The first full year of the U.S. recession likely dragged down household incomes and pushed more Americans into poverty in 2008. The Census Bureau’s annual report on incomes, poverty and health insurance forecasts that the unemployment rate will rise to 10 percent, throwing more people into poverty even as the economy emerges from its worst slump since the Great Depression.

The projected decline in incomes may also reinforce predictions that consumer spending will play a limited role in leading the recovery as Americans conserve their resources and pay down debt. 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 latest figures indicate that the poverty rate probably rose to 12.8 percent last year from 12.5 percent in 2007 and household income probably slid from the 2007 level of $50,233. Analysts predict 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.

The latest census data captures the tip of the iceberg in terms of the adverse impact of the recession. As the ranks of the unemployed swelled, the number of Americans lacking health insurance probably also rose to 50 million from 47 million. The number of uninsured slipped to 46 million in 2007 from 47 million.

In 2007, the Census Bureau reported 37.3 million Americans living on an income below the official poverty threshold, which for that year was $21,203 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. The Brookings Institution projects the poverty rate will peak at 14.4 percent in 2011, based on forecasts for the economy from the Congressional Budget Office. Median household income may also register a decline. During the last economic expansion, median income never recovered to its 1999 peak of $50,641. The 2007 median income was $50,233.

The economy is expected to grow 2.8 percent this quarter before slowing to a 2.1 percent gain in the last three months of the year, according to the median of 59 forecasts in the monthly Bloomberg News survey of economists taken Sept. 3 to Sept. 9. The anticipated expansion won’t be enough to prevent the unemployment rate from reaching 10 percent for the first time since 1983, the survey showed.

The US economy contracted 1 percent from April through June, according to the Commerce Department. The drop was the fourth in a row, making it the longest contraction since quarterly records began in 1947.

With all of the negative pressure on families, it is more important than ever that the organizations that provide basic support for struggling families to secure the resources to operate. Unfortunately it is in times like these that nonprofits struggle and are forced to reduce staffing levels and cut back on client case loads.

How is your organization coping?

What new funding strategies have you implemented?

What is your plan to serve the growing needs of families?

Let us know.

Related posts:

1. Hard Economic Times Are Fertile Ground For Cultivating Loyal Customers
2. Stephen’s Twitter Weekly Updates for 2010-07-04
3. 2010 Forecasts Improvement In US The Job Market, For Some.
4. Big Help for Small Nonprofits in The Healthcare Reform Act
5. Herb Block Foundation Invites Washington, D.C.-Based Projects to Apply for Pathways Out of Poverty Program

Tags: census bureau, census bureau figures, census data, great depression, household incomes, household wealth, lacking health insurance, Poverty, poverty rate, poverty threshold, Social Responsibility, world war ii
Posted in Stephen's Blog