Urban

Where Purchasing Power of Incomes Has Grown

Some of the starkest illustrations of the uneven recovery are shown by a new measure estimating real personal income. See how data for each metro area compares.
by | May 1, 2014
 

Residents of the Pine Bluff, Ark., and Greenville, N.C., metro areas may be carrying around fatter wallets as the purchasing power of their incomes grew nearly 8 percent between 2011 and 2012. Most other metro areas also experienced smaller increases in real per capita personal income over the year, according to new data published by the Bureau of Economic Analysis.

Regions of the country are all rebounding from the Great Recession at different rates. Some of the starkest illustrations of the uneven recovery become even more apparent when taking a closer look at the metro areas within these regions.

For the first time, the Bureau of Economic Analysis (BEA) recently published an official measure estimating regional price-adjusted changes in purchasing power. BEA’s new real personal income data estimates purchasing power of personal income both across regions and over time.

For all regions, real personal income climbed an average of 2.3 percent in 2012.

The following table lists real per capita personal income estimates for metro areas with published data:

Source: U.S. Bureau of Economic Analysis

One of the key components differentiating BEA’s estimates from other measures is that it takes into account regional price parities, using data for various spending categories (rent, food, etc.) compiled from multiple federal surveys. Personal income is adjusted by price levels for consumer goods and services within each metro area.

Metro areas recording the highest 2012 regional price parities, shown as a percentage of the national price index, were Honolulu (122.9), New York-Newark-Jersey City (122.2) and San Jose-Sunnyvale-Santa Clara (122.0).

Comparing BEA data a few more years back illustrates the extent to which metro areas recovered from the depths of the recession. The map below shows percentage changes in real per capita personal income growth between 2012 and 2009 – the year unemployment peaked. Metro areas recording the largest gain in purchasing power are shaded in dark green. (Click to open interactive map in new window)

As these income maps always seem to show, oil-rich areas of Texas and North Dakota fared quite well. Meanwhile, regions hit hard by the bursting of the housing bubble were still losing purchasing power over the three-year period. It’s also important to note that metro area economies incur different cycles. Washington, D.C., and much of the Great Plains, for example, weathered the recession well, so they didn't have as much income loss to recover as other areas.

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