Personal income in Washington state rose to $43,564 per capita in 2010, the 10th-highest in the United States, according to data released Wednesday by the U.S. Bureau of Economic Analysis.
Washington personal income ranked higher than Oregon, which ranked 30th with personal income of $37,095 per capita; and California, which ranked 12th with personal income of $43,104 per capita.
In the most recent data available, Clark County personal income was $35,789 per capita in 2008, according to an analysis by the Washington Employment Security Department.
Personal income in Washington state grew 2.5 percent to $292.95 billion in 2010, estimates from the BEA revealed, from $285.69 billion in 2009. Personal income encompasses earnings, property income and transfer receipts such as income from Social Security and unemployment compensation. In 2008, Washington’s personal income was $287.01 billion.
Nationally, personal income increased an average 3 percent in 2010 after falling 1.7 percent in 2009, according to the BEA. State personal income growth ranged from 0.3 percent in Nevada to 4.2 percent in New Mexico.
Experts cautioned against taking the data as great news for the economy. Economist Bill Conerly, principal of Lake Oswego, Ore.-based Conerly Consulting LLC, said the personal income data are aggregate numbers that don’t speak to how anyone in particular is getting by in a weak economic environment. The numbers simply measure all sources of income divided by every man, woman and child. They don’t take income distribution into account.
“It’s good news in the sense it’s not going down,” Conerly said of the personal income data. “But it doesn’t mean we’re in a boom by any means.”
David Lenze, economist for the BEA, said Washington’s 2.5 percent increase in personal income was “safely above” the rate of inflation for purchases of goods and services. Inflation, as measured by the national price index for personal consumption expenditures, increased to 1.7 percent in 2010 from 0.2 percent in 2009.
Conerly saw the issue of inflation differently. He said the increase in the state’s personal income wasn’t that big of a gain over the rate of inflation. Certainly, many consumers don’t feel like their incomes are safely above the rate of inflation, Conerly said, noting there’s a psychological component to how people view the economy.
“The things that are going down in price” — such as computers or appliances — “we buy infrequently,” Conerly said, while the “things that are going up in price” — such as gas and food — “we buy every day.”
Added Conerly: “We, as humans, tend to overemphasize whatever happened most recently, and what has happened most recently is we bought gas and we bought food.”
Conerly said data showing increases in personal income will come as a surprise to some, especially because job growth has been weak. He said there are two reasons behind the rise in personal income: In the last 12 months, average hourly wages in the U.S. have increased by 2 percent, and, in that same time period, the average number of hours people worked in a week rose by 2 percent.
“Without a doubt,” Conerly said, “incomes are a little bit higher now than they have been.”
Among the contributors to the 2.5 percent increase in Washington state personal income were wage and salary disbursements (0.48 percent), employer contributions for employee pension and insurance funds (0.19 percent) and government social insurance (0.10 percent).
Conerly said the personal income data give us a sense of where we’ve been in the past but don’t signal where we are today. While the personal income data, along with other economic data points, suggest “moderately positive news,” he said, you also have to consider the economic impacts of the European debt crisis, and of the crises in the Middle East and Japan.
“There’s more risk than ever before because of these international events,” Conerly said, “so it’s worth giving some thought to what your game plan will be if the economy takes a turn for the worse.”
Aaron Corvin: 360-735-4518 or email@example.com.