By Matt Schreiber – WBI President and Chief Investment Strategist
State personal income increased at an annual rate of 4.3% in the first quarter of 2018. This is a continuation of the positive trend in personal income. In Q1, every state had growth in personal income. The Bureau of Economic Analysis (BEA) breaks the country into six regions. This quarter, six of eight regions performed better than average. Last year, only two of eight regions performed above the annual average gain in personal income. Although growth in personal income in Q1 2017 was stronger, the growth in each region and underlying states were much more consistent in Q1 of 2018.
In fact, thirty-one states posted growth equal to in excess of the 4.3% national average increase in personal income. Fifteen states had growth greater than or equal to 5%. Washington led the nation in growth at 7.4%. Information services and durable goods manufacturing were the two largest contributors to the rise in personal income. Across the nation, earnings increased in 23 of 24 industries for which BEA prepares quarterly data. The industries with the largest quarter over quarter increase in earnings were durable manufacturing (12.2%), military (10.3%), mining (10.2%), construction (9.6%), and the federal government (7.2%).
With a consistent upward trend in personal income, this could take pressure of the consumer and the rising debt burden of the average American household. Consumer credit card debt recently eclipsed $1 trillion and total household debt recently hit a new record. Credit card write-offs for the 8 largest credit card issuers in the United States are up. However, with recent growth in personal and disposable income, the consumer should continue their strong pattern of spending which should be supportive of continued economic growth in the United States.
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