Consumer Confidence High, State Incomes Up Per Capita Incomes Outpaced Inflation In 48 States Last Year

Reports on consumer confidence and per capita income growth Tuesday offered more evidence of the nation’s economic strength.

Per capita incomes posted the fastest growth in five years in 1995, the government said Tuesday, with gains in every state except Hawaii and North Dakota exceeding the rate of inflation.

Meanwhile, consumer confidence in the economy held virtually steady in September, dipping just below a six-year high that was realized after strong gains in July and August, a private research group reported.

The Commerce Department said data showed national per capita income growth increased 5.3 percent last year, to $23,208, compared with the department’s original estimate of 5 percent last April.

The growth also was more than double the 2.4 percent increase in an index for personal consumption expenditures used in the study by the department’s Bureau of Economic Analysis. Incomes had advanced 3.9 percent in 1994, to $22,047.

But the study found per capita incomes grew just 2.4 percent in Hawaii, to $24,590, and 2.3 percent in North Dakota, to $18,625. Both suffered big losses in farm income.

Washington ranked 36th on the national list with a per capita income of $23,974, up 4.5 percent. Idaho ranked 40th with a per capita income of $18,906, up 4.2 percent.

Per capita income is the annual total income of residents divided by a state’s population.

The study found that most of the states sharing in the growth had large increases in dividend, interest and rental income and in government benefit payments.

The fastest growth was along the East Coast. Rhode Island topped the states with 7.3 percent growth, to $23,844. It was followed by Massachusetts, up 6.4 percent to $28,021. Connecticut, where incomes were up 5.7 percent, had the highest per capita income, $31,776.

By region, New England had the fastest growth, up 6.1 percent to $27,388. The slowest was the Plains, with a 4.7 percent increase to $21,992.

The slowest growth was primarily in the Plains, Rocky Mountain and Far West areas, which included nine of the 11 weakest states.

Consumer confidence is watched closely for indications of consumer spending, which accounts for about two-thirds of the nation’s economy.

The Conference Board also reported that consumers’ opinion of current business conditions was down 0.5 point at 129.0, and expectations for the next six months were virtually steady at 100.4, up 0.1. Both components were significantly higher than a year ago, and expectations for future business conditions were the highest since March 1990.

“The Expectations Index, which has been an accurate predictor of economic activity six months ahead, has shown significant improvement over the past year,” said Lynn Franco, associate director of the Board’s Consumer Research Center. “With consumers in high spirits, the outlook for holiday spending appears to be bright.”

Consumers also were optimistic about the next six months. The percentage of respondents who foresee business conditions improving in the next six months nudged to 17.3 percent from 16.6 percent. The short-term outlook for the job market was nearly unchanged from August.

Consumer confidence levels rose over much of the nation, with only the East South Central Area - Kentucky, Tennessee, Alabama and Mississippi - posting a decline.