In the annual poverty report released by the U.S. Census Bureau, the country's child poverty rate has more than doubled year-over-year, surging from 5.2 percent in 2021 to a distressing 12.4 percent in 2022.
According to the Supplemental Poverty Measure (SPM) of the Census Bureau, the expiration of pandemic-era programs primarily contributed to the growing figures. There were no stimulus payments last year, and the enhanced child tax credits expired in 2021.
The official poverty rate for 2022 was 11.5 percent, representing the 37.9 million people living in poverty. The official poverty measure compares pretax income to a poverty threshold adjusted by family size, number of children and age, as well as the SPM, which accounts for income and payroll taxes, tax credits and other benefits, while subtracting expenses like medical costs, child-support payments and childcare expenses,
"Millions of kids across the U.S. are living in real poverty – going without sufficient food, shelter and access to opportunities – not because we lack the resources to fix this injustice, but because we choose not to," said Oxfam America in a statement responding to the Census Bureau's latest figures.
Nikhil Goyal, a former senior adviser to Sen. Bernie Sanders (I-VT) on education and children, noted how the enhanced federal child tax credit was important for families who likely were already struggling under the weight of state and federal taxation. The credit gave eligible households with children $250 to $300 a month for several months in 2021 and it lifted approximately 5.3 million people, including 2.9 million children, out of poverty.
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Inflation, other contributing factors put most households on the brink of poverty
Goyal warned that tough times could persist, with other pandemic programs like emergency rental assistance winding down and inflation remaining a factor. While inflation is only a contributing factor to the "more than doubled" rate of child poverty in the U.S., it is still a factor and it plays its part as American households are now on the brink of poverty. (Related: Inflation, natural disasters and food shortages expected to worsen in 2023.)
For instance, the consumer price index had the highest increase in August with 0.6 percent. If this trend persists, the annual inflation rate could exceed seven percent. However, some economists argue that if measured using the methods employed in 1980, the inflation rate would be even higher, potentially reaching double-digit figures.
Similarly, auto loan delinquency rates have reached their highest levels since 2008, nearly doubling since the Federal Reserve began raising interest rates in March 2022. In the second quarter of 2023, the U.S. witnessed an auto loan delinquency rate of 7.3 percent, surpassing pre-pandemic levels. Moody's forecasts that auto loan delinquencies could hit 10 percent in 2024.
Even major companies are affected by this inflation. Most of them are shedding jobs, just like how Blue Harvest Fisheries, the largest groundfish company on the East Coast, recently filed for Chapter 7 bankruptcy. FedEx announced layoffs in its IT and Finance departments, while Google is cutting hundreds of jobs in its global recruiting organization.
JPMorgan Chase CEO Jamie Dimon – known for his optimism – warned that the Ukraine conflict, the Federal Reserve's monetary tightening and the increasing reliance on government spending are just some of the other factors that could further destabilize the economy.
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