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Is Goverment Spending an Engine of Growth
Source C. Ruiz
Date 06/05/05/06:14

Incomes up in most energy states
5/4/2006 By Dennis Cauchon, USA TODAY

AMERICANS' PERSONAL INCOME is growing dramatically in states that produce
energy or have strong ties to the expanding federal government.
The five states enjoying fastest per-capita income growth since 2000 are
major suppliers of oil, natural gas or coal, according to a USA TODAY analysis
of federal data.

Wyoming topped the list: Personal income rose an inflation-adjusted 13.9%
from 2000 to 2005. The state was well-positioned to take advantage of higher
energy prices. It ranks No. 1 in coal production, No. 4 in natural gas and No.
7 in oil but No. 50 in population. Not far behind the energy states were
Virginia and Maryland, which experienced explosive growth in their Washington,
D.C., suburbs

"The engine driving growth here is federal spending, especially for
technology related to military and homeland security," says economist Stephen Fuller
of George Mason University in Fairfax, Va.

The federal spending boom up 22% since 2000, after adjusting for
inflation, to $2.5 trillion in 2005 created a wealth of high-paying jobs for private
contractors. It also helped poorer states such as Mississippi by boosting
health care spending.

No state could match the affluence of the nation's capital, which had
average personal income of $54,985 in 2005, up 19.8% from 2000. "The Washington,
D.C., area is what Atlanta used to be a place where corporations locate their
headquarters or at least large regional offices," says SunTrust Banks
economist Gregory Miller. "Everyone wants to sell to the federal government, so
you've got to be there."

Other economic winners

Farm states. High prices for crops, beef and dairy products boosted income
in Iowa, Nebraska and other Midwestern states.

Hawaii. The state is booming again after a bust in the 1990s.

New England. The region, fueled by high technology, led the nation in income
growth over the past 10, 20 and 30 years. New Hampshire rose from the 33rd
most affluent state in 1975 to sixth today, a speedy rise unequaled by any
state since record-keeping began in 1929.

Among the most troubled

Louisiana. Hurricane Katrina knocked $4,032, or 14%, off income, pushing the
state to the bottom. It was the first time Mississippi was not ranked the
nation's poorest state.

Georgia and North Carolina. These 1990s boom states declined. Georgia's
income fell 2% over five years, worse than any state except for Louisiana,
because of trouble in the transportation and telecommunication industries. North
Carolina had the sixth-worst drop in income after losing manufacturing jobs.

Industrial states. The decline of Michigan, Ohio, Indiana and Illinois
accelerated from 2000 to 2005. The four states reached their lowest rank ever in
per-capita income.

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