Every U.S. state saw personal income drop in the third quarter as stimulus wound down, underscoring the need for fresh aid as Congress movescloser to a deal.
West Virginia led declines, contracting 30% at an annual rate, as Michigan, Kentucky and Oklahoma all registered drops exceeding 20%, Commerce Departmentdata showed Thursday.
By comparison, incomes fell 1.6% in California and less than 1% in Georgia, where two Jan. 5 Senate runoff elections will determine control of the upper chamber.
American incomes overall contracted the most since 2013 in the third quarter. State personal income fell 10% at an annual rate in the period, Commerce said. That marked a sharp deceleration from the prior quarter’s 36% jump, though total income remained higher than a year earlier, before the pandemic hit.
Transfer receipts, which include state unemployment benefits and Medicaid, fell by $1.3 trillion in the third quarter after soaring $2.4 trillion in the prior period.
Receipts were boosted earlier in the year by an added $600 weekly jobless benefit and $1,200 stimulus payment. The weekly unemployment top-up, however, expired at the end of July and the check was a one-time disbursement.
The data highlight the benefits of economic stimulus at a time when unemployment is high and a spike in U.S. coronavirus cases coupled with fresh restrictions keeping businesses closed are weighing on hiring.
Congress is nearing a deal on fiscal stimulus, with Democrats pushing to include state and local governments that have made cuts amid the income shortfall. Meanwhile, additional unemployment benefits expire at the end of the year, as well as an eviction moratorium that has protected some Americans.
More recent economic data point to a stalled recovery: claims for unemployment benefits unexpectedlyjumped to a three-month high last week. Also, U.S. retail salesfell more than forecast in November, highlighting challenges for consumers.
— With assistance by Alexandre Tanzi, and Wei Lu
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