WASHINGTON – U.S. personal incomes rose 1.5 percent in the second quarter of 2004, the fastest pace of growth in more than three years, as income gains sped up in 33 states, the Commerce Department (search) said Tuesday.
All 50 U.S. states reported increases in personal income, and real earnings for all eight U.S. regions climbed above the level set in the first quarter of 2001, the previous peak in the national business cycle, the government reported.
The Rocky Mountain and Far West regions posted the strongest personal income growth. Washington led the nation with a 2.4 percent increase in personal income, followed by Montana and Nevada, up 1.9 percent from the previous quarter.
"We do see an improving picture here," said Mark Vitner, an economist at Wachovia Securities (search). "I think the recovery has strengthened and broadened."
But Vitner noted the figures were old, and third-quarter data due in December would likely reflect economic softness experienced in the summer.
For some states, second-quarter gains were driven by increased earnings in the real estate and leasing industry. Arkansas and North Dakota posted a jump in earnings due to growth in the farm sector.
Nationally, all three components of personal income — net earnings, property earnings and transfer receipts — grew.
Net earnings, or income from work, increased 1.6 percent. Strong income growth rates for proprietors helped offset weaker gains in the wage and salary portion of earnings. Proprietors in Michigan posted the fastest earnings growth among states, hitting 4.7 percent in the quarter.
Transfer receipts, or payments received when no work or services are performed, also rose, thanks to growth in Medicare and Medicaid payments.
Income from interest, dividends and rent, known as property income, was the weakest contributor to total personal income. It rose 1.0 percent in the second quarter, the report said.
Nearly all industries reported higher earnings.
The real estate and leasing sector posted an 8.3 percent increase in second-quarter earnings. Wyoming, Montana, Michigan, South Dakota and Vermont all reported earnings gains of more than 10 percent in that sector.
High gasoline prices hurt the arts, entertainment and recreation industry, which suffered a 1.9 percent fall in earnings. Gas prices cut travel to amusement parks and spending on fuel-intensive activities, such as boating, the report said.
Ohio took the biggest hit in that sector, with earnings down 9.4 percent.