Personal income gains in the nation’s oil-producing states continued to slow during the third quarter, and the latest big move down in petroleum prices won’t help the situation.
Of the 12 worst-performing states for growth in personal income between the second and third quarters, nine — including Colorado — had strong connections to oil and gas production, according to a report Monday from the U.S. Bureau of Economic Analysis.
Personal incomes in Colorado rose 1.1 percent between the third and second quarters this year versus a 1.3 percent gain for the country as a whole, according to the report.
It was the first time since the first quarter of 2013 that Colorado lagged the nation on quarterly personal income growth. It also was weak enough to push Colorado to 39th.
“It is clear that Colorado slowed in the middle of 2015, substantially,” said Mark Snead, an economist at RegionTrack in Oklahoma City.
Personal income includes wages, dividends, interest payments and earnings from sole proprietorships, among other things. It is an important measure of the money consumers have available to spend.
“Colorado has such a dynamic economy it will likely shake off all but the most severe collapse in the oil and gas sector,” Snead predicted.
Mining sector earnings nationally have dropped for three straight quarters, and the decline in the third quarter wasn’t as severe as that of the second.
Broomfield economist Gary Horvath noted that it isn’t just oil and gas hurting. Coal and rare-earth miners are also struggling.
He also worries that downtown Denver could increasingly find itself in the bull’s-eye, with high-paying corporate headquarters jobs at risk.
Personal incomes in Colorado dropped $99 million in the mining sector between the second and third quarters. The income loss at management holding companies was a much larger $395 million.
Snead said large severance payouts common at petroleum firms can mask the impact of layoffs. But the quarterly numbers are finally starting to show the shrinkage.
Nowhere was the role reversal from boom to bust more evident than in the Plains states.
North Dakota, long a national leader for economic growth, ranked 48th in the country with a 0.9 percent gain in personal incomes. Its less-petroleum-endowed twin, South Dakota, led the nation with a 2.2 percent gain in personal incomes.
Strong farm receipts continued to bolster income gains in South Dakota and other Plains states. They also prevented a bad situation from being worse in places such as Oklahoma and Texas.
But with crop and beef prices falling, the expectation is that farm incomes will drop next year, weakening another important economic pillar in the heartland, Snead said.
Aldo Svaldi: 303-954-1410, asvaldi@denverpost.com or @aldosvaldi
