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Looking for an Uptrend? Try Poverty

25 July 2012 in Trading Ideas

An Associated Press survey of economists, think tanks and academics predicts that the amount of poor people in America will climb to its highest level since the 1960s.

The official figures, for 2011, will be known later this fall when they’re released by the census. But the survey’s consensus estimate was that the official poverty rate will climb to 15.7% from 15.1% in 2010. Several survey respondents predicted a smaller gain, but even a rise of one percentage point would put poverty at its highest level since 1965.

As the AP reported, poverty is spreading at record levels across many groups, from underemployed workers and suburban families to the poorest of the poor.

Unemployment, of course, remains a significant contributing factor. While the unemployment rate fell to 8.9% in 2011 from 9.6% a year earlier, the AP said the employment-population ratio has remained virtually unchanged as discouraged workers leaving the work force have offset those finding work.

A few other glum predictions for how 2011 ended, from the survey:

  • Poverty will remain above the pre-recession level of 12.5% for many more years. Several respondents predicted that peak poverty levels – 15% to 16% — will last at least until 2014, due to expiring unemployment benefits, a jobless rate persistently above 6% and weak wage growth. (It’s worth noting that poverty hasn’t fallen below 11.1% since 1973).
  • Suburban poverty, already at a record high of 11.8%, will rise again in 2011.
  • While poverty among people 65 and older will remain at historically low levels, buoyed, as the AP said, by Social Security payments, child poverty is expected to grow from its 22% level in 2010.

The 2010 poverty level was $22,314 for a family of four, and $11,139 for individuals.

Tags: poverty