05:36 AM PDT on Wednesday, June 30, 2004

By ABE ESTIMADA, kgw.com Staff

Oregon and Washington fell behind the national pace of personal income growth during the first quarter of 2004

(kgw.com Graphic)

But when the states’ quarterly numbers are annualized, personal incomes in Oregon and Washington lagged slightly behind the inflation rate for the same period of time. Inflation hovered around 5 percent for the first quarter of 2004, due to rising energy and food prices, said U.S. Bancorp economist John Mitchell.

Oregon incomes grew by 1 percent, and Washington incomes rose by 1.2 percent, below the national average of 1.5 percent, according to preliminary estimates released Tuesday by the U.S. Bureau of Economic Analysis.

While Oregon and Washington personal income numbers fell behind the inflation rate, the national personal income average remained ahead of inflation. That’s good news for the economy, Mitchell said, because spending is the primary engine of the recovery.

And with crude oil prices coming down and the job market improving, the growth in personal incomes nationally is yet more proof that the economic turnarond is on solid footing, Mitchell said. Despite having one of the highest jobless rates in the country, Oregon also recorded the 10th highest job growth rate in the country in recent months, Mitchell said, citing a study from Arizona State University.

"Oregon bottomed out last June, and it's been growing ever since," Mitchell said.

Personal income growth in California, Alaska, Hawaii and Nevada outpaced the national average. Nevada and Alaska residents had among the highest income growth in the country during the first quarter, each registering 2 percent increases.

Washington, Alaska, Hawaii and Nevada, which along with Oregon and California, belong to the Far West region of the bureau’s study.

After logging some of the highest growth in 2003, North Dakota and South Dakota incomes fell dramatically in the first quarter of 2004. In fact, North Dakota, with negative 1.5 percent, and South Dakota, with negative 2 percent, were in the bottom two for income growth in the first quarter.

Personal income is defined as the income received by all persons from participation in production, from government and business transfer payments, and from government interest, according to the bureau. Personal income is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and transfer payments.

Earnings from major industries in Oregon and Washington showed mostly gains for the first quarter of 2004 from the last quarter of 2003.

Natural resources and mining earnings declined 6 percent in Oregon and but gained 4.1 percent in Washington.

Construction earnings in Oregon grew 3.1 percent. Washington’s construction earnings gained 2.6 percent in the first quarter.

Durable goods manufacturing earnings continued their retreat from 2003 to the first quarter of 2004, declining 3 percent in Oregon. Washington earnings grew by 1.6 percent in this sector.

In non-durable goods manufacturing, Oregon earnings in this sector grew a slight .7 percent while Washington earnings in this sector grew 1 percent.

Trade earnings in Oregon grew 1.5 percent while this sector in Washington grew 1.7 percent.

Transportation and utilities earnings in Oregon rose 2.7 percent and Washington grew 3 percent for the same sector during the first quarter.

Earnings from the information sector gained in Oregon by 1.9 percent while Washington gained .2 percent in early 2004 after remaining flat for much of 2003.

Financial activities earnings registered a 2.2 percent gain in early 2004 in Oregon. In Washington, the sector was up 3.7 percent for earnings.

In the professional and business services sector, earnings grew 1.5 percent in Oregon and Washington took in .7 percent growth.

Education and health services earnings gained 2.8 percent in Oregon and Washington’s earnings for this sector also gained 1.7 percent in the first quarter.

Earnings from the leisure and hospitality industry in Oregon grew by 1.8 percent and Washington’s rose by .7 percent.

And in government, earnings rose by 1.9 percent in Oregon and gained 1.8 percent in Washington.