The latest edition of our monthly Numbers You Need bulletin reports on the most recent state personal income data that was put out last month by the Bureau of Economic Analysis. In the 1st quarter of 2010, state personal income grew by a healthy 0.9 percent in both Oklahoma and the nation, showing the strongest rate of growth since the 2nd quarter of 2008. Personal income grew in all but two states (North Dakota and South Dakota), with Mississippi leading the way (+1.6 percent). Oklahoma’s growth for the quarter ranked 28th among the states.
As can be seen in this chart, state personal income remains slightly below pre-downturn levels. Oklahoma’s state personal income of $131.2 billion in the 1st quarter was 99.2 percent of the amount in the 3rd quarter of 2008 (amounts are seasonally adjusted at annual rates). While state personal income for the nation as a whole declined more sharply than in Oklahoma during the worst of the recession, it, too, has recovered to just over 99 percent of pre-downturn levels.
While personal income remains slightly below pre-downturn levels, state revenue collections continue to fare far worse. A new report from the Rockefeller Institute of Government shows that for the nation as a whole, state tax revenues grew by 2.5 percent in the first quarter of 2010, marking the first growth in year-over-year quarterly revenue collections since the third quarter of 2008. However, in Oklahoma, data we compiled based on the monthly revenue reports from the State Treasurer’s Office showed revenues for January-March 2010 (Q3 of FY ’10) remaining 6.8 percent below one year ago. More strikingly, quarterly revenue collections for January – March were a full 22.3 percent below collections for the same quarter in 2008. (Data now in for the April – June quarter shows revenue collections up 2 percent from one year ago but down 23 percent from two years ago).
The Rockefeller Institute report noted that, “Tax revenue is highly related to economic growth, but there is significant volatility in tax revenue that is not explained solely by one broad measure of the economy.” With unemployment rates still high, natural gas prices still low, and retail sales still weak, it looks like it’s going to take quite awhile longer for the state’s revenue recovery to catch up to the recovery in state personal income.