GSI Analysis: Following Six Quarters of Slow Growth, NJ shows above-average Increase in Personal Income in Q2, Future Remains Uncertain

• Slight uptick follows a 6-quarter trend of below average growth
• 5% growth rate ranks 5^th in the nation, but below New York.
• Increase spurred by employee compensation and business earnings.
• Recent downward revisions markedly pared past estimates of total income.

The Bureau of Economic Analysis estimates that the aggregate personal income of New Jersey residents grew at a 5.5% annual rate in the second quarter, above the nation’s 4.3% growth rate. We ranked 5^th in the nation. As a region, the Northeast did well, most notably New York topped the nation with a 6.1% growth rate.

New Jersey’s second quarter increase was centered in “net earnings” (employee compensation plus the profits of non-corporate businesses). Our 6.8% rate of growth in this category outstripped the national figure of 5.3% and was 5th^th in the nation, while New York grew at the national pace (New York saw high growth of transfer payments, explaining why their aggregate increase was higher than ours).

While the second quarter data was good taken in isolation, other views are less cheerful. In all of the prior six quarters New Jersey income grew more slowly than the nation. Moreover, the latest release included a comprehensive revision to the historic income numbers, which marked down recent estimates of the level New Jersey personal income by more than 1 percent.