(The Center Square) – Georgia experienced a double-digit increase in personal income growth over the course of a year, reflecting the strongest rise ever in the first quarter, according to a new report.
The Pew Charitable Trusts report released Wednesday showed the state’s personal income in the first quarter of 2020 through the first quarter of 2021 increased by 15.7%. It rose by only 2% from the end of 2007 through the end of 2019.
Pew attributed the income boost to multiple rounds of federal aid provided to people and businesses during the COVID-19 pandemic. Laura Wheeler, the director of the Public Finance Research Cluster at Georgia State University’s Andrew Young School of Policy Studies, said she was not surprised by the numbers.
Wheeler also attributed the growth to stimulus payments and supplementary unemployment benefits paid out to Americans through three stimulus packages.
“There was a tremendous response by the federal government,” Wheeler said.
Each person received $1,200 payments and $500 for each of their dependents from the Coronavirus Aid, Relief and Economic Security (CARES) Act. The second stimulus payment was $600 for each person and $600 for a dependent child. The third payment was $1,400 per person.
Unemployed workers also received at least an additional $300 a week in jobless benefit payments from the federal government.
Wheeler said Georgia always has been on trend with the national personal income growth rate in the past. With the national rate at 14.4%, Georgia is doing better than the national average. It ranked 18th among other states in the Pew report. The U.S. also experienced its largest year-over-year growth rate since the U.S. Bureau of Economic Analysis started reporting the rates in 1948.
State personal income consists of earnings from working or owning a business; dividends, interest and rent; and transfers from governments and businesses, according to Pew.
Wheeler also believes a boost to other government social safety nets such as food assistance also allowed more Georgians to maintain their personal income, and remote work may have helped higher earners stay afloat.
“Many individuals were able to work from home and did not necessarily suffer the same catastrophic situation to their finances that some of the lower-income, lower-wage workers experienced, and so they did quite well,” she said.
Nationwide earnings were $177 billion higher in the first quarter of 2021 than a year earlier, after adjusting for inflation, compared with a $2.8 trillion increase in income from all sources of government assistance, according to Pew. All but 10 states saw a year-over-year increase.
Wheeler said the current income spike is temporary as the federal aid was short-term.
“So those were one-time infusions into somebody’s resources, and those won’t occur again,” Wheeler said. “So they will have some of that money saved, and it will continue to be spent out over periods of time, over the next two, three years. Some of it was spent immediately.”
U.S. Bureau of Economic Analysis data shows that U.S. personal income dropped in the second quarter of 2021 when compared with the first quarter.
By Nyamekye Daniel | The Center Square
