Plummeting income from investments shaves household cash

Posted Dec. 11, 2011, at 9:36 p.m.

WASHINGTON — The housing market collapse, historically low interest rates and corporations stingy with dividends helped cut the median household income in two of every three U.S. counties, according to the Census Bureau.

The number of American households that made money from rent, interest or dividends fell by one-third to 24.2 percent in 2010, including residents of counties that encompass New York City and San Francisco.

The census figures capture the lost financial opportunity experienced by Americans during a decade that saw the dot-com bust and then the worst recession since the Great Depression.

“We were expecting back in 2000 that our 401(k) would grow 4 to 6 percent a year,” said Gayle Thompkins, 68, a resident of Green Valley, Ariz., whose husband used to work for Dow Chemical when the couple lived in Michigan. “Right now, if we break even, we’ll feel lucky.”

The plunge in the number of households with dividend, interest or rental income spanned the country, falling to 29.8 percent from 39 percent in 2000 in Manhattan; dropping to 13.1 percent from 23.5 percent in Miami; and declining to 50.3 percent from 69.6 percent in Anchorage.

“Over the last decade, income provided by financial market returns has declined, and pretty meaningfully,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott in Philadelphia, said in a telephone interview. “Consumer incomes are beginning the decade off at a lower starting point.”

The census figures were released last week as part of the five-year version of the American Community Survey, an annual poll of 3.5 million households that replaced the decennial census long- form survey.

In 2000, 16 counties with more than 100,000 households had a majority report they received income from interest, dividends or rentals. Anchorage, where full-time residents last year received an average $1,281 dividend from a state fund created by oil revenue, was the only one in 2010.

Nationwide, median household income fell to $51,914, a $2,678 drop over the decade when adjusted for inflation. Black households lost the most, with median household income falling 8 percent to $35,194. Hispanics reported $41,354, a 5.5 percent drop. The figure for white, non-Hispanic households fell to $56,466, a 4.3 percent decrease over the decade. Asian households reported $68,950, a 2.2 percent gain.

Households in traditionally affluent areas, showed median income losses over the decade.

The greatest declines occurred in Great Lakes states and southern Appalachia. People in 82 of Michigan’s 83 counties reported their household incomes dropped between 2000 and 2010. Households in Livingston County, a Detroit suburb, registered the largest drop in the nation, with incomes falling to $72,129, a $15,491 decrease from the 2000 real median of $87,620.

“This is the absolute nadir for us,” said Lou Glazer, president of Michigan Future Inc., an Ann Arbor-based non-profit research group. During the last decade, 94 percent of the state’s income growth came from government payments rather than private-industry sources, Glazer said.

Dividend payouts declined for the broader U.S. market between 2003 and 2010. The amount of dividends paid out as a percent of net income declined to 55.5 percent from 80.5 percent in that period, according to Russell 3000 Index data compiled by Bloomberg.

Prices for existing U.S. homes fell over the decade in one of five U.S. counties, according to data compiled by Bloomberg. Pitkin County, Colo., homeowners were hardest hit. The median value of a home in the central Colorado county, home to the Aspen/Snowmass ski complex, fell $304,800, almost 10 times the decline in Oakland County, Mich., the second-biggest loser.

The median sales price was $1.2 million for the 63 homes sold during the third quarter of 2010 in the Aspen area, said Ryan McMaken, chief economist for the Colorado Division of Housing. During the third quarter of 2011, 68 homes were sold with a median sales price of $637,000, he said.

“There aren’t a lot of fire sales, but there hasn’t been the sort of demand that existed prior to the financial crisis,” McMaken said. “It’s pretty clear there have been some declines.”

With assistance from Sharon Lynch in New York, Jennifer Oldham in Denver and Scot McClintic in Princeton, N.J.

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