Biden team sees progress shifting economic gains to the poor By Reuters

Biden team sees progress shifting economic gains to the poor
© Reuters. U.S. President Joe Biden hosts a virtual roundtable on securing critical minerals at the White House in Washington, U.S., February 22, 2022. REUTERS/Kevin Lamarque 

WASHINGTON (Reuters) – Poorer Americans are seeing the benefit from strong U.S. economic growth, the Biden administration said on Wednesday, citing research suggesting that COVID stimulus and other measures may have eased inequality.

Researchers at the University of California, Berkeley, used new tools to evaluate growth in national income, and their data showed the economy was delivering gains to the bottom half of the income ladder, even without counting the pandemic aid.

After adjusting for inflation, adult labor and capital income – before taxes and government benefits – rose by 5.6% overall in the fourth quarter of 2021 compared to a year earlier, but it jumped by 10.9% for adults in the bottom half of the earning scale, it showed.

The data was highlighted in a blog published on Wednesday by the White House Council of Economic Advisers.

In recent decades, U.S. economic growth has increasingly rewarded the richest disproportionately, but Biden administration officials say the new data shows their policies are rebuilding a pandemic-scarred economy more equitably.

The data showed that so-called “market” incomes excluding government benefits for the bottom half of earners fell 25% in the second quarter of 2020 due to COVID-19 shutdowns, but rebounded by the fourth quarter of 2021, after adjusting for inflation, and were now 4% higher on average.

Income including government cash and other transfers also rose sharply due to pandemic relief, but has since tapered off, although it remains above pre-pandemic levels, the blog said.

Market incomes for the bottom 50% were 2% higher on average in the fourth quarter of 2021 than they before the pandemic, while disposable incomes were up 11%.

While all income groups saw incomes rising in 2021, those between the 50th and 90th percentile saw their market income grow more slowly than those in the bottom half or the top 10%.

The blog noted that Americans were not necessarily feeling better off, despite the income growth, and that many appeared concerned that inflation could wipe out these gains.

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