Forecasting Estimates of Poverty During the Covid-19 Crisis

To what extent will the COVID-19 pandemic increase levels of poverty in the United States? Official estimates of poverty in the United States are presented on an annual basis and with a considerable lag. In this brief, we apply a novel method for forecasting poverty rates in the United States using the Supplemental Poverty Measure (SPM) framework with a goal of providing projections of poverty rates throughout the COVID-19 crisis.

In our current model, we project that if unemployment rates rise to 30 percent, the annual poverty rate in the United States will increase from 12.4 percent to 18.9 percent. This represents an increase of more than 21 million individuals in poverty and would mark the highest recorded rate of poverty since at least 1967. Even with a quick recovery in employment rates after the summer, we project that the annual poverty rate will reach levels comparable to the Great Recession. Our current projections emphasize the urgent need for the provision of income assistance to all U.S. residents, with a particular focus on children and working-age adults who we find are at the greatest risk of falling into poverty. As we continue to develop the forecasting infrastructure, we will update poverty estimates to reflect the latest and most salient policy interventions, such as the CARES Act.