Today the U.S. Department of Commerce’s Bureau of Economic Analysis released their monthly personal income data for March 2011 (pdf).
The chart below shows the private sector share of personal income from January 1959 to March 2011. The data for March looks like it might be pointing to trouble. First, after nearly a year of continuous growth, the private sector share of personal income fell in March to 70.44 percent from 70.49 percent in February.
That by itself would necessarily be cause for alarm since it could just be a one month blip. However, looking more closely at the data reveals a disturbing turnaround in “government unemployment insurance benefits” (GUIB) in March. The highpoint for GUIB was in March 2010 when it was at 156.8 billion and has since fallen from that high to 112.8 billion in February 2011.
In March it climbed to 118.1 billion. Between January and February, GUIB fell by 10 billion, but for March went up by $5.3 billion–that is a $15.3 swing which significantly influenced the decline in the private sector share. To highlight the importance of GUIB, in August, 2010 the private sector share also fell and GUIB climbed from $123.2 billion in July, 2010 to $150.5 billion in August, 2010. But that was just a one month blip and a larger one at that.
The question now is–will GUIB continue to increase or was this too merely a one month blip that will correct itself in April? Given that gas prices are now at $4 a gallon ($3.95 in my neck of the woods), I’m thinking that this is more than just a blip. Anyone else have any insights on this?
Note: “Supplements to Wages and Salaries” (benefits) in the BEA data are not broken down into “private” sector” versus “government” components. I used the ratio of private wages and salaries to total wages and salaries in order to disaggregate supplements.