WASHINGTON // The ranks of the nation's poor have swelled to a record 46.2 million, or nearly 1 in 6 Americans, as the prolonged pain of the recession leaves millions still struggling and out of work. And the number without health insurance has reached 49.9 million, the most in more than two decades.
The figures are in a Census Bureau report, released on Tuesday, that offers a sombre snapshot of the economic well-being of US households for last year when joblessness hovered above 9 per cent for a second year. The rate is still 9.1 per cent at the start of an election year that is sure to focus on the economy and President Barack Obama's stewardship of it.
The overall poverty rate climbed to 15.1 per cent, from 14.3 per cent the previous year, and the rate from 2007-2010 rose faster than for any similar period since the early 1980s. For last year, the official poverty level was an annual income of $22,314 (Dh81,892) for a family of four.
Measured by total numbers, the 46 million now living in poverty are the most on record dating back to when the census began to track in 1959. The 15.1 per cent tied the level of 1993 and was the highest since 1983.
The share of Americans without health coverage rose from 16.1 per cent to 16.3 per cent, according to Census Bureau revisions. The increase was due mostly to continued losses of employer-provided health insurance in the weakened economy.
The uninsured rate for adults 18 to 24 actually declined last year, from 29.3 per cent to 27.2 per cent, said Brett O'Hara, chief of the Health and Disability Statistics branch at the Census Bureau. That was the only age group that posted a decrease, and he said "the law change certainly could be a factor."
For last year, the median - or midpoint - household income was $49,445, down 2.3 per cent from 2009.
The poor include Nekisha Brooks, 28, of Fort Washington, Maryland, who lost her job as a customer service representative for AT&T several months ago in a round of layoffs. Raising five young children, she is now on food stamps and partly leaning on friends and family for help.
"It's hard on the kids," Ms Brooks said, describing how her family has had to cut back on clothing and restaurant outings. "I've been putting in job applications every day and calling around, from housekeeping to customer service to admin or waitresses, but nobody seems to be hiring right now."
Bruce Meyer, a public policy professor at the University of Chicago, said the worst may be yet to come in poverty levels, citing in part continued rising demand for food stamps this year as well as "staggeringly high" numbers in those unemployed for more than 26 weeks. He noted that more than 6 million people are in the category of long-term unemployed and more likely to fall into poverty, accounting for more than two out of five currently out of work.
The latest numbers, which cover Mr Obama's second year in office, offer political fodder for both parties as Mr Obama seeks to push a new $447 billion plan for creating jobs and stimulating the economy. The plan includes a proposed Social Security payroll tax cut and an extension of unemployment benefits.
Mr Obama is urging Congress to pay for the new spending largely by increasing taxes on the wealthy, which Republicans have emphatically rejected.
According to the report, the gap between the rich and poor widened last year, at least based on some measures. For instance, income fell for the wealthiest - down 1.2 per cent to $180,810 for the top 5 per cent of households. But the bottom fifth of households - those making $20,000 or less - saw incomes decline 4 per cent.
Other measures pointed to a longer-term widening of income inequality but with little change in 2010.
On Tuesday, the Census Bureau also noted the effect of government safety-net programmes on the poor. It estimated that new unemployment benefits passed in 2009, which gave workers up to 99 weeks of payments after layoffs, and did not run out for most people until this year, lifted 3.2 million above the poverty line. Social Security kept about 20.3 million, elderly people as well as working-age adults receiving disability payments, out of poverty.
"If these programmes are cut back in the future, poverty rates are likely to rise even more," Mr Meyer said.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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