January 30, 2010
[efoods]While most eyes were focused on the better-than-expected gross domestic product data for last year’s fourth quarter, this week’s report from the Commerce Department’s Bureau of Economic Analysis also included details on U.S. personal income.
Along with wages and salaries, dividends and interest income, this category includes personal current transfer receipts, which the BEA defines as “income payments to persons for which no current services are performed and net insurance settlements.” That is, government social benefits (and, to a very minor extent, net transfers received from businesses).
As you can see from the following graph, while the relationship between personal income and GDP has not changed all that much over the course of the past six decades, the share of income accounted for by transfer payments has jumped more than 200 percent.
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