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 . . . 1st Quarter, 2011

Today the U.S. Department of Commerce’s Bureau of Economic Analysis released new personal income data for the first 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 first quarter of 2011 was at  75.7 percent–or 9.3 percent larger than the national average.  While this is the highest point since the third quarter of 2009, the private sector has essentially been moving sideways.

Chart 2 shows the major culprit behind this crowding-out of the private sector since the beginning of the “Great Recession”–the Orwellian American Recovery and Reinvestment Act (ARRA).  In the first quarter of 2011, the ARRA pumped $103 million into New Hampshire’s economy via personal current transfer receipts (pdf).  This is down from the peak spending ($345 million) under ARRA in the second quarter of 2009.  As ARRA spending continues to wind-down, this will help New Hampshire’s private sector rebound from its all-time lows though it puts a drag on overall personal income growth.

Per Capita versus Per Household Personal Income III

In my previous blog, I showed how per capita and per household income varied between Maine and New Hampshire.  However, some folks may dismiss this as one special case where per household income makes a difference to the analysis that a larger private sector share of personal income means greater economic prosperity in the long-run.

So, the charts below show a scatter-plot of the relationship between the private sector and income under the per capita metric (chart 1) and per household metric (chart 2) for the lower 48 states.  In both charts, Alaska and Hawaii are excluded from the observations.

The first thing to note is that the r-squared is higher under the per household metric (0.52) versus (0.46). The r-squared measures how closely the observations conform to the predicted line as measured in the equation shown.  Even just eye-balling the chart you can see that in chart 2 the observations are more tightly clustered.  And Utah, the state that started this saga, has clearly moved from an outlier in chart 1 to middle-of-the-pack in chart 2.

Secondly, the correlation is steeper under the per household metric which means an even greater increase/decrease in income with a bigger/smaller private sector.  On average, a 1 percentage point increase/decrease in the size of the private sector yields an increase/decrease in household income of $2,617.  That’s a nice chunk of change.