Personal income levels plummet in Wisconsin as government aid fades
Personal income in Wisconsin fell 25.8% in April, May and June, according to a report from the US Bureau of Economic Analysis released Thursday. Experts say that despite this, the US economy continues to recover.
The US Bureau of Economic Analysis, or BEA, publishes quarterly reports on personal income by state. Wisconsin’s revenue change – between Q1 (January, February, and March) and Q2 (April, May, and June) – ranked 30th among all states.
“I guess that’s because the overall impact of the stimulus payments in Wisconsin was more than, say, the average,” said Kundan Kishor, who chairs the economics department at the University of Wisconsin-Milwaukee. . “Agricultural states have done relatively better than states that are not very dependent on agriculture.”
The country’s overall income fell 21.8 percent.
“I was surprised at the level of the drop,” said Steve Deller, professor of applied economics at UW-Madison. “I would have thought that in the second quarter of this year we would have seen modest growth.”
Deller noted that there was “modest growth” in terms of labor income, but this was offset by a decline in “transfer receipts,” a category of income encompassing income from non-professional sources.
A second round of COVID-19 relief checks came out at the start of the year, helping to increase Wisconsin’s personal income in the first quarter by 51.5%. Deller said the disappearance of those payments in the second quarter would explain the subsequent decline.
Another factor in terms of transfer revenues are pandemic unemployment benefits which ended at the beginning of the month.
“We weren’t in free fall because of extended unemployment benefits,” Deller said.
Deller said consumer sentiment is the main driver of the economy.
“What we’re seeing now is people are tired of being locked up and coming out more, but… it’s not back to where we were,” Deller said. “We are not going to go back to where we were until COVID is removed. “
For now, Deller has said Wisconsin is “pretty much where we should be” compared to other Midwestern states such as Indiana and Michigan. Illinois is the only state in the region to experience a smaller drop in income than Wisconsin.
“There’s nothing here that really jumps out at me,” Deller said.
Kishor said that while the current volatility is unprecedented in recent economic history, there is hope for stability in the months ahead.
“The market will continue to improve, but probably not at a rate that policymakers or people would have liked,” Kishor said. “Over a longer period of time, we will likely return to long-term average personal income growth.”
Kishor said the recovery will depend on consumer spending and the willingness of workers to return to work in the middle of the current delta variant. He noted that markets such as stocks and housing were doing “pretty well”.
“If the luck is lacking it can create problems, and that’s something to watch out for,” Kishor said.
What happens with the debt ceiling and international markets could also make a difference, Kishor said.
Deller said that while quarter-by-quarter data can be interesting, longer-term patterns are ultimately more important. He said changes for the better in the third quarter will be followed by setbacks because of the delta.
“I think what we’ll see is a downturn in the economy because of COVID, and then some kind of rebound, but not quite where we were before COVID,” Deller said.
The BEA will release income data for July, August and September around mid-December.