New Hampshire’s Private Sector . . . 2nd 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, New Hampshire’s private sector share of personal income for the second quarter of 2011 was at 76.1 percent–or 9.9 percent larger than the national average.

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 $99 million was pumped into New Hampshire’s economy via personal current transfer receipts (pdf).  This is down from the peak spending ($303 million) under ARRA in the second quarter of 2009.  As ARRA spending continues to wind-down, this will continue to help New Hampshire’s private sector rebound from its all-time lows though it puts a drag on overall personal income growth.

New Hampshire’s Private Sector . . . 2nd Quarter 2010

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.  This new data brings a mixed-bag of new about New Hampshire’s private sector.  As shown in Chart 1, New Hampshire’s private sector share of personal income for the second quarter of 2010 was at a new all-time low of 75.18 percent–just edging out the previous low of 75.29 percent set in the last first quarter of 2010.

The good news is that the private sector change between the first and second quarters was a minuscule 0.1 percentage points which suggests that perhaps the dramatic drop in the private sector has at least found bottom.  Additionally, New Hampshire’s private sector gained ground against the national average.  In the first quarter of 2010, New Hampshire’s private sector was 9.71 percent larger than the national average but has climbed to 9.76 percent above the national average in the second quarter.

The major culprit behind this crowding-out of the private sector–the American Recovery and Reinvestment Act (ARRA).  In the second quarter of 2010, the ARRA pumped $138 million into New Hampshire’s economy via personal current transfer receipts.  This is down from the peak spending ($345 million) under ARRA in the second quarter of 2009.  As ARRA spending continues to wind-down, New Hampshire’s private sector should rebound from its all-time lows.

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.