Income Per Capita Dropped 2.6% in 2009

If you were feeling a bit lighter in the wallet at the end of 2009, you weren't alone.

Recently released numbers revealed that income per capita in the United States was $39,138 in 2009, which would represent a drop of 2.6% from the year before.

Despite the population of the United States growing by about 3 million people last year, there were a total of nearly 6 million job losses (5,961,600). The average jobless rate in the country last year was 9.3%, a startling increase from just a few years earlier.

When faced with these numbers, the reason for the drop in income per capita becomes readily apparent. It's very tough to find a job right now, and many people are either jobless or have been forced to take lesser paying jobs in order to make ends meet.

Although the markets had a strong year in 2009 (+18.82% for the DJIA, +43.89% for the NASDAQ and +23.45% for the S&P 500), the cumulative effect of the 2008-09 market downturn has left most portfolios in a state of disrepair. Despite the 2009 bounce, the three major US market indexes are all well off of their December 2007 levels. So, the average investor isn't exactly rejoicing about any gains in their portfolios in 2009.

Adding to the misery of the average American is the continued decline in home prices. According to the FHFA, the average US home declined about 1.2% in value in 2009. This decline may pale in comparison to previous years, but for home owners who have been waiting for a rebound in home prices, additional reductions in the value of their homes are certainly not welcome.

The five states with the biggest drops in income per capita in 2009 were:

Wyoming: -5.9%
Nevada: -5.8%
South Dakota: -4.4%
Idaho: -4.1%
Arizona: -4.1%

The five states with the heaviest number of total job losses in 2009 were:

California: -917,800
Florida: -425,700
Texas: -412,400
Illinois: -291,300
Ohio: -273,400

The five states with the highest average jobless rates in 2009 were:

Michigan - 13.6%
Nevada - 11.8%
South Carolina - 11.7%
California - 11.4%
Rhode Island - 11.2%

And finally, the five states with the highest average drops in home values in 2009 were:

Nevada: -17%
Arizona: -13%
Hawaii: -13%
Florida: -8.2%
Utah: -7.7%

It's not hard to see why a number of states (namely California and Illinois) are facing very tough challenges when it comes to balancing their budgets.

Will things start to meaningfully improve in 2010, or will it be more of the same?

Given these numbers, it's not a surprise that Americans are saving more and spending less. Given that the US economy relies heavily on the free-spending ways of the average American consumer, it's probably safe to say that more rough waters lie ahead.

Source: WSJ.com - Overview 2009: Income, Population, Jobs and Home Prices by State

Filed under: The Economic Meltdown