New Personal Income Data. The federal Bureau of Economic Analysis recently published its estimates of state personal income for the 4th quarter of 2017. While the data are subject to revision, they suggest that California’s income grew faster than the rest of the country in 2017. The table below shows growth rates for different income categories in the state and the nation (green categories are areas in which the California 12-month growth rate was faster than the U.S.). These growth rates compare the 4th quarter of 2017 to the 4th quarter of 2016. (Fourth quarter growth rates generally are a more variable measure than the annual average growth rates, which estimate activity in all four quarters.)
Strong Wage and Salary Growth. California’s wage and salary growth outpaced the nation by more than a full point in 2017. Moreover, the state’s wage and salary growth last year (5.8 percent) was well above the 15 year average of about 4 percent. The state’s overall income growth rate (4.5 percent) was held back by very slow growth in transfer payments, but this is an indication of the strength of the state’s economy: transfer payments consist largely of means-tested benefits such as Medi-Cal and unemployment insurance. Consequently, when the economy contracts transfer payments rise and when the economy expands these payments decline.
Strong Job Growth. California’s relatively strong wage and salary growth appears to stem largely from its relatively strong job growth. The chart below compares California’s 2017 job growth in different sectors to the nation’s. Among other things, the state’s high paying information sector (which includes the film industry and many technology sector jobs) grew, while the same sector shrank at the national level.
