The State of America’s Private Sector XIV

Today the U.S. Department of Commerce’s Bureau of Economic Analysis released new personal income data for the third quarter of 2010 and revisions for the past couple of years.  As shown in Chart 1, The U.S. private sector share of personal income for the third quarter of 2010 was at  68.7 percent–just edging above the previous quarter of 68.65 percent.  The private sector has essentially been moving sideways in 2010.

Private Sector 3rd Quarter 2010

Chart 2 shows the major culprit behind this crowding-out of the private sector–the Orwellian American Recovery and Reinvestment Act (ARRA).  In the third quarter of 2010, the ARRA pumped $59.8 billion into the U.S. economy via personal current transfer receipts.  This is down from the peak spending ($104.9 billion) under ARRA in the first quarter of 2010.  As ARRA spending continues to wind-down, the U.S. private sector should rebound from its all-time lows.

American Recovery and Reinvestment Act 3rd Quarter 2010

However, it remains an open question as to how much of the private sector will be permanently lost . . . as I blogged recently, in the longer-term the private sector is likely to keep shrinking.