The State of America’s Private Sector XV

Today the U.S. Department of Commerce’s Bureau of Economic Analysis released their monthly personal income data for November 2010 (pdf).

The chart below shows the private sector share of personal income from January 1959 to November 2010. The private sector grew again by another 0.1 percentage points and has now grown for 3 consecutive months adding a total of 0.5 percentage points.  Interestingly, while the public sector grew in November, the private sector grew even faster allowing the private sector to gain share.

Now that the Bush tax cuts extensions are now law, will the private sector be able to continue its growth against another round of government spending?  All of the new spending contained in the bill will show up in personal current transfer receipts, thus accelerating the growth in government spending.  As long as the private continues to grow as it has, I think the new spending will cause the private sector to plateau for awhile but not retreat.  Of course, in the long-run, I think the opposite is true with the downward trend in the private sector continuing.

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.

Private Sector Share of Personal Income for November 2010

The State of America’s Private Sector XIII

Last week, on the day before Thanksgiving, the U.S. Department of Commerce’s Bureau of Economic Analysis released their monthly personal income data for October 2010.  Come on guys, did you really mean to release this the day before a major holiday–it was just plain wrong.  Well, at any rate, I’m finally able to analyze this new data after digesting my Thanksgiving dinner . . .

The chart below shows the private sector share of personal income from January 1959 to October 2010.  The private sector grew again by another 0.1 percentage points and, for the first time since December 2009, is back up over the 70 percent mark (70.05 percent).  Interestingly, while the public sector grew in October, the private sector grew even faster allowing the private sector to gain share.

Is this two-month uptick in the private sector an inflection point or a mirage?  Time will tell . . . but I’m still expecting the private sector share to go lower which gives me an idea for another blog post, stay tuned.

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.

Private Sector Share of Personal Income by Month through October 2010

The State of America’s Private Sector XI

Today the U.S. Department of Commerce’s Bureau of Economic Analysis released their monthly personal income data for September 2010. The chart below shows the private sector share of personal income from January 1959 to September 2010.

After dropping slightly in August, the private sector as a percent of personal income bounced back in September.  Both government compensation and personal current transfer receipts were down from August.  The drop in government compensation is likely due to tight budgets at the state and local level, whereas the drop in PCTR is likely due to the wearing off of the American Recovery and Reinvestment Act (the so-called “stimulus).

On the positive side, private sector compensation continues to grow($5.206 trillion), but only brings it up above where it was in January 2009 ($5.139 trillion) though still significantly under December 2008 ($5.248 trillion).

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.

Private Sector Share of Personal Income for September 2010

The State of America’s Private Sector IX

The flip side of looking at the private sector share of personal income is, of course, the public sector share of personal income.  The public sector consists of two components: Personal Current Transfer Receipts (PCTR) and Government Compensation.

Today, let’s look more close at PCTR which is made up of programs such as Social Security, Medicaid, Medicare, etc.  In the first chart below, the amount of money flowing through PCTR has been growing at an accelerating rate.  In the last ten years PCTR nearly doubled to $2.1 trillion in 2009 from $1.1 trillion in 2000.

Personal Current Transfer Receipts between 1990 and 2009

The culprit?  The next chart shows the growth in Medical Benefits which more than doubled over the last ten years to $892 billion in 2009 from $427 billion in 2000.  Digging deeper shows an even faster rate of growth in Medicare which grew 128 percent to $500 billion in 2009 from $219 billion in 2000.

Of course, some of the recent spike is due to a surge in unemployment insurance thanks to the “Great Recession.”  Yet, remove that surge, and the underlying trend-line is not encouraging.  Given the eminent retirement of the baby-boom generation, it is within the realm of possibility that PCTR could double again . . . not in ten years, but within the next five years.

The questions is . . . how do we pay for it?  Think personal income is going to be doubling in the next five years?  And it’s always instructive to see the difference between Maine and New Hampshire.

Medical Benefits between 1990 and 2009

The State of America’s Private Sector VIII

Today the U.S. Department of Commerce’s Bureau of Economic Analysis released their monthly personal income data for August 2010.  The chart below shows the private sector share of personal income from January 1959 to August 2010.

After rebounding slightly in July, the private sector as a percent of personal income set a new all-time low of 69.66 in August.  I was hoping that the private sector would start to break-out of its rut . . . but on the upside, not the downside.

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.

Private Sector Share of Personal Income for August 2010