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Tuesday, August 29, 2006

Income, Poverty Stats: Two Tales of the Economy

This morning, the Census Bureau released its report, Income, Poverty, and Health Insurance Coverage in the United States: 2005.

Nationally, 2005’s 1.1 percent increase marked the first time that real median household income showed an improvement since 1999. The poverty rate remained statistically unchanged from 2004, which marked the end of four consecutive years of increases. That’s one tale of the economy.

But, as OMB Watch noted yesterday, the raw numbers are misleading unless historical benchmarks are taken into account. The economic tale that does so is not as sanguine.

For average workers, incomes are still below the 2001 pre-recovery level. In fact, 2005 marked the first time in at least 40 years that medium income fell in the fourth year of a recovery:

Change in Median Income During First Four Years of Economic Recoveries: Dollar Change by Fourth Year of Recovery (In 2005 Dollars) and Percentage Change

(Source: Center on Budget and Policy Priorities)

And you’d think the poverty rate would have to decrease four years after the economy had bottomed out and begun to recover. Again, for the first time in at least 40 years, not so today:

Change in Poverty Rate During First Four Years of Economic Recoveries' Four Year Period: Poverty Rate At End of Recession -- Poverty Rate Four Years Later/Percentage Point Change

(Source: Center on Budget and Policy Priorities)

The famous jobless recovery is becoming an increasingly unequal one.