EDITOR NOTE: I want to start by saying Happy New Year, and I pray that 2021 will yield better results than what we've seen this year. The largest surge in poverty in the US didn’t occur during the Great Depression, nor did it happen in the Great Recession. It took place in 2020, and it surged faster than at any time in recorded history. And despite the development of effective vaccines, it isn’t over. We’re facing a second lockdown amid a third wave of the virus. The pandemic has also mutated in Europe; the new strain, far more contagious, is already well within US shores. There won’t be enough vaccines to inoculate all Americans. Fiscal and monetary stimulus will increase as the government attempts to put a lid on the pandemics' economic destruction. Your purchasing power will rapidly plunge as a result. The only thing standing between you and a severe decrease in wealth is the intrinsic value of sound money--specifically, non-CUSIP gold and silver. Without it, your wealth is 100% vulnerable to erosion. So take care of your health amid the pandemic, but don’t forget your financial well being, as it’s almost equally important in the new year.
Due to the coronavirus pandemic’s decimation of the labor market and the months-long expiration of benefits from the government relief package keeping families afloat, the poverty rate in the United States surged from 9.3% in June to 11.7% in November, according to a report released Wednesday by analysts at the University of Chicago and the University of Notre Dame, creating the biggest increase in a single year since the government began tracking poverty in 1960.
- In March, the federal government offered a relief package that included one-time stimulus payments (up to $1,200 per person) and greatly expanded unemployment insurance benefits, which actually resulted in the poverty rate declining in April, May and June.
- Poverty has risen sharply since, as the government has not issued a penny for additional stimulus checks, and several relief benefits have expired.
- The average unemployment payment from late March through the end of July was approximately $930, but it dropped to about $330 a week in August.
- Despite the country's official unemployment rate falling by 40%, from 11.1% in June to 6.7% in November, poverty steadily climbed each month over this period, with a total of 7.8 million Americans descending into poverty.
- To determine near-real-time estimates of poverty, the study’s researchers used data from the monthly Current Population Survey, a nationally representative survey of about 60,000 households each month.
According to the study, Black Americans, children and those with a high school education or less have disproportionately been impacted. Poverty rates for Blacks have risen by 3.1% since June. The poverty rate for individuals without a college degree has climbed from 17% in June to 22.1% in November. Approximately 2.3 million children under the age of 17 have fallen into poverty over the past six months.
WHAT TO WATCH FOR:
The study notes that poverty rates may continue to soar due to the expiration of additional benefits later this month. The last two federal emergency unemployment programs in the CARES Act (including Pandemic Unemployment Assistance, for those usually not eligible for regular unemployment insurance) are set to expire on December 26. According to a separate analysis by the Century Foundation, up to 12 million workers who rely on these programs will lose them on the day after Christmas, which will add to the more than 4 million Americans that have already exhausted their federal unemployment benefits.
“There are two ways to counteract this upward trend in poverty: One is a dramatic improvement in the labor market. The other is more support from the federal government,” said James X. Sullivan, a Notre Dame professor. “Given the state of the virus, I wouldn’t bet on significant improvement in the labor market in the short run.”
More than 14 million American households are at risk of eviction, according to a recent report by the global investment bank Stout, with nearly 5 million of those households expected to receive eviction notices starting January 1 when a ban issued by the CDC lapses.
Originally posted on Forbes