Yesterday the Bureau of Economic Analysis updated its estimates of state-level personal income, with numbers through the 2nd quarter of 2011 (BEA press release). The new numbers show that the recession in personal income was longer and deeper than previously thought. Here are updates, using the new data, of 4 charts I posted last March.

The first chart shows Washington personal income by quarter from the 1st quarter of 2000 through the 2nd quarter of 2011. (Data are seasonally adjusted annual rates. Quarterly incomes are one-fourth of the values shown.) The spike in the 4th quarter of 2004 was caused the special dividend that Microsoft issued to shareholders in December 2004. By the National Bureau of Economic Research’s reckoning, the recession began in the 4th quarter of 2007 and ended in the 2nd quarter of 2009. Washington personal income reached a peak of $292.3 billion in the 3rd quarter of 2008. Income fell for four quarters, reaching a low of $277.6 billion in the 3rd quarter of 2009, a drop of 5.3 percent. Income did not exceed third quarter 2008 value until 1st quarter of 2011. In the 2nd quarter of 2011, personal income reached $299.8 billion, 2.6 percent greater than the previous peak.

State personal income is the sum of three parts: (1) net earnings of state residents; (2) dividend, interest and rent payments; and (3) transfer payments. (The “net” in net earnings reflects the exclusion of contributions for government social insurance, e.g. social security taxes.) Chart 2 shows the cumulative change since the 3rd quarter of 2008 in each of these three components of Washington personal income. Were it not for the $11.6 billion (30.3 percent) growth in transfer payments over the period, personal income in the 2nd quarter of 2011 would have been less than that of the third quarter of 2008. (Benefits under the Unemployment Insurance, Social Security, Medicare and Medicaid programs account for the bulk of transfer payments.)

The third chart shows transfer payments as a share of Washington personal income. In the 4th quarter of 2007, the peak of the last cycle, transfer payments were 12.7 percent of personal income. By the 2nd quarter of 2009, which the NBER marks as the end of the downturn, the transfer payment share had grown to 16.4 percent. The share peaked at 17.3 percent in the 4th quarter of 2010 and was 16.7 percent in the most recent quarter.

The final chart tracks the change in earnings since the 3rd quarter of 2008 separately for the government, farm and private non-farm sectors. (These are earnings from jobs located in Washington state, irrespective of whether or not the job holder is a resident of the state. In contrast the earnings shown on the earlier chart are earnings of Washington residents, irrespective of whether or not the job is in the state.) Government sector earnings saw no significant decline during the recession and in the 2nd quarter of 2011 were $3.4 billion greater than in the 3rd quarter of 2008. (The federal government accounts for half of this gain.) Private nonfarm earnings fell by $9.8 billion from the 3rd quarter of 2008 to the 1st quarter of 2010. The recovery in private nonfarm earnings began in the 2nd quarter of 2010, but in the 2n quarter of 2011 they were still $770 million below the level of the 3rd quarter of 2008.