A Census Report today showed poverty, by some measures, at its highest since the Great Depression. (Flickr/Valerie Everett)

Today, the Census Bureau announced that one in seven Americans lived in poverty last year. Reporting income and poverty statistics for 2009, the Bureau said median income did not change substantially, remaining around $49,800. But the poverty rate climbed to 14.3 from 13.2 percent. That means that during 2009, 43.6 million people lived on less than the equivalent of $21,756 for a family with two adults and two children.

[Economy1] “Last year we saw the depths of the recession, including historic losses in employment not witnessed since the Great Depression,” President Obama said in a statement in response. “[The data] illustrates just how tough 2009 was: Along with rising unemployment, incomes failed to rise for the typical household, the percentage of Americans without health insurance rose to 16.7 percent, and the percentage of Americans living in poverty increased.”

He also hailed the Recovery Act, or stimulus, programs that kept 2.3 million Americans above the poverty line.

On a call with reporters, Heidi Shierholz, an economist with the Economic Policy Institute, described the statistics as “yet another reminder of the severity of the Great Recession,” which started at the end of 2007, ended sometime last year and has been followed by a sluggish recovery.

“Most simply, the labor market is the core building block of family incomes,” she said, explaining that the precipitous rise in the unemployment rate has fed the increase in poverty. “The big jumps in poverty and declines in income are no surprise, given the deterioration of the labor market.”

Between 2007 and 2009, the unemployment rate climbed from 5.8 to 9.3 percent — the biggest two-year increase on record. And economists project that the average annual unemployment rate will continue to rise through 2011 — an unprecedented four year, year-on-year increase. For that reason, Shierholz said that the poverty rate will likely increase for the next year or two as well.

The statistics contained within the report are striking. The proportion of Americans living in “deep poverty,” with incomes less than half of the poverty line, hit a record high of 6.3 percent — meaning nearly 20 million Americans live on less than $11,000 a year for a family of four. One third of black children live in poverty, and more than 20 percent of all children live in poverty. The number of people without health insurance increased for the first time ever, to 50.7 million, up more than 4 million since 2008.

The stimulus did help save more than 2 million families from poverty, and most provisions did not come into their full effect until 2010. For instance, the poverty rate declined for the elderly, whose Social Security benefits got a bump in 2009 due to an American Recovery and Reinvestment Act provision. “Today’s report is ugly,” Shierholz said. “Without ARRA it would have been a lot uglier.”

The United States measures poverty by pre-tax income. Therefore, salary, wages and cash income such as unemployment insurance benefits count, but non-cash benefits like food stamps do not. (It should be noted, though, if unemployment insurance is a person’s only income, he or she falls below the poverty line.)

Many social scientists argue the government should make the poverty threshold a function of how much a family or individual spends, rather than how much they make. Say, for instance, both earners in a wealthy two-earner household lost their jobs one year. They might live off of savings, draw down their retirement accounts and take out a line of credit to keep their heads above water. But they would still count in the poverty statistics due to their lack of earnings.

The measure skews the picture in other ways, as well. Bruce Meyer, a professor at the Harris School of Public Policy at the University of Chicago, argues, “[The poverty measure] does not do a good job of capturing differences in well-being across groups. It sharply increases the poverty rate of the elderly, even though other indicators of well-being show that the elderly are better off than other groups. It reduces (at least relative to other groups) the poverty rate of children, although other measures indicate they are more disadvantaged.”

But next year, the government is making the poverty measure more nuanced — adding a supplemental poverty yardstick. The new measure will take into account cost-of-living differences across the country. It will also weigh the cost of utilities, child care and health care, and the amount of federal and state assistance, including non-cash benefits like food stamps, a person or family receives.

That measure is expected to show many more families living in impoverished conditions. Indeed, the last decade has been punishing for lower-income and working-class Americans. In Congressional testimony last year, Rebecca Blank, undersecretary for economic affairs in the Commerce Department, noted that poverty did not fall during the economic expansion of the 2000s.

“[T]he poverty rate always rises steeply during recessions, but falls during expansions,” she said. “[P]overty fell by 1.5 percentage points during the expansion of the 1980s and by almost 3 percentage points during the expansion of the 1990s. In the recession of 2001, poverty went up as anticipated, but never really came down. Rather than falling, poverty rose by eight-tenths of a percentage point during the expansion of the 2000s, so that a higher share of the population was poor in 2007 than in 2001.”

Speaking on a call with reporters today, Lawrence Katz of Harvard concurred. Calling the Census report the “most detailed look to date of the human cost and the severity of this recession,” he noted the extended decline or stall-out in real incomes for most workers.

“For the typical American family,” he said, “a decade has gone by in which real incomes have fallen, and have fallen by five percent.” He noted that only households headed by workers with professional or advanced degrees withstood the period without income declines.

“People talk about a lost decade,” he said. “We’ve already had it.”

The demographers estimate the poverty rate will increase year-on-year from 13.2 percent to about 15 percent. That means one in seven Americans, some 45 million people, lived in poverty last year, the “highest single-year increase since the government began calculating poverty figures in 1959.” The rate is already above the previous high of 13 percent, which came during the energy crisis in 1980. From The AP’s report:

Among the 18-64 working-age population, the demographers expect a rise beyond 12.4 percent, up from 11.7 percent. That would make it the highest since at least 1965, when another Democratic president, Lyndon B. Johnson, launched the war on poverty that expanded the federal government’s role in social welfare programs from education to health care.

Demographers also are confident the report will show:

• Child poverty increased from 19 percent to more than 20 percent.
• Blacks and Latinos were disproportionately hit, based on their higher rates of unemployment.
• Metropolitan areas that posted the largest gains in poverty included Modesto, Calif.; Detroit; Cape Coral-Fort Myers, Fla.; Los Angeles and Las Vegas.

To classify as impoverished last year, a family of four needed income of less than $22,025 — $17,163 for a family of three, $14,051 for a family of two and $10,991 for individuals.

This spring, the Obama administration decided to update how the government defines poverty, to give a clearer picture of how many families and individuals are really in need. In March, the Census Bureau started developing a new poverty measure, to go alongside the standard rubric. (The government plans to use the supplemental measure starting next year, with 2010 data.)

The current poverty yardstick, in place since the 1960s, gauges poverty by a family’s cash income. The new measure will take into account cost-of-living differentials, as it is much more expensive to live in, say, New York than Omaha. It also weighs the cost of utilities, child care and health care, and the amount of federal and state assistance — such as SNAP benefits (formerly, food stamps) — a person or family receives.

Even by the old yardstick, the data the Census Bureau will release this week should look grim, with more than 40 million individuals living in families with income below the poverty line.

Rebecca Blank, undersecretary for economic affairs in the Commerce Department, expanded on the rise in poverty in the recession in congressional testimony (PDF) last year. She noted that poverty did not fall during the economic expansion of the 2000s, as economists would have expected — more evidence of the 2000s as a “lost decade” for most working Americans.

“[T]he poverty rate always rises steeply during recessions, but falls during expansions,” she said. “[P]overty fell by 1.5 percentage points during the expansion of the 1980s and by almost 3 percentage points during the expansion of the 1990s. In the recession of 2001, poverty went up as anticipated, but never really came down. Rather than falling, poverty rose by eight-tenths of a percentage point during the expansion of the 2000s, so that a higher share of the population was poor in 2007 than in 2001.”

That means poverty increases during the great recession came on top of an elevated base.

Home sales had increased precipitously in March and April as homebuyers rushed purchases to take advantage of the Obama administration’s homebuyer tax credit, which offered first-time buyers $8,000 and others $6,500. Effectively, March and April borrowed buyers from May and June, and therefore economists anticipated a steep decline.

But as Paul Krugman notes: “We’re still in a liquidity trap, with Fed policy constrained by the zero lower bound. And a liquidity trap world is a paradox-of-thrift world, in which the virtuous individual decision to save more is a vice from the point of view of the economy as a whole. For now, it’s actually a good thing that consumers are behaving irresponsibly.”

The Bureau of Economic Analysis cites growth in personal consumption (that is, consumer spending), private inventory investment (stores restocking their shelves), exports and nonresidential fixed investment (business purchases of things like wells, hotels, computer systems and plumbing) as the major factors accounting for the growth. Consumer spending increased at a 3.6 percent pace, the strongest in more than three years.

Of course, GDP is just one number among many. But the slowdown in its pace of growth is a sign of how strong the headwinds remain as the government withdraws its crisis programs and unemployment remains high (a lag on GDP growth, because all those unemployed people are not producing much, nor are they consuming much). The stronger the growth, the faster the United States fills its output gap.

Premier Wen Jiabao aimed sharp words at Washington on Sunday, ceding little ground on China’s currency policy and suggesting that U.S. efforts to boost its exports by weakening the dollar amounted to “a kind of trade protectionism.”

Perhaps now Treasury Secretary Tim Geithner can certify that they are manipulating their currency and Commerce Secretary Gary Locke will impose economy-wide sanctions? Don’t hold your breath. The Treasury Department declined to comment on Wen’s statement, and the State Department referred all questions on the yuan to the Treasury Department.

Even more shockingly, Wen denied that the Chinese currency was undervalued at all.

“First of all, I do not think the renminbi is undervalued,” Mr. Wen said, using the Chinese currency’s official name. “We are opposed to countries pointing fingers at each other or taking strong measures to force other countries to appreciate their currencies. To do this is not beneficial to reform of the renminbi exchange-rate regime.”

Wen’s comments come despite the fact that the yuan is pegged to the dollar but is only allowed to float within a defined band below the dollar, in order to encourage exports. The Wall Street Journal notes that earlier this month, Chinese officials even acknowledged that.

He didn’t repeat the language used this month by central bank Gov. Zhou Xiaochuan, who had said the yuan’s de facto peg to the U.S. dollar is a “special” measure that will eventually end. But Mr. Wen repeated previous statements that reforms to the currency system will continue. While he didn’t rule out the possibility that the yuan could rise against the dollar, he argued that it doesn’t need to.

Need is, of course, a matter of perspectives. U.S. exporters have been arguing for years that the yuan needs to be revalued in order to establish a fair trade system.

Wen, however, continued with his somewhat ironic pronouncements.

“I can understand that some countries want to increase their share of exports,” Mr. Wen said, in an apparent reference to the Obama administration’s goal. “What I don’t understand is the practice of depreciating one’s own currency and attempting to press other countries to appreciate their own currencies solely for the purpose of increasing one’s own exports,” he added. “This kind of practice I think is a kind of trade protectionism.”

In other words, China has an explicit policy by which it keeps the yuan weak in order to increase its exports and has constantly resisted pressure from the U.S. and EU to float its currency, which everyone (including China) believes would reduce its exports. Yet when the dollar is weak due to an economic crisis and low interest rates designed to stave off collapse — as opposed to massive monetary interventions, which would be reflected in higher rates of inflation, which the U.S. doesn’t have — Chinese leaders accuse other countries of engaging in the same trade-distorting monetary practices that China uses in order to pressure them to allow their currency to appreciate.

Gross domestic product expanded at an annual rate of 3.5 percent in the three months ending in September, a significant spike from a relatively shrunken base. The economy had contracted at annual rates of 0.7 percent and 6.4 percent in the first and second quarters of this year, respectively.

The new numbers from the Commerce Department are likely to provide cold comfort for out-of-work Americans  — the national unemployment rate hit 9.8 percent in September, job growth historically trails other economic indicators, and GDP presents a very broad snapshot of the economy — but they could suggest a recovery is on the way.

“I think he had buyer’s remorse,” one GOP senator told me.  “After he looked into it more, he said, ‘Whoa, this was a mistake.’”

“He’s been getting Republicans walking up to him saying, ‘Are you going to let the White House circumvent you, are you going to let them do this to you?’” one GOP aide who is aware of those conversations told me Thursday night.  “This was a natural conflict that was going to arise, and on a personal level, politics aside, people were saying ‘Hey, are you sure you want to do this?’”

York concludes that “the Census issue is likely to intensify” post-Gregg, which is a leap of faith: the White House was only considering shaking up the Census after the Congressional Black Caucus (and other Democrats) balked at the idea of Republican Gregg, who’d opposed statistical “sampling” reforms (which could count more minorities), running the show.

Right now Republicans can do what they had been doing and put heat on the White House not to devolve the management of the Census to the White House. They can bring it up in hearings; they can introduce a bill that the Democrats will almost surely table. But their leverage is gone. Assuming the White House doesn’t choose another Republican to run Commerce — and given the way everyone not named “Robert Gates” or “Ray LaHood” has acted, that’s a strong possibility — the GOP has lost the chance to have a high-level advocate against Census sampling in the administration. If the next commerce secretary agrees with the White House and CBC on sampling, then there will be sampling, no matter what happens to the actual management of the Census.

Nevertheless, for a Republican Party desperately careening from message to message, from “Drill Baby Drill” to “The Future is Cao,” Gregg’s move has rallied the troops and provided them with a set of organizing principles around which to begin rebuilding their tattered brand—or at least to sully Obama’s sterling brand.

OK, I’ll ask: What organizing principles?

Before the Gregg withdrawal, Republicans were piling on the White House for trying to devolve some (not all) of the management of the Census from the Commerce Department to the White House. Is that the new Republican rallying cry? No, it’s another example of the party careening from message to message.

If 2010 rolls around and the GOP is running “Return full Census management responsibilities to the Department of Commerce!” ads in swing states, obviously, I’ll eat my words.

CQ’s Jonathan Allen points out that Gregg, one of the upper chamber’s most vocal fiscal hawks, voted twice in 1995 to abolish the department — once in the Budget Committee and once on the Senate floor. From CQ:

Gregg’s 1995 votes were cast for the fiscal 1996 budget resolution, a nonbinding blueprint that outlined the GOP’s fiscal priorities after Republicans won full control of Congress for the first time in 40 years.

The Senate version of the controversial measure envisioned spending cuts of more than $960 billion, almost half of it from Medicare and Medicaid. Democratic efforts to amend it were uniformly rebuked by a united GOP majority on the Budget Committee.

Ultimately, the Commerce Department survived, and Gregg has since shown more interest than most of his Republican colleagues in funding some of its agencies, particularly the National Oceanic and Atmospheric Administration.

Gregg also fought President Bill Clinton’s efforts to increase funding for the Commerce Department to administer the 2000 census. Indeed, Gregg’s commitment to basic functions of the department has been questioned at times.

“He was generally pretty harsh on them and not really interested in their programs, especially the commerce side of things,” said a Democratic appropriations aide.

A Republican staffer was even more blunt, telling CQ: “I guess if you can’t destroy it, go be in charge of it.”

It brings back memories of John Bolton, the United Nation’s critic who later became U.S. ambassador to the U.N. And it begs the question: At what point do we stop blaming Obama’s candidates (think: Tim Geithner; Tom Daschle; Larry Summers), and start questioning the judgment of the guy who wants them at his ear?