The number of people living in poverty last year has increased to 46.2 million as per a report by the U.S. government which is the highest in the last 50 years.
The annual income and poverty figure, released by the U.S. Census Bureau on Tuesday, indicates the impact of the recession on the nation.
It has been reported that one million more Americans went without health insurance. The bleakness of the economic situation of the nation has been revealed as household incomes have fallen sharply.
This alarming rate of poverty may make one wonder - like writer Arianna Huffington - if the U.S. is on the road to be a third world country.
The incapacity of the nation for creating jobs can be the major cause for the prolonging distress. In 2009, the total number of Americans who fell below the official poverty line was 43.6 million. Out of the 2.6 million added to the list, more than 60 percent have mentioned that they did not work even one week last year.
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The percentage of Americans who are devoid of health coverage rose from 16.1 percent to 16.3 percent. The rise was owing to sustained losses of health insurance provided by the employer in the weakened economy.
The poverty rate has increased to 22 percent among children. While among the black children, poverty rate has increased to 39 percent, and among the Hispanic children, poverty rate has touched 35 percent.
The white child poverty rate has reached 12.4 percent. The report clearly provides the new confirmation regarding the incapacity of the country for escaping the persistent outcomes of the recession.
The report has come on an occasion when President Obama is trying to get his jobs bill passed by the Congress. The latest figures will help him present the bill with more conviction.
The relevant question here will be the one raised by Arianna Huffington in her book 'Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream': Is the U.S on the path to become a third world country?
One critical aspect to be noted here is the rising economic power of China. Take the case of the communications and technology products China exports. The U.S. is no longer the top exporter is this sector. China has clearly overtaken the U.S.
In addition, China is developing its indigenous technology. It graduates more than 200,000 engineers every year who help it become an important player globally in the sector of high end manufacturing.
Take, for instance, the case of automotive industry. The cars from China are, as of now, ridiculed by the Western carmakers as being mere inferior copies of the high class products that they are making. Here one should remember that Toyota had received the same treatment in the 1960s. But today, the American carmakers are getting desperate to catch up with the growth of Toyota.
Another important aspect is that the U.S. trade deficit has been growing steadily since the 1970s. Its trade deficit has been increasing at a large rate since 1997. The United States reported a trade deficit equivalent to $45 billion in July of 2011.
This can affect the fate of the dollar. It has to be noted that China is shifting some of its massive foreign holdings into gold and away from the US dollar, undermining the dollar's role as the world's reserve currency. China plans to make its currency, the yuan, fully convertible for trading on international markets by 2015.
Buying gold and allowing the yuan to be traded freely would weaken the US dollar's dominance as the international reserve currency. The move would have major implications, making it more expensive for the U.S. government to borrow money and to run perpetual trade and budget deficits.
The last element within the third world phrase has to be concerned with enormous concentration of wealth within a small segment of the polity. The gaps in after-tax income between the richest one percent of Americans and the middle and poorest fifths of the country had more than tripled between 1979 and 2007.
There are other factors which will be contributing to third world status. This will include the state of education, health care, the infrastructure and a large middle class. The US education and health care systems are dangerously lagging behind the other first world nations. The U.S. is alone among developed nations in not having a universal healthcare system.
The U.S .is ranked 41st in the world for infant mortality rate and 46th for total life expectancy. The Organisation for Economic Co-operation and Development (OECD) found that the United States ranked poorly in terms of Years of Potential Life Lost, a statistical measure of years of life lost under the age of 70 that were amenable to being saved by health care.
All these factors warn the U.S. to take immediate measures to prevent the future from becoming worse.