Isles rank third in income growth | Honolulu Star-Advertiser

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Personal incomes of Hawaii residents grew in the second quarter at the third-fastest rate of any state, a federal agency reported Tuesday.

Personal income growth, which includes salaries and wages, investment income and federal government payments, accelerated to 1.3 percent in the April-through-June period from 0.5 percent in the first quarter, according to the report from the U.S. Bureau of Economic Analysis. Arizona also had a 1.3 percent increase in second-quarter personal income.

Hawaii’s increase exceeded the national average gain of 1 percent, and was topped only by North and South Dakota, which recorded personal income gains of 2.1 percent and 2 percent respectively.

Personal income paid to Hawaii residents totaled $60.88 billion at a seasonally adjusted annual rate in the second quarter, up from $60.09 billion in the previous quarter.

However, economists caution against reading too much into the quarterly changes because personal income numbers can swing widely from period to period. For example, Hawaii’s second-quarter gain of 1.3 percent followed a 0.5 percent increase in the first quarter, ranking the state 49th in the nation. South Dakota, which ranked second in the second quarter, was dead last in the first quarter.

For the entire year, the state Department of Business, Economic Development and Tourism is forecasting personal income in Hawaii to grow by 4.3 percent.

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In addition, the figures are not adjusted for inflation, which erodes the value of personal income. DBEDT’s 2012 projected increase falls to 1.5 percent after inflation is taken into account.

Of the three major categories of personal income in the second quarter, the largest gain was in dividends, interest and rent income, which rose 2.1 percent. Net earnings, composed of wages and salaries, increased 1.2 percent. Government transfer receipts, which includes Social Security and food stamps, grew 0.8 percent.

Pay for members of the military made the largest contribution to the second-quarter increase in salaries, followed by the accommodation and food service industry.