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Personal Income, Inflation and Economic Recovery

While some states have seen personal income growth during the past year, most continue to struggle economically, according to recently released data from the Commerce Department. Only 10 states, including Arkansas, saw individual earnings exceed pre-recession earnings. These 10 states (Arkansas, Kentucky, Louisiana, Maryland, New Mexico, North Dakota, Pennsylvania, Vermont and West Virginia) had an average earnings increase of 2.9 percent.

Even though a few states are seeing personal income increase to pre-recession levels (or higher) the economy is not as strong as it appears. Income is not going as far as it did before the recession because of rising gas and food prices. (In March of this year, average hourly earnings increased by 1.7 percent while inflation increased by 2 percent).

Also, while wages are rebounding in some areas, the national unemployment rate is still high, at 8.8 percent in March. Stagnant wages can be attributed to the fact that there are so many potential workers in the market that employers do not need to pay higher wages. Also, unemployed workers are more willing to take lower wage jobs as the economy limps along.

The economy is beginning to bounce back in some ways, but we are still a long way from being at the same place we were before the recession started. Families continue to struggle as unemployment remains high and income gains are offset by rising prices.