Today the U.S. Department of Commerce’s Bureau of Economic Analysis released new personal income data for the first quarter of 2011 by state (pdf) and revisions for the past couple of years. As shown in Chart 1, The U.S. private sector share of personal income for the first quarter of 2011 was at 69.3 percent. While this is the highest point since the second quarter of 2009, the private sector has essentially been moving sideways. With the economic signs of a double-dip recession growing by the day, even this slight uptick in the private sector may be short-lived.
Chart 2 shows the major culprit behind this crowding-out of the private sector since the beginning of the “Great Recession”–the Orwellian American Recovery and Reinvestment Act (ARRA). In the first quarter of 2011, the ARRA pumped $45.5 billion into the U.S. economy via personal current transfer receipts (pdf). This is down from the peak spending ($103.1 billion) under ARRA in the first quarter of 2010. As ARRA spending continues to wind-down, this will help the U.S. private sector rebound from its all-time lows though it puts a drag on overall personal income growth.
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