Minnesota paychecks continue to bounce back at one of the fastest rates in the nation.
Personal income in the state grew to $46,227 per person in 2012, a 3.7 percent increase that put the state fourth overall, according to data released Wednesday by the Commerce Department.
That pace was slower than 2011, when the initial comeback from the recession drove incomes up 4.8 percent statewide, but Minnesota handily beat the national average last year, which was 2.7 percent.
“The simple story line is that we’re doing better than the U.S., and we’re glad we are,” said Tom Stinson, the state economist.
Personal income in Minnesota is higher, and growing faster, than any state in the Upper Midwest other than North Dakota, which was tops at 9.9 percent last year, thanks to the oil industry boom that has made that state a leading energy producer.
Ohio, Montana, Minnesota and Oklahoma rounded out the top five.
One reason for the state’s good income showing is that job creation is picking up. The state released data a week ago showing that Minnesota employers added 14,500 jobs in February, capping the strongest six-month streak of job gains since the early 1980s.
Together, the news about hiring and income is reason for cautious optimism, Stinson said.
“It looks like we’re doing better than average across all of the sectors,” he said.
The growth in personal income is particularly significant because inflation has remained historically low. That means the extra income is translating into more spending power, not just allowing people to keep up with rising prices.
Minnesota’s gains have been driven by increased earnings in agriculture, heavy manufacturing, construction, professional jobs and health care, the Commerce Department figures show.
But growth in some industries has not translated into a full job recovery. For instance, manufacturing output in the state grew 17 percent from 2007 to 2011, yet the industry employs 33,000 fewer people here than it did in early 2008, and inflation-adjusted earnings in manufacturing are still down over that period.
Construction employs almost 20,000 fewer people than at the beginning of 2008, and while total earnings grew in 2012, they are still down 11.3 percent compared to 2007.
Many of the job openings in the state also remain among lower-paying positions. The three jobs in Minnesota with the most vacancies at the end of 2012 were retail sales, cooks and servers, and cashiers, jobs that pay a median wage of less than $10 per hour.
Whether the state and nation can continue posting gains in real income could depend on whether a nosedive in consumer confidence this month is temporary or continues into the spring. Many businesses in Minnesota and the region are holding off on investments and hiring despite the better economy because of concerns that the recovery may not last.
“We’ve made a tremendous amount of progress, but in my conversations with households and businesses, their outlook does not always seem to be lining up with that kind of positive information,” said Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis.
He said he doesn’t have good explanation for the disconnect, but “it’s something for us to keep apprised of.”