Inflation eats TN income gains
Small gains in personal income among Tennessee residents in the third quarter were wiped out by inflation over the same period ' a disappointing turn of events that left some economists saying that the only bright spot was that things could have been worse.
Personal income of workers in Tennessee rose 0.3 percent for July-September compared with the previous three months. That equaled the percentage gain for the United States as a whole, although 19 states did experience net earnings growth for the first time in at least a year, according to a report by the Bureau of Economic Analysis in the U.S. Department of Commerce.
The improvement essentially was eaten up by a 0.7 percent increase in how much U.S. households paid for goods and services during the third quarter.
"The only good thing is it's not declining," economist David Penn of Middle Tennessee State University said. "But we really can't get excited about it because the increase is so small."If the quarterly gain of 0.3 percent were maintained for a full year, the annual growth rate would reach 1.2 percent. But it takes much larger income gains over a year to represent a true improvement in someone's standard of living.
"We like to see something around 5 percent to 6 percent a year at least," Penn said. "That's an indicator of increased standard of living for the long run."
Workers in health care and financial services managed to take home relatively the biggest gains in pay and benefits in the state.
In Tennessee, net earnings, which include the wages and salaries of employees and incomes of sole proprietors, accounted for most of the period's gains. That contrasts with the April-June quarter, when the overall 0.9 percent gain in personal incomes was driven largely by more unemployment insurance benefits and other transfer payments such as those that go to Social Security beneficiaries.
"It's an entirely different story this quarter," said David Lenze, an economist with the Bureau of Economic Analysis. Increases in wages and salaries reflect a combination of changes in hours worked and average weekly earnings of workers, Lenze said.
Before the second quarter's slight gain, Tennessee's personal income data had dropped for three consecutive quarters.
Georgia and North Carolina matched Tennessee's income growth of 0.3 percent, while Alabama's results were flat for the third quarter, and Kentucky's and Mississippi's fell 0.2 percent. Louisiana fell 0.4 percent for the period.
