By Adam Pagnucco.
Part One summarized the premise of this series: an examination of key stats from the U.S. Bureau of Economic Analysis (BEA) comparing Montgomery County to its largest neighbors. Part Two looked at population. Part Three looked at gross domestic product (GDP). Part Four looked at per capita GDP. Now let’s look at personal income.
BEA defines personal income this way:
Income received by persons from all sources. It includes income received from participation in production as well as from government and business transfer payments. It is the sum of compensation of employees (received), supplements to wages and salaries, proprietors’ income with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj), rental income of persons with CCAdj, personal income receipts on assets, and personal current transfer receipts, less contributions for government social insurance.
In this series, I use the Washington-Arlington-Alexandria CPI-U to convert nominal personal income into 2022 dollars, thereby adjusting for the effects of inflation.
The chart below shows real personal income growth (adjusted for inflation) for the large jurisdictions in the region in the most recent year measured.
2022 was a bad year for real personal income growth. For the region, nominal personal income grew by 2.5% but the Washington-Arlington-Alexandria CPI-U grew by 6.6%, producing a 3.9% loss in real personal income. The entire region suffered and MoCo’s loss was close to the region average.
Now let’s look at the five-year change.
MoCo was the only large jurisdiction in the region to lose real personal income during this period. Its nominal personal income rose by 13.5%, but since price inflation was 15.6%, its real dollar personal income dropped.
This chart shows the ten-year change.
Once again, we’re at the bottom. MoCo’s nominal personal income rose by 28.8% over this decade, but regional price inflation of 22.1% wiped out most of that increase in real dollars. In contrast, the region as a whole recorded nominal personal income growth of 44.3%, thereby yielding a much higher real dollar increase than MoCo.
What is happening to us? The chart below shows real personal income in MoCo from 1984 through 2022. During most of this period, our real personal income is growing along with our population. But starting in 2017, it stalls out. In Part Two, we saw that MoCo and five other jurisdictions (Arlington, Prince George’s, Fairfax, D.C. and Alexandria) all had no population growth between 2017 and 2022. However, those other jurisdictions did not lose real personal income while we did.
The consequence of our stagnant personal income is that we are losing our share of the region’s monetary pie. The chart below shows our percentage of the region’s personal income from 1969 through 2022.
For roughly twenty years, our share of the region’s personal income has been falling. To an extent, that’s to be expected given the growth of exurbs like Loudoun, Prince William and Frederick. But other inner jurisdictions like D.C., Fairfax and Arlington are holding on better than we are. This is not just an inner vs outer suburb phenomenon – it’s about our county specifically as well.
Next: we will look at per capita personal income.