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Personal incomes of Hawaii residents grew by 1.1 percent in the second quarter of this year, more than offsetting a 0.9 percent decline in the previous three-month period, according to a report released Monday by the U.S. Bureau of Economic Analysis.
Hawaii’s second-quarter increase in personal income was the 11th largest among the 50 states and the District of Columbia. The average increase in personal income nationally was 1 percent in the second quarter, according to the BEA.
Among the three major components of personal income, the biggest increase for Hawaii residents was in dividends, interest and rent, which grew by 2.5 percent in the second quarter from the first quarter. Transfer receipts, a category that includes government payments such as Medicare and food stamps, rose by 1.2 percent. Net earnings, which consists mainly of wages and salaries, increased by 0.8 percent.
The figures are not adjusted for inflation, which erodes the value of personal income. The state Department of Business, Economic Development and Tourism is forecasting that personal income in Hawaii will grow by 4.5 percent in 2013 but by only 2.6 percent after inflation is taken into account.
The main reason personal income declined in the first quarter was an increase in payroll taxes that went into effect Jan. 1, according to the Bureau of Economic Analysis. Workers in Hawaii and the rest of the country saw their payroll taxes go up by 2 percentage points at the start of the year as part of the budget deal approved by Congress that ended a two-year "tax holiday."
Personal income in Hawaii grew to $63.9 billion at an annual rate in the second quarter from $63.2 billion at an annual rate in the previous quarter.
The biggest single contributor to the 2012 increase in earnings was pay to hospitality industry workers, which accounted for $82 million of the overall $276 million increase in earnings in the second quarter from the first. Construction industry earnings grew by $64 million, while earnings rose by $33 million in the category of professional, scientific and technical services.