Hard times getting harder for Coloradans
The Denver Post
If making a buck in this economy seems a lot harder, that’s because it is.
Job losses and shrinking paychecks, combined with lower interest rates and investment returns, have shrunk personal incomes in Colorado for the second quarter in a row.
State personal income fell 0.7 percent in the first quarter from the fourth, exceeding the 0.5 percent decline seen nationally, according to a report Thursday from the U.S. Bureau of Economic Analysis.
Personal incomes fell from an annual rate of $208.9 billion in the fourth quarter to $207.4 billion in the first.
Colorado’s change in personal income in the first quarter dropped its ranking to 35th among states for income growth. In 2008, the state had the 10th-best rate of personal-income growth – 4.9 percent.
“When the recession hit, it hit hard,” said Gary Horvath, managing director of the business research division at the University of Colorado’s Leeds School of Business.
Personal income consists of wages from employment, small-business income, dividends, interest, rents and transfer payments, which include things such as Social Security and unemployment insurance.
Personal-income numbers capture the money made by a broader range of people than do job reports – retirees, landlords, small-business owners and even the unemployed and others on social assistance.
Earnings from wages and small businesses fell 0.82 percent in the first quarter, while the payout from dividends, interest and rents dropped a much larger 3.72 percent.
“While personal income is negative, it is not outside of what I would have expected, given the sharp declines in employment,” said Natalie Mullis, chief economist with the Colorado Legislative Council.
Higher unemployment claims, combined with an adjustment in Social Security payments, contributed to a 5.2 percent rise in transfer payments.
Sectors that contributed more income in the first quarter than the fourth included the federal government,
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the military, utilities, education services and health care.
The sharpest income declines came in farming, administrative services, construction, finance, durable-goods manufacturing, mining, and real estate services.
“A significant portion of the jobs laid off are good-paying jobs,” Horvath said.
A drop in corn, wheat and other commodity prices hurt farm incomes, while lower oil and gas prices have pushed down profits in the energy industry, said Ernie Goss, an economics professor at Creighton University who tracks the Colorado economy.
The official numbers understate the loss of income in two ways. First, they don’t account for inflation, which ran at 3.9 percent last year, according to the Denver-Boulder consumer price index.
And because Colorado’s population is growing at twice the national rate, the state needs bigger income gains to avoid a slip in per-person income.
In terms of severity, the two-quarter drop in income is the sharpest since the first quarter of 1958, when personal incomes in the state declined 2.6 percent quarter to quarter.
While back-to-back quarterly declines in personal income are not unheard of, Colorado hasn’t suffered an annual decline in personal incomes since the Great Depression.
Aldo Svaldi: 303-954-1410 or firstname.lastname@example.org
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