The State of America’s Private Sector XIX: 2010

Last week the U.S. Department of Commerce’s Bureau of Economic Analysis released their preliminary 2010 personal income data (pdf) (which includes revisions to previous years).

The chart below shows the private sector share of personal income since 1929 (the first year of available data) to 2010 (the last year of available data).  The opposite of the private sector is the public sector which is defined as all government compensation paid to employees (military and civilian) plus all personal current transfer receipts (Social Security, Medicare, Medicaid, Welfare, etc.).

As the chart clearly shows, the private sector has been steadily crowded-out by the public sector.  Nationally, the private sector has plummeted 24 percent to 68.7 percent of personal income in 2010 from 92.7 percent in 1929.  More troubling, 2010 is the lowest private sector share in history after dropping another 0.6 percentage points from 2009.  How low will it go?

Additionally, the decline in the private sector can vary dramatically by state.  The chart also shows my two favorite states for making such comparisons–New Hampshire versus Maine.  These two states are alike in so many ways, yet differ in one major area which is the size of the public sector.  New Hampshire has the largest private sector in the country while Maine has the 41st largest private sector in the country.

Also note that New Hampshire’s private sector leveled off in 2010 while continuing to fall in Maine and nationally.  Now if New Hampshire can only get right-to-work enacted, then maybe they can get its private sector up back to over 80 percent 🙂

Private Sector Share of Personal Income 2010

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.

The State of America’s Private Sector VII

Today the U.S. Department of Commerce’s Bureau of Economic Analysis released new personal income data for the second 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 second quarter of 2010 was at a new all-time low of 68.49 percent–just edging out the previous low of 68.63 percent set in the last first quarter of 2010.

Private Sector Share of Personal Income for 2nd Quarter 2010

Chart 2 shows the major culprit behind this crowding-out of the private sector–the Orwellian American Recovery and Reinvestment Act.  In the second quarter of 2010, the ARRA pumped $61.5 billion into the U.S. economy via personal current transfer receipts.  This is down from the peak spending ($102.6 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 Recover and Reinvestment Act Spending for 2nd Quarter 2010

However, it remains an open question as to how much of the private sector will be permanently lost.  For example, some of the temporary spending under ARRA will simply be transferred to state and local governments for funding resulting in higher state and local taxes.