The Household Index of Poverty continues to rise

By James Corbett

The Household Index of Poverty is the most sensitive calculation of U.S. economic performance and it is rising faster than at any time in history. Poverty in America rose 43% under her leadership, from November 2006 to November 2010.

The Household Index of Poverty is a simple, equal-weighted calculation of the five important statistics regarding poverty: The first two address inflation (food and fuel), the next two include the impact of unemployment (U6 Underemployment and Food Stamp demand) and the last is the Federal Debt, which is the long-term poverty statistic for all households.

The components are:

11/06 11/10 % difference

Food Inflation 38.1 42.9 12%

T-giving Dinner, in $US

Fuel Inflation 59.4 84.1 14%

Price of oil, per barrel

Unemployment 8.1 17.1 111%

% of U6 underemployment

Food Stamp Demand 26.1 43.1 65%

Recipients, in millions

Federal Debt 8.9 13.9 56%

Amount in trillions, $US

------- -------- ----------

Totals 140.6 201.1 43%

The Calculation of Poverty

Separately, each of these statistics has been closely monitored for decades. Unemployment was higher in the Great Depression, inflation rose faster in the 1970s and the price of a barrel of oil was quite low for decades before spiking to its highest price ever in 2008.

However, all five Index components have reached painfully high levels simultaneously. On even closer examination and with an historical perspective, the Household Index of Poverty is at a dangerously high level and it is expected to get worse still:

* With another Debt Ceiling increase coming, the all-time high $14 trillion of Federal Debt is equal to 94% of the total U.S. GDP and fast approaching the suffocating level of 100% GDP. It is now more than $177,000 per household, more than double the average household income.

* In a slow-growth recovery, the Federal Reserve expects underemployment to remain stubbornly and painfully high, perhaps even increase further, for at least the next 2 years.

* The 43 million on Food Stamps is almost 14% of the total population, both all-time highs. That is fully one third of all of people in Japan and more than the entire population of Spain. With unemployment insurance expirations, Food Stamp demand will continue to rise.

* Although food and fuel inflation have risen at a slower pace than the other Index components, global demand and diminishing supply point to substantial increases of each in the next decade. Higher prices for both have already had a huge impact on many economies around the world. A gallon of petrol is nearing $8 in the Netherlands and the UK. Corn, wheat and sugar prices are all at all-time highs and food shortages and isolated riots have begun.

In handing over the Speaker's gavel, Madame Speaker offered a laundry list of her accomplishments. But her painful legacy is already quite clear. The Household Index of Poverty reveals that the poverty rate for every American household is at its highest and getting worse. The softer tone of political debate in Washington is no comfort at all to the millions in pain.