Useful Stats: 5-year analysis of per capita personal income, 2018-2022

A new Bureau of Economic Analysis (BEA) release shows that over the past five years of available data (2018-2022), nationwide per capita personal income increased by 21.64%, rising from $53,786 to $65,423, with an average yearly percentage change of +5.04%. While personal income grew 23.39% during this period, from around $17.67 trillion to $21.80 trillion (+5.41% per year on average), this article will focus solely on per capita personal income, examining both nationwide and interstate trends from 2018-2022 with an emphasis on uncovering the impacts of the pandemic.

Personal income refers to the total income of all residents in an area, while per capita personal income measures the average income earned per person in a given area. Although personal income is commonly used as a measure of economic productivity, per capita personal income is more useful for comparisons between regions as it standardizes income by population. Focusing on per capita personal income is particularly important when examining state-level trends, as it mitigates the differences in personal income found in states with exceptionally high or low populations, as well as those with large shifts in population numbers.

Between 2018 and 2022, national per capita personal income — the average total income of all U.S. residents — grew by an average of approximately $2,909 per year, or 5.04%, with the highest jumps from 2019 to 2020 (+6.25%), and 2020 to 2021 (+7.29%). At a glance, these positive trends defy the expectation that pandemic-driven unemployment would decrease personal incomes, but it is important to consider the wide variety of components within the personal income metric; personal income accounts for all sources of income, not just wages and salaries, and is inclusive of government social benefits (e.g., unemployment insurance, Medicare, Medicaid, Social Security).

A congressional report from 2020 delves deeper into the early trends from the pandemic, attributing much of the personal income increase to one-time federal stimulus from legislation such as the CARES Act, as well as more long-term policies such as enhanced unemployment benefits and the Paycheck Protection Program.

However, many of these pandemic induced benefits have since been discontinued; for example, BEA data reveals that pandemic unemployment insurances and benefits went from contributing $0 to personal income in 2019, to nearly $400 billion in 2020 and $278 billion in 2021, before dropping to just $900 million in 2022 (-99.68%). Similarly, programs such as the Paycheck Protection Program contributed approximately $157 billion and $116 billion to personal income in 2020 and 2021 respectively, but $0 in 2022.

Despite the end of many pandemic-era federal stimulus, all 50 states and D.C. have experienced growths in their per capita personal incomes since before the onset of the pandemic (2018).

From 2018-2022, in terms of income, California (+$15,831), Colorado (+$15,714), Washington (+$15,477) and Massachusetts (+$15,252) experienced the largest increases in personal income from 2018 to 2022. West Virginia (+$7,890), Mississippi (+$8,348), Arkansas (+$8,403) and Louisiana (+$8,565) saw the smallest, albeit still very significant, increases in per capita personal income.

In terms of percent change from their 2018 to 2022 values, Colorado had the largest jump at +26.88%, followed by Utah (+26.85%), Idaho (+26.19%), South Dakota (+26.15%) and California (+25.74%). On the other hand, Alaska (+15.60%), Delaware (+16.45%), Connecticut (+16.52%) and Maryland (+16.76%) experienced the smallest percentage changes.

To put these changes into perspective with regards to inflation, using the US Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) Inflation Calculator, $1,000 in January 2018 has the same buying power as $1,194.40 in December of 2022 — a 19.94% difference — which certainly makes these large growths in personal income seem less impressive.

Many, but not all, of the states with the highest increases also had the most federal funding from COVID-19 programs on a per capita basis. The Peter G. Peterson Foundation used data from a variety of US government agencies to calculate the total and per capita funding for each U.S. state and D.C., broken down by category, and organized in both tabular and graphic form, which can be found here.

Click here for the data used in this article.