Recent growth in nonfarm personal income.

Friedenberg, Howard L. ; DePass, Rudolph E.

NONFARM personal income growth in the Great Lakes region picked up significantly &om the second quarter of 1987 to tbe second quarter of 1988; this pickup was a major factor in narrowing the recent growth differences between coastal and interior regions. Nonfarm personal income in the Great Lakes region grew at the national average rate, of 7.7 percent since the second quarter of 1987, after having grown at a below-average annual rate-6.2 percent-earlier in the current economic expansion (table A). The uncharacteristically weak recovely of durables manufacturing payrolls from the 1981-82 recession, largely traceable to competition from imports, had dampened growth in the Great Lakes region earlier in the expansion. In addition, competition from U.S. regions with lower labor costs had further delayed recovery in the Great Lakes region. The region's pickup since tbe second quarter of 1987 reflected strength in exports of durable goods.

Slowdowns in nonfarm income growth in two coastal regions-Southeast and Far West-also contributed to the narrowing of coastal-interior growth differences. Growth in nonfarm income since the second quarter of 1987 was somewhat below the national average in the Southeast and somewhat above the average in the Far West, after having been well above average in both regions earlier in the expansion. Weakening in private servicetype payrolls in part accounted for the slowdowns in both regions.

In the other coastal regions-New England and Mideast-nonfarm income continued to increase at rates well above the national average, while in the other interior regions-Plains, Rocky Mountain, and Southwest-nonfarm income continued to increase at rates well below the national average.

Regions with above-average or average growth

In New England and the Mideast, large increases in payrolls in construction and private service-type industries boosted nonfarm personal income growth since the second quarter of 1987. The Mideast region also benefited from strength in durables and nondurables manufacturing.

In the Far West, weakness in private service-type payrolls nearly offset strength in nondurables manufacturing and construction payrolls, resulting in near-average growth in nonfarm income.

In the Great Lakes region, in addition to strong growth in durables manufacturing, payrolls in nondurables manufacturing, construction, and private service-type industries grew at rates above the national average.

Regions with below-average growth

In the Southeast, as noted above, growth in nonfarm personal income was somewhat below the national average since the second quarter of 1987. Weak growth in nonfarm income especially private service-type payrolls-in Georgia and in most interior Southeast States more than offset strong growth in the Atlantic coast States of Florida, North Carolina, Virginia, and South Carolina (chart 5).

In the Plains region, the weak farm economy adversely affected payrolls in nonfarm industries, including construction and durables manufacturing.

In tbe Southwest and Rocky Mountain regions, continued weakness in oil prices adversely affected mining as well as construction and financial activities that serve the mining industry. Mining had been unusually resistant to the 1981-82 recession because oil prices had remained relatively high; in the expansion, declining oil prices-especially the sharp drop in 1986curtailed mining and related activities.