Americans’ personal income skyrocketed across the country in 2021
Personal income for many Americans increased significantly in 2021 despite the COVID-19 pandemic, which has led to record unemployment and prompted scores to isolate at home amid social distancing measures.
According to a recent Bureau of Economic Analysis (BEA) report, residents living in non-metropolitan areas of the United States experienced a 7.7% increase in personal income over the past year, while that of city dwellers increased by about 7.4% % rose.
What is the preliminary report of BEA means
The BEA report’s personal income estimates released yesterday are just a “first look” at earnings information for 2021. More complete data is due to be released in mid-December.
Still, early numbers show that income has risen in a whopping 3,075 counties across the country and fallen in just 36 counties over the past year. Revenues remained unchanged in three counties.
Personal income growth for the United States as a whole was 7.5% in 2021 compared to a 6.7% increase in 2020 — a notable upward trend. For the country’s metropolitan areas alone, personal income growth was 7.4% in 2021, up from a 6.5% increase in 2020.
And while residents of non-metropolitan areas also saw income growth in 2021 (7.7%), it was slightly slower than income growth in 2020, when such regions saw a 7.8% increase.
Per capita income increases
The new report also sheds some light per person Income growth, which is slightly different than simple personal income growth. Per capita figures are calculated based on personal income figures divided by population figures.
On that measure, total income growth for the country was 7.3% in 2021, up from 6.2% in 2020. The metropolitan areas of the United States experienced the largest year-over-year per capita jump, up from 6% in 2020 a 7.3% increase in income in 2021. And again, income growth in the non-metropolitan areas has slowed year on year – declining from a growth rate of 7.9% in 2020 to 7.5% in 2021 .
“Overall, personal income increases in 2021 were primarily driven by income increases reflecting the continued reopening of the economy following the outbreak of the COVID-19 pandemic in the first quarter of 2020,” said Paul Medzerian, a regional economist at BEA. “The personal income increases also reflect continued payments from pandemic response legislation, including the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act.”
Personal Income Increases: Non-metropolitan vs. metropolitan areas
However, aggregate income growth numbers don’t tell the whole story. The level of income growth varies widely across the country.
For example, metro personal income growth for 2021 ranged from a high of 34.9% in Lynn County, Texas to a low of -1.8% in Power County, Idaho. In the non-metro regions, the range is from 60.9% income growth in Throckmorton County, Texas in 2021 to a low of -12.2% in Chouteau County, Montana.
The metro areas that experienced the most significant change in per capita income between 2020 and 2021 are:
- Midland, Texas: 14.8% increase
- Abilene, TX: 12.9% increase
- San Jose-Sunnyvale-Santa Clara, CA: 12.9% increase
- San Francisco-Oakland-Berkeley, CA:
- Vallejo, CA: 12.1% increase
- Stockton, California: 12.1% increase
- Elkhart-Goshen, IN: 11.5% increase
- Brownsville-Harlingen, TX: 11.2% increase
- Kankakee, Illinois: 11.1% increase
- Scholarship pass, OR: 11.0% increase
4 things you can do with your increased income
For those with higher incomes, particularly disposable incomes, it is important to be wise with money and avoid lifestyle slippage, which means you spend more because you earn more. Here are some ways to deal with higher earnings:
- Invest: Increased income can expand even further if you invest it wisely. Experts recommend investing at least 15% of your after-tax income. This can be stocks, bonds, money market accounts or an investment mix that suits you and your short- and long-term needs.
- Build an emergency fund: You may also consider investing some of your higher income into savings to set up an emergency fund for unexpected expenses. Taking this step can help you avoid going into debt in emergencies or relying on credit cards.
- Reduce Debt: With interest rates rising significantly over the past year, maintaining a revolving credit card balance is a costly affair. If you have extra income, using some of it to pay off credit card bills can be a smart way to get ahead.
- Invest in long-term goals: Have you always wanted to go back to school and get an advanced degree to advance your career? Or maybe learn computer skills? Or another skill or trade that could be lucrative? Using extra income to invest in yourself is another great way to distribute your newfound income.
