Blog Posts > West Virginia’s Strong Personal Income Growth More Of A Blip Than A Trend
October 11, 2018

West Virginia’s Strong Personal Income Growth More Of A Blip Than A Trend

West Virginia made headlines in recent months with a strong quarter of personal income growth. While some media outlets and politicians took the data as further evidence of the so-called “West Virginia comeback,” subsequent releases of personal income data show that the strong quarter was more likely an anomaly than a sign of a trend.

West Virginia’s total personal income grew at an annualized rate of 5.6 percent in third quarter of 2017, placing it in the top 10 states for best growth, and garnering praise from state officials. However, in the quarter immediately preceding that, the state ranked last, with personal income declining at an annualized rate of -0.4 percent.

In fact, West Virginia had a few noisy quarters of personal income growth data, with the annualized growth rates jumping from 2.7 percent in 2016:Q4 to 7.7 percent in 2017:Q1 and back down to -0.4 percent in 2017:Q2, with the state rank going jumping from 36th, up to 9th, back down to 50th, and back up to 8th during that time.

Since then, West Virginia’s personal income growth has stabilized, but at a level below the national average, and has ranked in the bottom half of states for the past three consecutive quarters. In the most recent quarter, 2018:Q2, West Virginia’s personal income grew at an annualized rate of 3.6 percent, ranking 37th among the states.

In an economy like West Virginia’s, that has been relying heavily on the extraction industries for GDP growth, personal income is an important measure. While GDP measure the total value of all goods and services produced in an economy,  personal income measures how much money is received by people in an economy from their economic activity. Personal income includes wages, benefits, proprietor income, dividends, interest, rent and transfer payments like Social Security and veteran’s benefits. And in some cases, GDP can increase without benefiting the people of West Virginia.

For example, if a natural gas company from Oklahoma drills in West Virginia, only the wages paid to the workers would be included in West Virginia’s personal income. The profits from the sale of the gas would be included in West Virginia’s GDP, but not in West Virginia’s personal income. Instead, they would be counted in Oklahoma’s personal income.

Once again, the most recent economic indicators show signs of concern for West Virginia, and underscore the need to focus on strengthening its workforce.

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