Rise in Personal Income Eases in First Quarter

Growth in personal income slowed in all but three states during the first three months of 1988, barely keeping ahead of inflation, the government said Wednesday.

The Commerce Department said growth in income in the 50 states and the District of Columbia slowed to 0.8% in the January-March period, compared to growth of 2.8% in the final quarter of 1987.

Despite the slowdown, incomes managed to stay slightly ahead of the increase in prices, which was 0.6% in the first quarter for personal consumption spending.

Income in the 12 months ending March 31 expanded by 6.3%, while inflation was 3.8%.

Analysts attributed part of the cooling in the first quarter to swings in farm subsidy payments, but other factors cited include:

- Slower job growth in the January-March period after a strong fourth quarter.

- A decline in investment income as the Federal Reserve loosened the reins on the money supply, pushing interest rates to their lowest point so far this year.

- An increase in bonuses and other payments to employees at the end of the year, which made first quarter growth look less robust by comparison.

Mark Zandi, director of state forecasting for the WEFA Group, a Bala Cynwyd, Pa., forecasting firm, said the pattern of faster growth on the East and West coasts than in the nation’s heartland continued in the first quarter, but was less pronounced than in the past.

Incomes in the first quarter grew 1.1% in the Far West and Southeast and 0.9% in New England and the mid-Atlantic states. In the inland regions, incomes fell 1.2% in the Plains states, edged up 0.5% in the Southwest and rose 0.7% in both the Great Lakes and Rocky Mountain regions.

Income dropped in six states, edged up in 42 states and the District of Columbia and showed no growth in two. In all but three states--Oklahoma, Idaho and Montana--income either fell or its growth slowed from the fourth quarter.