Poverty is the state and condition of an individual or a community who is not able to meet the minimum standard of living. Eventually, it leads to a financial crisis and essentials requirements. The poverty line of an employee is determined when the income level of the employee is not sufficient to meet his and the family's daily needs. A poverty-stricken family or individual can go through starvation, no clean clothes, no proper food, no medication, and many other facilities. Each nation has its measuring lines to determine the poverty of the nation.

In the US, the poverty status is determined by the income bracket, which is not met by certain people of the nation. The Department of Health And Human Services (HHS) sets this status income bracket and the Bureau of the census in the US (Lee, 2018) calculates the percentage rate of the people in the poverty category. The study of the census reflects that poverty in the US is more than 40 million people in the year 2016.

Purpose Statement:

The paper evaluates and analyzes the influence of high poverty in economic scenarios.


Firstly, it has discussed the main context of the topic that for what reason some of the researchers think that poverty neighborhoods affect the economy.

Secondly, it has focused on the experiment and described the advantages of the experiment as well.

Thirdly, it has included the outcome of the experiment and the effect on adults and children.

Effect of Poverty on Economy

The federal spending of low-income people affects the total income in the economy. Due to the effect of poverty, the earning of the people reduces below the poverty income, which is determined by the appropriate department of the US. Therefore it impacts the percentage of the total income in the economy. These also resulted in a fall in the Gross Domestic Product in the economy. The decrease was measured in the trend of a decrease of 2% in the GDP rate of the US economy (Juknys et al., 2018). The spending in the early days in the country was more which resulted in more earning for the person or the family. But with the dates gradually passing, there was a fall experienced in the spending of the people from 35% in 1960 to 10% and less in 2014 onwards. The economy was also impacted by the social security spending which was reduced by 8.5% in 2012 reducing the group poverty. The increase in the income could rise to the per capita income. But with the stagnant income in the economy, there was a stagnant percentage of the GDP in the US. The income of the households was increasing relatively at a slower rate as compared to the rate of growth of inflation. The median income of people only grew by 21.2% until the year 2016. Poverty also saw a stagnant in the income of the bottom 60% of the earning people. This affected the unequal distribution of the wealth within the economy, creating a misbalanced economy.

The Motive of the Experiment

The experiment was started to understand the poverty measurement of the country. During the experiment, it was studied the economy of the US is also severely affected by poverty. The US being a developed country also faces the tantrums of poverty. The experiment and the study help considering that economical scenario. The root cause of the poverty emergence was identified. Identifying the root helps in understanding the reforms and measures which should be taken for the betterment of the situation. Also, the understanding and consideration of the GDP of the US economy were studied thoroughly. The changes in the figures of the GDP percentage over the years were noticed. The economical growth of a country fully depends on the function of the GDP and its function in the growth of the economy as a whole. The experiment highlighted the facts of how the earning of an individual is responsible to make an impact on the economy of a country like the US. The per capita income that is the earning of the individual of a country is responsible for bringing growth in the economy. The effects of poverty are drastically on the 60% of the earners in the US. It was found out how the changes and ideas should be implemented for the betterment of the economy. The inflammation rate of an economy is responsible for economical changes. It also determines poverty caused by the rate of the inflammation of the economy. The employment structure of the country was elaborately studied while experimenting. It could also be identified the amount of spending which was done among the economy determining the strength and confidence of the economy.

Setup of the Experiment 

The experiment was set up for understanding the poverty of the US and coming to the calculation of how it affects the country. The information and data were collected from external sources and the application was carried out. To understand the economical structure of a country like the US various indicators were to be taken into consideration. The measurement of the Gross domestic product and the per capita product were the primary consideration for tracking the economic scenario of the country. To understand the better consequence of the economical growth and poverty line the indicators were understood carefully to get the best output from the information.

Advantage of Running the Experiment

The advantages of running the experiment are to understand the indicators of measuring the economical condition of the country. These indicators determine and are impacted by the poverty condition of the country.

Real GDP - the real gross domestic product of the country helps in determining and understanding the total goods and services which is produced in an economy (Hulten, 2018). It also helps in measuring the wealth of the economy and hence the poverty percentage of the economy could be taken into consideration with this calculation.

Money Supply - Money supply also known as the M2 in an economy determines the circulation of the currency within the country's economy (Lu et al., 2017). The study of the circulatory flow of income and money helps in observing the money flow of the different sectors of the people. Therefore, the low-income poverty people were recognized.

CPI - The consumer price index, generally known as the CPI is put into the function for measuring the change in the prices of goods and services, which were distributed in the year or months (Konny et al., 2019). This indicator helps in measuring the inflation rate of the economy. Therefore, the capability to consume a higher-priced product by the consumers determines the earning capacity of the people.

PPI - The PPI helps in studying the change in the pricing of the goods, which are sold in the economy. The PPI, also known as a producer price index, is also one of the measuring indicators of inflation (Kowal et al., 2019). The earning of the people in the economy is determined by the spending capacity of the people on goods and services with inflation taken into consideration.

Confidence Survey of Consumer - The survey of the confidence of the consumer elaborates the situation of the US economy nation's mood as well as the public's pessimism or optimism (Bricker et al., 2019). This survey is generally used in the US to calculate the spending confidence of the people of the economy when they only have good financial conditions and employment.

CES - The CES, known as the Current employment statistics gives information regarding the total number of people employed, unemployed and records the wages earned by them. This statistics holds the data of the non-agricultural sector, including the government workers in the US (Manning, & Stewart, 2017). This indicator helps in gaining an understanding of the economic background. The employment rates will help in determining the well-being of the economy and the labor force of the country.

Retail Trade and Food Service Sales - This statistics is used in identifying the retail and foodservice sales that have changed from the previous year, either decreased or increased (Lukic, 2016). This helps in getting the statistical data of the number of consumption decisions made across the retail industries and food industry in the US. Therefore, giving a piece of wider information to the poverty of the people in the economy.

Housing starts - This indicator, also known as the new residential construction, is used in determining the total housing unit in the economy of the country in a period (Wu et al., 2016). This gives the information related to the mortgage rate which gets affected by the change in the interest rate of the bank. The people having the mortgage of their housing can be used to determine the stability of the economy whether leading to more poverty generation.

Sales and Trade of the Inventories - This is the indicator to measure the total shipment of the sales of inventories manufactured within a period. This provides the information related to the condition of the business in manufacturing and eventually selling those (Gallino et al., 2017). Poverty may influence the manufacturing and selling of inventories, which in return influences economic growth.


The gross domestic product and the per capita income of the country determine the economic scenario. It also helps in understanding the poverty rate and the improvement in the economical sense.


In the above figure, the gross domestic product and per capita income of the people in the US have been identified. The GDP rate of the country grew by 2.3% compared to its rate in the previous year. It is calculated to be 6-tenths of one percent less compared to the figure published in the year 2018 of 2.9%. The GDP of the country was calculated to $21,427,100 million, which was included in the ranking of the 196 countries. The GDP rose by $846,900 in comparison to the figure in 2018. The per capita income also saw an increase from the previous year by $2,593. However, poverty for the year 2018 in the US was 11.8%, which was down by 0.5 percentages that are 12.3% in 2017. The change in the poverty rate influenced the GDP, per capita income, and other indicators of the economy in the US. 

Effects of Poverty on Adults and Children 

Poverty hits the people, comprising the children and the adults drastically. The children are at greater risk as they are negatively influenced by the cause of poverty (Rasmussen, 2019). The poor academic conditions of the children are lead by poverty in the economy. The condition of malnutrition within the children is very common for the existence of poverty. They suffer from socio-emotional traumas, which generally arise due to the poor condition of living. The children mostly face abuse and negligence from society in their growth (Kim & Drake, 2018). The physical health problems in the development of the children are delayed due to poverty (Fitzsimons et al., 2017). Along with the children, the adults are also affected by the cause of poverty. Poor infrastructural livelihood is a situation, which arises from poverty. The placement within the adults is more due to the presence of poverty in the economy. Due to the presence of the basic services for the low income, the nutrition and the daily life of the people are impacted. The violence and aggression are seemed to be more for the cause. Various diseases arise due to the lack of proper health treatment of the people.


From the above content, it can be understood is that the country's economy is severely dependent on the poverty of the country. The indicators for understanding the economic condition of the country can be termed as Gross Domestic Product, per capita income, consumer price index, Current employment statistics, Sales and Trade of the Inventories, producer price index, Housing starts, and many others. Various researchers with proper evidence have discussed the influence of poverty on health, economy, children, society,

and violence. Even, this experiment has also proved that country’s economy can be affected by poverty as well. Through the calculations and understanding of the information provided by these indicators, the country helps in gaining the poverty rate of the country. Poverty has affected the GDP and per capita income of the country. Along with it the children, as well as the adults and families, are affected by the cause.







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