For most of us, the easiest way to get a sense of how the local economy is doing is to look in our wallets. If there’s more money in it than there was a year ago, then our personal economy is on the upswing.
If there’s less, well, times aren’t so good.
So that’s why it was encouraging to see new federal data that shows our incomes in the Buffalo Niagara region are slowly rising.
Not so much that you’ll want to run out and start looking for a vacation home. But enough that you’re probably feeling a little more confident about your personal financial situation.
Here are the details:
• Our per capita personal incomes went up by an average of 1.7 percent in 2014 after taking inflation into account, according to new data from the U.S. Bureau of Economic Analysis. The wage growth was a little stronger than the government initially reported last November.
• In real numbers, that meant our incomes grew by an average of $721 during 2014, to $42,864 after inflation. That works out to almost $14 a week in added spending power.
• Even more encouraging, the increase in incomes was a reversal of the disappointing decline that we saw during 2013, when per capita incomes in the Buffalo Niagara region actually fell by 1 percent after inflation.
• It was the strongest growth in per capita incomes in the Buffalo Niagara region since 2011, when the post-recession growth spurt in incomes began to lose steam.
That’s the good news. The bad news is that our incomes still aren’t keeping pace with the country as a whole, where per capita incomes grew by an average of 2.2 percent during 2014. About 60 percent of the nation’s 388 biggest metro areas had faster income growth than the Buffalo Niagara region.
What makes the income data so important is that spending by consumers makes up about 70 percent of all domestic economic activity. The more consumers have to spend, the more robust the economy will be. And how much they have to spend depends, in large part, on how fast their incomes are growing.
Rising incomes mean more purchases at the mall, maybe an extra trip to the movies or a fast-food place.
For the truly fastidious among us, it even could mean a little bigger cushion in our savings account.
But an extra $14 a week isn’t enough to kick off a big celebration or a spending spree.
Our incomes come from a variety of sources. Wages and salaries are the biggest part, but things like dividends, pensions and social services payments also help determine how much money we have.
In 2014, our wages and salaries started to rebound as the local job market began to tighten. After adjusting for inflation, our annual wages per employee grew by a little more than 1.4 percent, reflecting the modest uptick in hiring and a steady drop in the local unemployment rate.
There is mounting evidence that wages are slowly strengthening here. Canisius College economists George Palumbo and Mark Zaporowski recently looked at wage trends in job sectors where the region has an above-average presence. In most, the annual wage growth topped the local average from 2010 to 2014.
Even more encouraging, those annual wages per employee grew even faster last year – by 3 percent after inflation.
Job growth also is strengthening, although it’s unclear from conflicting employment data just how strong that increase is. Palumbo and Zaporowski think the growth rate was around 1 percent last year, which still would be nearly double the average increase that the region had from 2010 to 2014. The local unemployment rate has fallen to 4.4 percent – its lowest point in nine years.
So all that bodes well for our overall personal income growth during 2015. We’ll just have to wait until November for the federal government to release the next set of data.