State per capita incomes diverged beginning in 1979, reversing a 50-year trend.. By 1989, State per capita income inequality, as measured by the coefficient of variation, had increased 41 percent from its 1979 value to its highest level in over 20 years. States in which real per capita income was greater than the national mean in 1979 and grew faster than the national mean accounted for most of the increase. Atlantic Coast States accounted for a large portion of the increase, as did States in which producer services accounted for a large share of total earnings. States dependent on hightechnology manufacturing, energy, farm, and traditional manufacturing accounted for less of the increase. Projections of future levels of inequality, based on alternative assumptions about per capita income growth, yield mixed results, ranging from a 10-percent decrease to a 56-percent increase in the coefficient of variation from 1989 to 1995.