A new federal report shows that West Virginia and Kentucky saw the country’s sharpest declines in personal income last quarter as some forms of federal support during the pandemic expired.
The U.S. Bureau of Economic Analysis says personal income decreased in every state in the third quarter of 2020, which includes the months of July, August, and September.
The Bureau of Economic Analysis defines personal income as the income received from all sources including labor, owning a home or business, domestic sources, financial assets, and transfers.
Income in West Virginia declined by nearly 30% in the third quarter. In Kentucky, income decreased by a little over 24% and in Ohio it dropped by 16%.
Matthew von Kerczek, an economist for the Bureau of Economic Analysis, explained that there were two contributing factors to the decline in personal income for the nation, both tied to the limits of federal coronavirus support.
“The first was the expiration of the federally funded additional $600 per week in unemployment benefits and the second was the reduction in the number of people receiving economic impact payments,” Von Kerczek said. “Those were the $1,200 stimulus checks that we mostly see in the second quarter of 2020.”
West Virginia had the largest decline in the nation in the third quarter, but it had the largest increase in the second. Von Kerczek said this is a reflection on the impact of the stimulus checks and the extra unemployment benefits.
Personal income had increased in the second quarter, which represents the months of April, May, and June, due to the government’s economic support during partial COVID-19 shutdowns.
Von Kerczek said that personal income was still boosted in the third quarter by the CARES Act, but the boost was more significant in the second quarter.
“In the second quarter, the CARES Act boosted personal income by about $3 trillion. In the third quarter it’s just over $1 trillion,” he explained.
There was a partial rebound in earnings in the third quarter compared to the second quarter due to the gradual reopening of the economy.
According to the report, earnings increased by 32% in the third quarter after decreasing by 25% in the second. Von Kerczek said this is because of the partial economic shutdowns that took place earlier in the year.
The final quarter report will be released in March 2021.
