Feature Story

November 25, 2008

RECESSION COULD CAUSE LARGE INCREASES IN POVERTY

Center on Budget and Policy Priorities

Sharon Parrott of the Center on Budget and Policy Priorities is the author of a new report estimating that the number of poor Americans will rise by 7.5 million - 10.3 million if the recession causes the unemployment rate to reach 9 percent, with the number of poor children rising by 2.6 million - 3.3 million.

The investment firm Goldman Sachs has projected unemployment at 9 percent in the last quarter of 2009.

The report also estimates very large increases in the number of people living below half the federal poverty line. (The 2008 poverty guidelines are $17,600 for a three-person family, for example; a family of that size with an income of less than $8,800 is below half the poverty line.)

The report also shows that poor people are far less likely to be lifted out of deep poverty by federal programs now than they were in 1995, and recommends federal action to prevent large increases in poverty.

Among the proposals recommended are a temporary increase in food stamp benefits (now called SNAP), additional rental assistance, improvements to the Temporary Assistance for Needy Families contingency fund, expanded unemployment benefits, and more aid to states.