Tomorrow's Census Poverty Figures Likely Bleak

'Deep poverty' is predicted to hit record high

As a result of high unemployment, economic analysts are predicting that the poverty rate numbers, which will be released tomorrow by Census,  have worsened as well. The Census Bureau will release their official poverty figures for 2010 Tuesday, and analysts say numbers could reach a record high with no signs of dropping for 2011. The Center on Budget and Policy Priorities (CBPP) point to a number of factors including patterns linking unemployment and poverty during previous recessions.

Here are a few other predictions suggested by CBPP:

• Poverty may well increase. Key bellwethers of poverty, such as long-term unemployment, worsened from 2009 to 2010, so the poverty rate may worsen as well. Moreover, after recessions, poverty increases typically persist longer than unemployment increases do — in the previous three recessions, the poverty rate did not begin to fall until a year after the annual unemployment rate began to decline. Poverty is unlikely, however, to have risen as steeply in 2010 as it did in 2009, when it climbed from 13.2% to 14.3% in response to widespread job losses.
• Poverty has already risen for most of the last last ten years. From 2001 to 2007, when the economy supposedly expanded, the poverty rate actually increased, from 11.7% in the recession year of 2001 to 12.5%, which according to CBPP has never happened before. As a result, the nation entered the current economic downturn with poverty already at an elevated level.
• "Deep poverty" could hit a record high. The Census Bureau will also release figures on people living below half of the poverty line --  incomes below $11,000 a year for a family of four. The previous record high deep-poverty rate was 6.3% in 2009, which means that about one in every 16 Americans lived in deep poverty that year. If this percentage hits 6.4% or higher in 2010, it will mark the highest level on record, with data going back to 1975.

    Looking ahead, poverty seems unlikely to improve in 2011, and there is significant risk it will remain high for some time. As noted, after the previous three recessions, the poverty rate didn't begin declining until a year after the annual unemployment rate started to fall. If this pattern holds, poverty will not improve in 2011, given the failure of the unemployment rate to decline in 2010. Moreover, the economy continues to struggle; GDP grew by less than 1% in the first half of 2011.

CBPP also suggests that 2011 will probably result in even worse poverty ratings. At the end of this year, the Recovery Act stimulus, which was a response to the economic downward spiral, is set to expire. If Obama’s jobs act doesn’t pass Congress, many Americans will lose their unemployment insurance benefits and the payroll tax cut will disappear.  Though the economy has experienced a slight boost since 2009, job growth remains slow. Obama recently proposed a new jobs creation plan to help get Americans working as soon as possible.

Read CBPP’s other predictions here.