Nevadans saw their personal income decline more in 2009 than residents of any other state, a new report from the U.S. Bureau of Economic Analysis found.
Residents' personal income in Nevada fell to $102 billion in 2009, down 4.8 percent from $107.1 billion in 2008. That's not only the worst performance in the nation in 2009, it's also the second-biggest decline among the states since 1969, the bureau said. Total personal income gauges the combined earnings of all residents in the state. Nevada has always had one of the country's lower overall personal incomes, because it's one of the country's smallest states.
Nevada's per capita personal income, which divides total personal income among the state's number of residents, was $38,578 in 2009, down 5.8 percent from $40,936 in 2008. That decline ranked No. 2, after Wyoming's 5.9 percent drop to $45,705.
Nationally, the decline in personal income averaged 1.7 percent, with overall pay dropping from $12.2 trillion in 2008 to $12 trillion in 2009. Per capita personal income nationwide was $39,138, down 2.6 percent from $40,166.
Inflation came in at 0.2 percent in 2009, the bureau said.
The bureau attributed Nevada's steep earnings falloff mostly to troubles in the construction and hotel-casino sectors.
Jeremy Aguero, a principal in local research and consulting firm Applied Analysis, also pointed to Nevada's boom-time growth as a factor in its income losses. Before the recession, Nevada had one of the highest per capita personal incomes in the country, and it enjoyed one of the nation's lowest jobless rates. So the state simply had better-than-average room for decline, Aguero said. Today, the Silver State has the nation's second-highest unemployment rate. At 13.3 percent, Nevada is just behind Michigan's 14.1 percent.
The new federal figures hint that Nevada's economic and fiscal woes could persist, local observers said.
"While the retail industry remains optimistic, it is becoming more difficult to believe that a recovery could happen soon," said Mary Lau, president of the Retail Association of Nevada. "Private job growth will be paramount to a full return to economic stability, and we haven't seen any indicators yet that would lead us to believe that private job growth is returning."
Declines in personal incomes don't just herald sustained tough times. They also cascade through the state's economy and budget.
Nevada's consumption-driven economy depends on spending among tourists and locals alike, Aguero said.
"Personal incomes impact almost everything we do," he said. "As incomes decline, people put off making decisions. It takes people longer to decide to buy a car. Companies think twice about buying, expanding or building a new office park when they're reducing salaries. Everything from the most basic retail and hospitality spending to really complex investment decisions is affected by income and the willingness to spend."
Plus, declines in personal income have long visited Nevada's taxable sales, which help generate funding for schools and prisons.
The Silver State's taxable sales have plunged nearly $2 billion during the recession, falling from $4.68 billion in December 2007, when the recession began, to $2.8 billion in January, according to the state Department of Taxation. Some of the biggest downturns have come in spending on construction, furniture, big-ticket durable goods and cars.
The bureau's numbers do show income moderation in late 2009. The state's biggest falloff came in 2009's first quarter, when incomes fell 3.1 percent. Incomes were flat in the second quarter and down 0.9 percent in the third quarter. But the fourth quarter showed an income increase of 0.5 percent.
Aguero said the uptick makes sense. After all, the state's employers have been slashing workers' hours, cutting salaries and delaying raises for the better part of two years, a trend they can sustain for only so long. A plateau is inevitable.
Personal income isn't measured by salaries alone, though. Earnings also come from investment returns, rental income and even government aid such as unemployment benefits. How these revenue streams fare will determine how quickly incomes rebound in Nevada.
Despite 2009's tumble in earnings, Nevada still ranked No. 20 in the nation in per capita personal income. That's down from No. 17 in 2008.
In California, the state's largest feeder market for both tourists and new residents, personal income totaled $1.56 trillion in 2009, down 2.5 percent from 1.6 trillion in 2008. Per capita personal income in the Golden State dipped to $42,325, down 3.5 percent from $43,852 in 2009. California has the nation's 10th highest per capita personal income.
The bureau also showed a 1 percent increase in Nevada's population, with the state's number of residents rising from 2.62 million in 2008 to 2.64 million in 2009.
Contact reporter Jennifer Robison at firstname.lastname@example.org or 702-380-4512.