Iowa’s personal income declines just 0.1% in first quarter of 2013

WASHINGTON DC – State personal income declined an average 1.2 percent in the first quarter of 2013 after growing 2.7 percent in the fourth quarter of 2012, according to estimates released today by the U.S. Bureau of Economic Analysis. Personal income declines ranged from 0.1 percent in Iowa to 2.5 percent in Wyoming. In contrast, personal income grew 1.6 percent in South Dakota, the only state with an increase in the first quarter. Inflation, as measured by the national price index for personal consumption expenditures, slowed to 0.2 percent in the first quarter from 0.4 percent in the fourth quarter of 2012.

The decline in first-quarter personal income reflected the effects of several special factors including the expiration at the beginning of 2013 of the “payroll tax holiday” (a temporary two-percentage point reduction in the personal contribution rate for social security) and the acceleration of the receipt of income, especially personal dividends and salary bonuses, into the fourth quarter in anticipation of first-quarter changes in individual income tax rates.

Earnings. Overall, earnings growth slowed to $24.4 billion (0.2 percent) in the first quarter, down from a $213.1 billion (2.2 percent) increase in the fourth quarter. Earnings increased in 17 of the 24 industries for which BEA prepares quarterly estimates, with the largest increases in professional services ($15.3 billion) and construction ($15.0 billion). Construction earnings growth exceeded the 2.8 percent national average in New York (4.9 percent), Texas (3.4 percent), and California (3.3 percent).

U.S. farm earnings increased $5.5 billion (5.3 percent) in the first quarter after growing $2.8 billion (2.7 percent) in the fourth. Illinois, Iowa, and South Dakota accounted for the entire increase in the first quarter. Crop output, particularly of corn, in these states is rebounding from the drought-induced losses in 2012.

First-quarter earnings fell in 7 industries with the largest decreases in finance ($39.9 billion) and durable goods manufacturing ($11.7 billion).

The 5.4 percent first-quarter earnings decline in the finance industry followed an 8.7 percent boost in the fourth quarter. The swing reflected the impact of accelerated bonuses in anticipation of changes to individual income tax rates. Finance earnings fell in every state in the first quarter.

Earnings in the management of companies industry displayed a similar pattern in many states. In Colorado, for example, earnings rose 44.6 percent in the fourth quarter and fell 22.6 percent in the first.

Manufacturing earnings grew 2.4 percent in Washington State, the only state with an increase. The largest decline was in Oklahoma, where manufacturing earnings fell 3.8 percent.

Property income. Property income (dividends, interest, and rent) fell $96.1 billion nationally in the first quarter after growing $156.3 billion in the fourth quarter. Dividends accounted for the entire decline in the first quarter. Fourth-quarter personal dividend income was high because firms accelerated distributions and paid special dividends in anticipation of changes to individual income tax rates. First-quarter property income fell the most in California ($10.9) billion and Florida ($9.3 billion). For 22 states, with Florida and Wyoming the most prominent of them, the decline in property income contributed more to first-quarter personal income losses than the decline in earnings.

Revisions. Estimates for 2012:I to 2012:IV have been revised. All of the regional statistics underlying this news release, along with mapping and charting software, are available at www.bea.gov/regional/.