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ECON First believes that business success centers around knowing the economic and demographic characteristics of their primary market area. While business experience, insights and intuition are important, they are substantially advanced by hard data.

The U.S. Department of Commerce’s Bureau of Economic Analysis uses data from a wide variety of sources to estimate personal income for the nation, the states and the counties. Estimates for the nation and the states are released quarterly while county level estimates are provided on an annual basis.

If businesses wish to know the trends in household purchasing power in their primary market areas, it is essential that they track and understand the BEA personal income data.


Personal income is the income received by, or on behalf of, all persons in a geographic area from all sources. The three major categories of personal income are:  wages and earnings; dividends, interest, and rent; and transfer payments. At the state and county levels wages and earnings are adjusted for patterns of net commuting.

Personal income is available to persons (households) for consumption expenditures, taxes, debt payment, and savings.

The source of primary market area personal income by major category is important.

Personal income coming from wages and proprietor’s earnings reflect the underlying health of the area economy and are the best indicator of local willingness to consume.

Income from dividends, interest and rents typically reflects the ability to pay of higher income households with wealth. Trends in this income have consequences for the market for luxury goods such as higher end housing and special edition automobiles.

Transfer payments encompass everything from Social Security, Medicare, Medicaid, SNAP, TANF, and unemployment insurance. Most of these payments are pegged at best to the growth rate in inflation. Rising transfer payments can signal increasing need for social services in the area, or a demographic shift to more senior households. The larger the share of personal income in a market area coming from transfer payments (fixed income), the more businesses should focus on price discounts and coupons.

While it is vital for businesses to follow the trends in personal income in their market areas, the trends in the three composing categories of personal income provide important information as well.

Finally, at the state and local levels BEA provides estimates of the flow of wages and earnings due to net commuting. Typically, for example, a county fringe to a major metropolitan area (southern New Hampshire next to the Boston MSA) will have a large net in-flow of wages and earnings. Workers commute to the many jobs in the metropolitan area while choosing to reside in the fringe county where housing costs and taxes may be lower.


Let’s look in detail at two counties in Florida as examples of using BEA personal income data to understanding differences in consumption potential.

Sarasota County is located on the western coast of Florida below Tampa. Sarasota has a population of 406,000, per capita income of $56,500, and 32% of its adult residents have a bachelor’s degree or more.

By contrast, Gadsden County is on the northwest border of Florida. Gadsden has a population of 47,000, per capita income of $30,400, and 17% of the adult residents have a bachelor’s degree or more.

The wide difference between the two counties jumps out when the annual growth rates in personal income and its three components are charted.

Total personal income was far more effected by the 2008 recession in Gadsden, but total personal income lagged in Sarasota from 2012 until 2014.

Annual Growth Rate in Total Personal Income

The reason for these difference in volatility in total personal income between the two counties becomes clear when we look at the annual growth rates for the two categories of personal income: wages and earnings and dividends, interest, and rent.

Wages and earnings in Gadsden took a far greater initial hit from the recession and rebounded strongly. Retiree dominant Sarasota experience less of a wage hit from the recession but the drop in retiree housing demand dictated a slower recovery following 2010.

Annual Growth Rate in Wages and Earnings

Returns from assets…dividends, interest and rent…are far more volatile given the concentration of wealth among Sarasota retirees.

The growth rate in transfer payments follow a similar pattern in both counties. This is to be expected as the majority of transfer payments are formula driven through government. Transfer payments are a hefty 20% of total personal income, due to the large number of seniors. In Gadsden that soars to 32% due to a both a large concentration of seniors and a higher poverty rate.

Annual Growth Rate in Dividends, Interest and Rent


ECON First specializes in providing the hard data that allows business owners to make more informed decisions regarding start-ups. expansion, marketing channels, and pricing strategies. Trends and sources of personal income at the county level are obviously one valuable data input that can provide assurance to business owners as a gauge of consumer spending power.

Let ECON First help you to better understand your primary market.

Dr. John E. Stapleford
ECON First