulative compensation growth over the last 5 years (2014–2019) was fastest in the states of Washington (38.3 percent) and Utah (36.4 percent) and slowest in North Dakota (2.8 percent) and Wyoming (5.0 percent). Over the same period, compensation grew 23.6 percent for the United States (chart 4).

Proprietors’ income, which represents the income earned from current production by unincorporated businesses that is received by persons, grew 4.7 percent for the United States in 2019, down from 5.0 percent growth in 2018. U.S. farm proprietors’ income rose 20.4 percent ($9.6 billion) in 2019 after increasing 1.9 percent ($0.9 billion) in 2018. In the farm belt, farm proprietors’ income growth was above average in Iowa (39.5 percent), Kansas (125.1 percent), Minnesota (61.2 percent), and Nebraska (32.8 percent) but fell in North Dakota (20.8 percent) and South Dakota (16.6 percent). U.S. nonfarm proprietors’ income grew 4.2 percent in 2019, down from 5.1 percent growth in 2018. Among states, nonfarm proprietors’ income growth was fastest in Virginia (5.7 percent) and slowest in Wyoming (0.3 percent).

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Property income (dividends, interest, and rent) increased 1.3 percent in 2019, down from 7.1 percent in 2018. Personal dividend income fell 1.1 percent, personal interest income rose 2.2 percent, and the rental income of persons increased 3.7 percent.

Personal current transfer receipts, which consist primarily of Social Security, Medicare, and Medicaid benefits, grew 5.2 percent on average in 2019, up from 4.0 percent in 2018. Transfer receipts increased in all states. Growth was fastest in Utah (7.5 percent), where Medicaid benefits increased 14.6 percent, and slowest in Connecticut (2.2 percent), where Medicaid benefits fell 5.0 percent. In West Virginia, personal current transfer receipts contributed more to personal income growth in 2019 than any other component (table E). In all other states, the compensation of employees was the leading contributor to personal income growth.

Social security benefits grew 7.9 percent in Idaho in 2019 and 6.8 percent in 2018, faster than every other state in both years. In contrast, social security benefits grew 4.4 percent in West Virginia in 2019 and 3.7 percent in 2018, the slowest of all states in both years.

Contributions for government social insurance, a subtraction in the derivation of personal income, grew 4.3 percent in 2019, down from 4.8 percent growth in 2018. The largest increase in contributions for government social insurance in 2019 was 9.6 percent in Nevada. The smallest increase was 0.4 percent in West Virginia.

Because state personal income is a place-of-residence concept, the compensation of employees and certain employee contributions for government social insurance, which are measured by place of work, must be adjusted to place of residence. The residence adjustment reduced personal income growth in New York $6.4 billion in 2019 (table E). At the same time, the residence adjustment contributed $4.1 billion to New Jersey’s personal income growth and $2.2 billion to Connecticut’s growth.

Updates to previously released estimates

Each September, BEA typically revises the preliminary estimates of annual state personal income released in March in order to incorporate the results of the annual update of the NIPAs,⁶ to incorporate state source data that are more complete and more detailed than those previously available (table H), and to update the seasonal factors used for the quarterly estimates. In general, the components of personal income were revised from the first quarter of 2015 to the first quarter of 2020. In addition, the residence adjustment was revised from the first quarter of 2013 to the fourth quarter of 2014 to incorporate revised source data.

The NIPA estimate of U.S. personal income for 2019, after adjustment for differences in geographic coverage and the timing of the availability of source data, was revised down 0.3 percent ($56.8 billion).⁷ This national estimate controls the state estimates.⁸ U.S. personal current transfer receipts were revised down 1.5 percent ($46.5 billion), nonfarm proprietors’ income was revised down 1.1 percent ($18.1 billion), and dividends, interest, and rent were revised down 0.4 percent ($16.1 billion). These downward revisions were offset somewhat by a 0.1 percent ($13.3 billion) upward revision to wages and salaries and a 21.8 percent ($10.1 billion) upward revision to farm proprietors’ income.

The unweighted average revision to 2019 personal income in the 50 states and the District of Columbia was 1.4 percent (table F). The average absolute revision was 1.5 percent.

The largest downward revisions for 2019 were for Vermont (2.5 percent), Connecticut (2.3 percent), and Michigan (2.2 percent); the largest upward revision was for Montana (1.4 percent). Property income (dividends, interest, and rent) contributed the most to the revision of personal income in Vermont and Michigan (table G). Nonfarm proprietors’ income contributed the most in Connecticut. In Montana, property income and farm proprietors’ income each contributed 0.7 percentage point to the revision of personal income, and nonfarm proprietors’ income subtracted 0.7 percentage point. These revisions are mostly due to the incorporation of new source data from the Internal Revenue Service for dividends, interest, and rent and the income of nonfarm sole proprietorships and partnerships reported on 2018 income tax returns. The revisions to farm proprietors’ income were primarily due to the incorporation of 2019 state-level crop production data from the U.S. Department of Agriculture.

On October 8, 2020, BEA released current-dollar statistics on PCE by state for 2019. PCE grew 3.9 percent nationwide in 2019, increasing in all states and the District of Columbia. The percent change for the states ranged from a low of 1.8 percent in Vermont to a high of 5.7 percent in Utah (chart 5).

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PCE by state is a household consumption measure that reflects the value of the goods and services purchased by, or on behalf of, households by state of residence. These statistics on households provide an indication of economic well-being as well as information on consumption patterns across states and over time. For example, the statistics show how households allocate their spending between goods and services or between necessities and discretionary items or how consumers adjust their spending to changes in the economy.

The states with the largest PCE growth rates in 2019 were in the western half of the United States. After Utah, the largest growth rates were in Washington (5.3 percent), Colorado (5.2 percent), and California (5.1 percent). On the opposite end of the spectrum, the state with the smallest growth rate—Vermont—was followed by Iowa (2.1 percent), Mississippi (2.2 percent), and New Mexico (2.3 percent).

Utah

Utah experienced the largest growth in 2019, increasing 5.7 percent; it was also the fastest growing state the previous year, increasing 7.2 percent in 2018 (table I);. The fastest growing states had strong growth in categories with large budget shares of total state PCE, such as housing and utilities, health care services, and financial services and insurance. A good example is Utah, which had large growth in both the financial services and insurance category and the housing and utilities category.

The primary contributors to Utah’s growth were financial services and insurance and housing and utilities. While financial services and insurance and housing and utilities were the state’s primary contributors, all categories contributed positively to the overall growth, except for gasoline and other energy goods. Utah has enjoyed a vibrant and robust economy, and that trend continued in 2019. In addition to a strong economy, Utah is the national leader in industrial banking.⁹

The strong growth in Utah is also evident in BEA’s personal income and GDP regional data (chart 6). Growth in Utah’s GDP and personal income outpaced the growth rate for the nation. Additionally, Utah’s population grew more than the national average. Both components of population, natural increase (births less deaths) and net migration (inflows less outflows), increased from the previous year (table J).

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Vermont

Vermont had the smallest growth in 2019, increasing 1.8 percent; it was also among the slowest growing states the previous year, increasing 3.8 percent in 2018. Like the fastest growing states, a common characteristic for the slow growing states was an underperforming category with a large budget share of total state PCE. Two of Vermont’s largest contributors to growth, housing and utilities and health care services, are good examples of this.

Expenditures on housing and utilities in Vermont had the second slowest growth rate of all the states, at 2.6 percent. In contrast, the national growth rate for housing and utilities expenditures was 4.3 percent, and Utah, the fastest growing state, boasted a growth rate of 5.1 percent. Similarly, the growth rate for expenditures on health care services in Vermont was 1.7 percent, while U.S. expenditures on health care services had a growth rate of 4.5 percent (chart 7).

Additionally, the slow growth in Vermont was evident in BEA’s personal income and GDP regional data (chart 8). Growth in Vermont’s GDP and personal income lagged the respective growth rates for the nation. However, the most important indicator was the population statistic, which decreased in 2019. Unlike Utah, both components of Vermont’s population decreased from the previous year.

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Revisions

The October release of PCE by state included updated statistics for 2013–2018. The updated statistics incorporated the results of the 2020 annual update of the NIPAs and newly available and revised regional source data. Source data that were either revised or newly released include total receipts data from the 2017 Economic Census, new and revised data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages for 2015–2019, and new 2018 data from the Census Bureau American Community Survey.

Several methodology improvements were incorporated into the PCE by state statistics for the October release. The health care category introduced the use of product service code data, which allows for the inclusion of expenditures through additional retail outlets and improved identification of consumer-specific spending. The financial services and insurance category incorporated the improvements implemented in the NIPAs for services furnished without payment by financial intermediaries.¹⁰ Lastly, the food services and accommodations category incorporated data from the Annual Survey of State and Local Government Finances for school lunches.

Current-dollar national PCE was unrevised in 2018 (table K). At the state level, the revisions ranged from a downward 4.0 percent in Montana to an upward 2.7 percent in Arizona. Current-dollar PCE was revised downward in 24 states and was unrevised or revised upward in 26 states and the District of Columbia. The revisions were caused by the new and revised source data, primarily due to the 2017 Economic Census. Additionally, the methodology improvements introduced revisions to select categories.