From the just-released revision to Q4 GDP, it is very clear that rising government transfer payments are playing a key role in supporting personal income. While personal income grew by $295 billion in 2008 vs. 2007, most of that gain was due to government transfer payments, which increased by $161.5 billion. Private wages and salaries only grew by $103.9 billion. Without government transfer payments personal income would have hardly increased at all, making the recession far worse.
See chart below:
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