The State of America’s Private Sector 25: Second Quarter 2011

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.

Chart Showing Private Sector 2nd Quarter 2011

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.

Chart Showing ARRA 2nd Quarter 2011

The State of America’s Private Sector 24: July, 2011

Yesterday the U.S. Department of Commerce’s Bureau of Economic Analysis released their monthly personal income data for July 2011 (pdf). The chart below shows the private sector share of personal income from January 1959 to June 2011. For July, the private sector share of personal income was 70.65 percent–up 0.08 percentage points from June. While the trend has been up for the last few months, the current level is still well below the pre-Great Recession level of 74.48 percent in June 2007. And this is before we head into the double-dip recession.

Chart of Private Sector Share of Personal Income for July 2011

The State of America’s Private Sector XX: February 2011

Today the U.S. Department of Commerce’s Bureau of Economic Analysis released their monthly personal income data for February 2011 (pdf).

The chart below shows the private sector share of personal income from January 1959 to February 2011.  Since the private sector hit its inflection point in April 2010, the private sector continues to rebound up to 70.47 percent in February from 70.39 percent in January.  The private sector has now grown in 10 of the past 11 months adding a total of 0.78 percentage points.

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 February 2011

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.