Mike Shedlock

Inquiring minds are investigating Personal Transfer Receipts.

Personal current transfer receipts are benefits received by persons for which no current services are performed. They are payments by governments and businesses to individuals and nonprofit institutions serving individuals.
Personal Current Transfer Receipts Examples

  • Medicare
  • Medicaid
  • Food Stamps
  • Social Security
  • Unemployment Insurance

  • Nearly every dime of federal government receipts goes to personal transfer payments.
  • Between 1960 and 1970, personal transfer payments were 30-35% of federal government receipts.
  • From 1980-2000 the percentage fluctuated between 50% and 65%.
  • If (when) the economy slips back into recession personal transfer payments will exceed 100% of federal government receipts.

Personal Current Transfer Receipts

Note that transfer receipts are nearly $2.4 trillion.

Federal Government Receipts 

Ratio of Personal Transfer Receipts to Federal Government Receipts

Given personal transfer receipts take up nearly 100% of federal government receipts, in theory, there should be no room for anything else, including wars, roads and bridges, and wages of federal employees.

Unfortunately, the government wastes money on wars, wastes money on bureaucracies that should not exist, and overpays on roads, bridges, and infrastructure (because of Davis-Bacon, collective bargaining, and prevailing wage laws).

The only way to remedy this is with an iron-clad, no-exceptions, balanced budget amendment.

Please consider a collections of charts from The “Jobless and Wageless” Recovery from the Great Recession of 2007-2009. Annotations in red (where present)are by me.

GDP 2007 Q4 - 2011 Q1

GDP made a new high but look at the amount of US fiscal stimulus from Congress, monetary stimulus from the Fed, and global stimulus especially China, that it took to achieve that.

Nonfarm Jobs

Total Civilian Employment

By the "end" of the recession the US economy shed 7 million nonfarm jobs and 6 million civilian jobs. Since the official end of the recession, there has been a small net loss of both nonfarm jobs and civilian jobs.

Mean Weekly Private Sector Hours 

Mean weekly hours have risen by .5 hours since the recession ended but are still .2 hours below the start of the recession.

Change in Civilian Jobs vs. Prior Recessions 7 Quarters Later

Private Sector Real Hourly Earnings in Constant 201o Dollars

Thanks to the Fed specifically and central bankers in general, real wages are below where they were when the recession ended.

Real Median Weekly Earnings Full-Time Wage and Salary Employees in Constant 2010 Dollars

Trends in Annualized Wage and Salary Accruals CPI-U Adjusted 2010 Dollars

Annualized Value of Corporate Profits in Constant 2010 Dollars

Snip from the report ....

"To date, through the first quarter of 2011, the nation’s recovery from the 2007-2009 recession is both a jobless and a wageless recovery. Aggregate employment still has not increased above the trough quarter of 2009, and real hourly and weekly wages have been flat to modestly negative. The only major beneficiaries of the recovery have been corporate profits and the stock market and its shareholders. Most holders of savings and money market accounts also are net losers due to declining real interest rates which have been in negative territory for many interest bearing and money market accounts."

There are more charts, tables and commentary in the 23 page PDF report.

Given the global economy is clearly weakening (disregarding inventory building and the latest US manufacturing ISM numbers), there is every reason to believe the jobless, wageless, "state of affairs" will last.

Notice I called it "state of affairs". The recovery, if that is what one wants to call what we had, is on its last legs.

For a look at the latest manufacturing ISM numbers and trends in other countries, please see Manufacturing ISM Weaker Than it Looks; Digging Into the Numbers; Inventory Restocking Accounts for Much of the Rise

Mike "Mish" Shedlock

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Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.