On August 26, the Census Bureau is likely to report a small--and probably statistically insignificant--increase in the 2007 poverty rate. Because this number will represent an average of the 2007 calendar year figures, and will not include data for the first six months of 2008, it projects a far rosier scenario than current reality. A month-to-month look at the factors correlated with the poverty rate--such as employment and earnings--reveals that they suffered in the latter half of 2007 and continued in that mode through at least the middle of 2008. If historical relationships hold, that would suggest that, between mid-2007 and mid-2008, poverty increased by about 0.4 percent, or by roughly 1.2 million people.

The Census Bureau is also likely to report a modest increase in real median income for calendar year 2007, similar to the 0.7 percent 2006 increase. But, again, this yearly average obscures the downward economic trend that began in the second half of 2007. For all of 2007, employment grew by an average 95,000 jobs per month. However, the ongoing housing market downturn and the credit difficulties in financial markets impaired income growth from the third quarter of 2007 onward. Thus, while real GDP growth for the entire year of 2007 was approximately the same as in 2006, real GDP and employment growth slowed markedly in the fourth quarter of 2007. In the first half of 2008, the economy lost around 50,000 jobs per month, and GDP growth over the last three quarters (Q3 and Q4 of 2007 and Q1 of 2008) barely averaged 1 percent.

At this AEI event, poverty research consultant Richard Bavier, AEI economist Desmond Lachman, and Urban Institute poverty expert Linda Giannarelli will discuss the meaning and implications of these revealing and updated poverty and income figures. AEI’s Jacobs Scholar, Douglas J. Besharov, will moderate.