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South Dakota Rocks Real Personal Income Growth in 2011

Last week the Bureau of Economic Analysis reported that South Dakota had the lowest positive real GDP growth in the country in 2012. The BEA also reported that South Dakota's real per capita GDP dropped slightly, compared to slight growth nationwide.

But as further proof that there are numbers and then there are numbers, the BEA's new numbers on real personal income show that when you factor in the local cost of living, South Dakotans enjoyed the fastest growth in purchasing power in the nation, 10.4% between 2010 and 2011. (Watch those years: last week's data was 2012; this week's is 2011.) Every state enjoyed growth on this metric: Mississippi had the lowest, 1.3%, while the national average was 2.7%.

Break that purchasing power down per capita, and South Dakota still looks great, growing 9.4% in 2011. The only places with better purchasing power in 2011 were Connecticut and Washington, D.C.

Now that's the data Governor Daugaard needs to put on his Dakota Roots kiosk. Of course, the BEA data for 2011 still doesn't square with the Bureau of Labor Statistics data on average wages and MIT data on living wage, which shows that there are a lot of places (like Minnesota, California, and New York) where the local average wage goes further in feeding a family than it does in South Dakota. So I've got to wonder: is our wealth being concentrated at the top in a way that would make our average real income per capita look great while still leaving a majority of folks struggling?

One oddity from the data: BEA breaks that data down by metro and non-metro areas. In the Sioux Falls and Rapid City metro areas, real per capita personal income grew 4.7% in 2011. In South Dakota's non-metro areas, it grew 13.3%. South Dakota was one of just seven states where real per capita personal income grew faster in non-metro areas than metro areas (the others: Iowa, Maryland, Massachusetts, Nebraska, Nevada, and North Dakota). Part of that difference is explained by the fact that the regional price parity in South Dakota's non-metro areas is 8.8 percentage points lower than that in Sioux Falls and Rapid City. (Metros are more costly than non-metros everywhere, with the average disparity 8.8 percentage points.) But the growth disparity also suggests South Dakota's high growth numbers aren't just a result of cash concentrating in the hands of big Sioux Falls bankers.

6 Comments

  1. Michael Black 2013.06.17

    Take away the ag sector and I bet the growth in wages isn't there.

  2. Nick Nemec 2013.06.17

    Without seeing any statistics my hypothesis is that a strong ag economy for the last few years has boosted incomes in non-metro areas.

  3. Sam Hurst 2013.06.18

    Forgive my wonk-deficiency, but in your earlier posting from the Bureau of Economic Analysis, there is this comment on South Dakota: "In South Dakota, agriculture, forestry, fishing, and hunting subtracted 2.03 percentage points from real GDP growth." Can someone explain to me what this means?

  4. caheidelberger Post author | 2013.06.18

    Sam! Nice to hear from you. Here's how I understand that statement: the AgFFH sector shrank, generating less business than it did in 2011 and dragging down our GDP. If the economic activity in AgFFH had remained the same as in 2011 (i.e., if its contribution to real GDP growth had been 0.00 points), our total real real GDP growth would have been 2.23% instead of 0.2%. Does that make sense?

  5. Sam Hurst 2013.06.18

    Yeah...it makes sense, but it begs a second question. What made the ag sector shrink between 2011 and 2012? Is this about oil/gas/ethanol? I have been assuming that ethanol has artificially propped up the ag economy for a decade, and Nic suggests in his comment that the ag sector is strong.

  6. Nick Nemec 2013.06.18

    Prices have been high the last few years, I'd have to look up some historical price data but it might be a case of 2012 was good, but not as good as 2011. The drought in 2012 also reduced the total volume of product sold, I can't sell what I don't have.

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