Poverty not trending with GDP in Illinois

By |2017-10-19T21:16:09+00:00September 23rd, 2014|Tags: , |0 Comments

Poverty not trending with GDP in IllinoisLast week, the new Census Bureau data revealed that Illinois’ poverty rate remained unchanged between 2012 and 2013. This graph contrasts the stagnant poverty rate with one measure of state economic performance as a whole. (Click for a closer look.)

Simply put, the GDP (Gross Domestic Product) is the estimated value of all the final goods and services produced in an economy. It is one of the most common ways to measure economic performance. Illinois’ GDP dropped between 2007 and 2009 because less value was added to the economy during the Great Recession.

The poverty rate is the percentage of people living below the poverty threshold ($11,888 for an individual in 2013). Often, the poverty rate and the GDP have an inverse relationship (see change from 2006-2007 on graph). In theory, a growing economy (Higher GDP), will tend to correspond with fewer people struggling to make ends meet (meaning Lower Poverty). When the economy contracts and everyone struggles (Lower GDP), more people are likely to fall below the poverty threshold (meaning Higher Poverty).

These two measures give us different ways of viewing the recovery in Illinois. While the state is doing better overall, the poorest in Illinois have not bounced back. In fact, the percentage of Illinoisans in poverty has only increased or remained the same since 2007.

[A note on statistical significance: While Census data are reliable estimates based on careful surveys done across the country, they can never give us a precise headcount of the exact number of people in poverty. Any statistic is really a best estimate within a given range of possibilities. If two statistics are too close to one another, and their ranges of possibilities overlap too much, then statisticians cannot confidently say that the numbers are really different. So while the poverty rate appears to dip from 2011 to 2012, the numbers are so close that they might as well be the same.]

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