Kansas personal income rose strongly in the third quarter, from July 1 to Sept. 30, driven largely by the agricultural sector.
The state ranked 11th among states for income growth from quarter to quarter, with an increase of 0.7 percent, or $889 million.
Personal income includes wages, commissions and benefits; dividends, interest and rents; and all government payments such as Social Security and Medicaid.
Strong income growth for the state’s farmers accounted for about 40 percent of the quarter’s income growth. Farmers enjoyed a strong wheat crop after a damp spring, but the drought returned in May, forcing cattle farmers to sell off parts of their herds.
The rest of the state’s income growth was spread among a variety of sectors of the economy, with health care, manufacturing and local government contributing the most.
“It’s all ag,” said Donna Ginther, director of the Center for Economic and Business Analysis at the University of Kansas. “Without the ag sector we wouldn’t have done so well. Everything else is pretty lackluster.”
Also, the third quarter looks good in part because of the poor performance of earlier quarters. Kansas personal income rose just 1.5 percent since the fourth quarter of 2011, putting Kansas 49th among states.
Agriculture played a big role in that as well. Severe drought in the second half of 2011 blistered the fall crops. Farmers did so poorly that it pulled down the whole state in the first and second quarters of 2012. Total state personal income actually fell in the second quarter largely because of poor farm incomes.
The next few quarters may see a rerun of that, with a steep drop in farm income caused by the drought in the second half of the year weighing down income growth from the rest of the sluggish economy, Ginther said.