Tom Abate, Chronicle Staff Writer
Friday, March 26, 2010
Personal income in California fell last year for the first time since the Great Depression, the Commerce Department said Thursday.
State income plunged even more sharply in 2009 than the similar, historic drop that occurred on a national basis, a notable reversal given that California generally has beaten the national averages throughout the 80-year history of this report.
Personal income includes wages and salaries, health and pension benefits, rents, dividends and interest, federal payments such as unemployment and Social Security, and just about every form of wealth except stock sales and other capital gains.
The 2.5 percent drop in statewide personal income works out to $1,527 fewer dollars for every man, woman and child in California.
The accompanying nationwide drop of 1.7 percent works out to a $1,028 decline in per capita income for all Americans.
Prior to last year’s drop, personal income in California had fallen only five times since 1929, when such record keeping began. All five of those occurrences were during the Depression.
The worst statewide decline on record came in 1932, when personal income fell 21.7 percent.
U.S. personal income also fell five times during the Great Depression, with the worst drop of 23.6 percent occurring in 1932.
Nationwide, the measure dropped one additional time in 1949, when average U.S. personal income declined 1.3 percent. But incomes in California grew through that post-World War II slump with an increase of 1.7 percent that year.
Years of growth
Over the 80 years that federal records span, personal income in California has grown an average of 7.3 percent annually.
By comparison, U.S. personal income growth has averaged 6.4 percent annually since 1929.
Howard Roth , chief economist for the California Department of Finance, said Gov. Arnold Schwarzenegger’s budget assumed a slightly larger income drop of 2.8 percent, so Thursday’s bleak numbers have already been factored into how much tax revenue the state can expect in this budget crisis.
Although income dipped last year on both the state and federal levels, Roth said the Commerce Department figures suggest that this measure may be heading back up. The federal report notes that income fell in the first part of 2009, but turned upward toward the end of the year.
“The worst of this is behind us,” Roth said.
Pain widely felt
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