US poverty rate back to pre-crisis levels

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Women walk by a panhandler along Madison Avenue, one of Manhattan's premier shopping and residential streets on November 1, 2011 in New York City.Image source, Getty Images
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In the US 2.5 million people were no longer in poverty last year

A stronger US economy lifted American household incomes last year and drove the poverty rate down to the level seen before the financial crisis.

The median household income increased by 3.2% to $59,039 (£44,480), rising for a second consecutive year as more people found full time jobs.

At the same time, those living below the poverty line fell to 12.7%, the lowest since 2007, the US Census said.

Women's earnings also rose relative to men's for the first time in 10 years.

The US Census report, based on a survey of about 95,000 households, showed broad gains across most income, racial and ethnic groups.

The numbers reflect one of the longest economic expansions in US history, with more than six years of steady job growth. The unemployment rate fell to its lowest level since 2001 earlier this year.

According to the US Census report, the number of men and women working full time increased by 2.2 million from 2015 to 2016.

About 40.6 million people were living below the poverty line in 2016, defined as an annual income of about $24,500 for a family of four.

That number fell by 2.5 million from 2015, driving the poverty rate down from 13.5% to 12.7%. It was 12.5% in 2007.

'Safety net'

Scott Allard, a scholar with the Brookings Institution think tank and author of Places in Need, called the report "good news".

"They reflect the impact of sustained job growth and the help safety net programs provide to low-income families trying to grab the next rung on the ladder," he said.

Image source, Getty Images
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Unemployment in the US has fallen to a 16-year low

However, the richest families had some of the biggest gains.

The top 5% of families accounted for more than one fifth of total income in 2016, similar to the previous year. The average income in that group was more than $375,000, up more than 5.5% from 2015.

By contrast, the average income of the bottom 20% was $12,943, up 2.6%.

A higher percentage of black families were living in poverty than whites, Asians or Hispanics. Their median household incomes were also lowest of racial and ethnic groups at $39,490.

But black households also saw the strongest gains last year, with the median rising by 5.7% from 2015 to 2016.

Women with full time year-round jobs earned about $41,500, about 80% of what men make. Last year they made about 79% of what men made.

The study appeared to suggest that median household incomes have finally topped the previous record of about $58,670 set in 1999.

But officials said the numbers were not directly comparable because it had changed its questionnaire, so actual incomes may still be lower.