Census: Income rose, middle class grew in 2007
But child poverty also rose, according to the new report.
From the perspective of their pocketbook, Americans had a good solid year last year.Skip to next paragraph
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The standard of living rose and the middle class grew while the number of wealthy actually shrank somewhat compared to 2006. At the same time, the official poverty rate was basically unchanged. And the number of Americans without health coverage fell for the first time during the Bush administration.
Those are some of the conclusions from the US Census Bureau's annual survey, a report that gives scholars a longer view of the nation's economic health.
From an economic point of view, this is the last official broad look at Americans' pocketbooks before the November election. As such, many Republicans will be cheered by the Census Bureau's snapshot. However, there are also some disturbing trends that will give Democrats, meeting in Denver this week, some fodder to criticize eight years of Republican control of the White House.
The Census Bureau found that child-poverty rose, mainly because the income of households headed by women fell. And overall incomes, while they grew 1.3 percent from 2006, were only on par with the high water mark set in 1999, once adjusted for inflation.
The survey is important as an official poverty measure and may affect how federal benefits are distributed to the states. But because the economy has turned sour this year, many Americans may wonder what the Census Bureau has been measuring.
The survey, taken in February, March and April of last year, will only partially reflect the economic problems that have beset the nation. For example, the economy last year continued to add jobs, albeit at a slower pace than previous years. Employers stopped adding to their workforce this March. The fall in housing prices won't be reflected in the survey either since home prices peaked in 2006 but did not start to seriously fall until last fall, shortly after the financial shock from subprime loans hit.
The survey also doesn't reflect the steep rise in gasoline prices. Between March of 2006 and March of 2007, prices at the pump were about $2.50 a gallon. However, when Census puts together its data for 2008, the price of gasoline will have gone up about $1 a gallon.
"We will see the real brunt of the mortgage crisis and energy crisis next year," says Mr. Zandi.
The report has not had much bearing on many recent presidential elections. But this year, Barack Obama is talking about raising taxes on high-income earners. States trying to bridge gaps in their budgets are discussing millionaires' taxes. "This makes the distribution of income more important economically and politically," says Zandi.