Personal Income

Louisiana personal income is a primary economic indicator that is calculated by the BEA. It is an estimate of the total sum of all income earned from employment by private firms, from home or business ownership, from government and from financial assets. It does not included capital gains or loses (realized or unrealized).

Historical Data

Personal income is reported in nominal terms at the state level. It can be deflated to real terms however using state PCE estimates (also supplied by the BEA). Both real and nominal estimates are plotted below1. The U.S. economy exhibits a continual long run increase in nominal personal income post World War II. This trend is somewhat muted in the Louisiana economy for nominal personal income (plotted in orange) though it is still there.

Since nominal personal income estimates do not account for inflation it is necessary to deflate the data. Real personal incomes in chained 2013 dollars is plotted in blue. Post the Great Recession of 2008 real personal incomes have largely stagnated and not grown with the rest of the larger national economy.

Personal Income Forecasts

Forecasts2 for Louisiana real personal incomes are made from an aggregation of multiple statistical models designed to approximate the underlying data generating process of the available data. A Bayesian model averaging approach is used here to capture the joint uncertainty that any given model may be misspecified as well as to capturing the probabilistic uncertainty inherent in each individual estimate. Observed data is given in blue while forecasts are presented in orange. The weighted average of all models used is represented by the solid orange line. The upper bound and lower of the cone of uncertainty surrounding these estimates is represented by the dashed upper and lower lines respectively.

 


  1. Please note that the graphs below are interactive HTML widgets. Please hover over each to examine the underlying data that comprises them.

  2. Forecasts are provided as a convenience and for informational purposes only without any explicit or implied warranty. The authors and publishers of this post and site bear no responsibility for the information provided here and cannot be held liable for any negative consequences that may arise due its publication. Forecasting the future is inherently a tricky proposition, and all forecasts have an error term attached to them. Please exercise caution when making financial and business decisions based on the information provided. Use this information as a single input into your decisions making process.

Patrick is an assistant professor of Economics at Louisiana Tech University. He researches interest rate determination and the inflationary consequences of suboptimal monetary policy. He teaches monetary economics, research methods & macroeconomic theory.