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US inflation eroded 2022 incomes, poverty jumped as pandemic support ended, Census says

WASHINGTON – Inflation-adjusted income fell and a key poverty measure rose sharply last year as the US economy continued its rocky emergence from a once-in-a-century pandemic, the US Census Bureau reported on Tuesday.

The income and poverty data released by the Census showed how deeply the country’s recent economic outcomes were influenced by the Covid-19 health crisis and the government response to it – with a measure of child poverty more than doubling following the expiry of pandemic-era child tax credits last year, and the worst inflation in 40 years undercutting household spending power.

The child poverty rate, based on a supplemental measure that adjusts for government benefits and household expenses, jumped to 12.4 per cent in 2022 from 5.2 per cent in 2021.

Overall the supplemental poverty rate rose to 12.4 per cent in 2022 from 7.8 per cent in 2021, a change Census officials said was also driven largely by the expiration of pandemic-era programmes.

Compared to 2019, before the pandemic, the overall supplemental rate was slightly higher than the 11.8 per cent seen in 2019. The so-called official poverty rate was largely unchanged from 2021 at 11.5 per cent.

Family incomes, meanwhile, largely failed to keep up with a 7.8 per cent jump in consumer prices that was the largest since 1981.

Real median household income fell by 2.3 per cent to $76,330, which Census officials said was about 4.7 per cent below 2019.

The report offers one of the first clear glimpses of how the economy fared coming out of a health shock that shuttered stores and factories in 2020 and continued to stifle activity through much of 2021. The performance of the US economy continues to confound, with stronger than expected growth despite rising Federal Reserve interest rates, yet with inflation still elevated as well.

The current unemployment rate of 3.8 per cent is comparable to what it was in 2019, and census officials noted that some aspects of the economy appear stronger than before – with record numbers of women in the workforce, for example, and a poverty rate among Black Americans which, while far higher than the national average at 17.1 per cent, hit a record low last year.

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Household income also rose slightly for African American and Hispanic-headed households, while declining for others.

The changes in US job patterns coming out of the pandemic, when the competition for labour was fierce among restaurant and other service businesses desperate for employees, also benefited lower-income and less educated workers. Inflation adjusted median income rose 6.4 per cent for households whose head did not graduate high school even as it fell for those with high school or college degrees.

But even some of the positive points continued to be distorted by the pandemic.

On a pre-tax basis, the United States last year registered a 1.2 per cent decline in income inequality as lower- income workers registered slight wage increases while real incomes dropped for middle and upper-income earners. It was the first statistically significant drop in income inequality since 2007.

Yet the expiry of pandemic era refundable tax credits offset that, with income inequality on an after-tax basis rising more than 3 per cent. REUTERS

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