Sluggish economy leaves more people in poverty

WASHINGTON (AP) -- With the economy struggling and the labor market sluggish, analysts predict that last year's rise in poverty and lower income may not be reversed soon.

A Census Bureau report shows the U.S. poverty rate rose to 11.7 percent in 2001 after nearly a decade of decline. Meanwhile, the median household income fell 2.2 percent to $42,228 after remaining flat the previous year, making it the first statistically significant decrease in a decade.

That double shot of bad economic news Tuesday came as the Conference Board reported a fall in consumer confidence for the fourth consecutive month, while stocks on Wall Street dipped to a four-year low.

"The signs are right now that this was a pretty healthy recession," said Tim Smeeding, an economics professor at Syracuse University. The income and poverty trends "look like the result of a recessionary kick and I can't imagine the 2002 figures are going to look any better."

The bureau reports income and poverty figures each September for the previous calendar year. The report released Tuesday, covering 2001, highlighted socio-economic trends that reversed some gains made in the booming 1990s.

Among the changes: 32.9 million people lived in poverty in 2001, up 1.3 million from the previous year, when the poverty rate of 11.3 percent was the lowest level since 1974.

And nearly all measures of income inequality indicate the gap between the rich and poor has widened since 1999, the Census Bureau said. Last year, incomes fell for every group except the very richest and very poorest.

Given the latest economic signs, Joel Naroff, an economist and president of Naroff Economic Advisers in Holland, Pa., predicted that poverty levels would not change substantially over the next year.

Median income, which refers to the point at which half of households earn more and half earn less, declined among all racial groups. Asians saw the biggest decline at more than 6 percent, followed by blacks at about 3 percent and whites and Hispanics at around 1 percent.