The chart below is real personal income less transfers. I used the personal consumption expenditure index to deflate the series.
As you can see, to return to the trend path by the fourth quarter of this year, we would need 2.85% real growth in personal income. This would suggest one of two things; engineering a large productivity gain, as seen between 1995-2000, or targeting a 4% path of nominal expenditure. Unfortunately, it doesn’t look like either of those is going to happen any time soon.
Here is the series going back to 1970:
On this last chart, you can see a comparison of personal income with and without transfer payments. The black line is baseline at 2007:Q7, and the shaded area shows the “big crash” of the recession, which correlates with falling NGDP — due to tight money. As you can see from the charts, personal income is getting quite a boost from transfer payments right now.
As we have seen, the 1990’s were a revolution in social technologies due to new ways of organizing business communications. Something may come along to revolutionize this area again (maybe work from home, finally?), but I’m not holding my breath.