U.S. Poverty Rises, Median Household Income Falls
(Update2)
By Timothy R. Homan and Mike Dorning
bloomberg.com
Sept. 10 (Bloomberg) -- Household incomes decreased in 2008, the first full year of the recession, and the poverty rate rose to the highest since 1997, government data showed.
The median household income fell 3.6 percent to $50,303, snapping three years of increases, the Census Bureau said today in its annual report on incomes, poverty and health insurance. The poverty rate climbed to 13.2 percent from 12.5 percent. The number of people living in poverty rose to 39.8 million last year, an increase of 2.6 million from 2007.
Today’s report highlights concerns that consumer spending will play a limited role in leading any recovery from the worst recession since the 1930s. Plunging home values and stock prices have fueled a record $13.9 trillion loss in household wealth in the U.S. since the middle of 2007.
“The decline in incomes we’re seeing certainly has implications for consumer spending, particularly post-housing bubble when families can’t tap into home equity through loans,” said Heather Boushey, a senior economist at the Center for American Progress, a research organization headed by John Podesta, a leader of the Obama administration transition team.
The number of people without health insurance coverage rose to 46.3 million last year from 45.7 million in 2007, the report also said.
Analysts are forecasting a further increase in poverty and a drop in incomes this year, reflecting the worst job losses of any recession since World War II. Since the slump began in December 2007, the U.S. has lost 6.9 million jobs. Payroll cuts peaked at 741,000 in January and have since subsided, with 216,000 job losses in August, according to the Labor Department.
Poverty Threshold
The poverty threshold in 2008 was defined as $22,025 in income for a family of four.
The poverty rate typically rises during a recession and continues to climb even as the recovery begins, Census Bureau figures show.
During the economic expansion of the 1990s, the poverty rate declined each year from 15.1 percent in 1993 to 11.3 percent in 2000. It then climbed to 11.7 percent in 2001, as the nation slid into recession, and continued its ascent to 12.7 percent in 2004.
The jobless rate has averaged 8.9 percent this year, compared with 5.8 percent in 2008, Labor Department figures show. The unemployment rate last month jumped to 9.7 percent, the highest in 26 years.
President Barack Obama in February signed into law a $787 billion stimulus package aimed at stabilizing the economy and creating or saving about 3.5 million jobs.
To contact the reporters on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net; Mike Dorning in Washington at mdorning@bloomberg.net
Last Updated: September 10, 2009 11:45 EDT |
