Per Capita Income in New Mexico 2005 — More Bad News

When the Bureau of Economic Analysis released its per capita income data for 2005 it looked at first like there might be some good news. The release emphasizes changes in per capita income from 2004 to 2005. And, while New Mexico continues to be near the bottom of the income rankings, its growth was in the top 25 percent (12th out of 50). That seems like a good reason for celebration, right? Wrong!
The reason we should not celebrate is income growth was disproportionately for state and local government and welfare payments. In fact, New Mexico had the highest yearly growth of income for state and local government in the nation! Here is how NM government growth compares to states in the region:

For yearly growth rate of welfare NM was 7th in the nation, and it would have been higher had we not been muscled out by the hurricane ravaged states. Here is how NM compares to states in the region:

Netting our the disproportionate effect of government and welfare growth on per capita personal income from 2004 to 2005, we see that New Mexico is lagging behind other states in the growth of private sector generated income:

So there you have it. Prosperity is generated by private sector growth and not by reliance on government — just the opposite of what the trend is in NM compared to other states.