Last week the U.S. Department of Commerce’s Bureau of Economic Analysis released new personal income data for the second 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 second quarter of 2011 was at 69.2 percent and has been trending downward since 1990.
Note that the private sector is significantly higher than last reported for the first quarter, 2011. The reason is due to the Orwellian American Recovery and Reinvestment Act (ARRA). According to new BEA revisions, “net” ARRA payments are lower than reported previously because “some ARRA funding, such as for Medicaid, replaced state funding and had no net effect on personal current transfer receipts.” As a result, the rebound in the private sector is better than previously reported.
As such, Chart 2 shows that, in the second quarter of 2011, the modified ARRA calculations show that $42.3 billion was pumped into the U.S. economy via personal current transfer receipts (pdf). This is down from the peak spending ($82.1 billion) under ARRA in the second quarter of 2009. As ARRA spending continues to wind-down, this will continue to help the U.S. private sector rebound from its all-time lows though it puts a drag on overall personal income growth.