In U.S. recession, poverty strikes middle class

Thu Jan 15, 2009 9:33pm EST
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By Lucia Mutikani

WASHINGTON (Reuters) - Chaun Frost ran up her credit cards in when the U.S. economy was booming, and now the single mother is paying a heavy price.

To service her debt and buy food for her two children, she has taken a second job selling pizza on weekends and some week nights, supplementing the $2,200 a month she earns from her job coordinating volunteers at a children's hospital.

"We have been hurt by the current state that the economy is in," said Frost, 32. "I am part of the new working poor."

About 37.3 million Americans were living in poverty in 2007, or about 12.5 percent of the population, according to the government, which defines poverty as an annual income of $21,203 or less for a family of four.

Figures due out in August will show that rose by about half a percentage point last year, analysts estimate, and more and more people like Frost will slip into poverty this year as the recession takes hold.

In many ways, Frost is typical of the many middle class people in the current recession who are falling into poverty.

Many of the decisions she made seemed smart at the time. Some of her many debts were accumulated as student loans. She also makes monthly payments for a big car whose value is now less than the amount she owes on it.

Repayments on the car and insurance bills are almost as much as the $850 rent for the modestly furnished two-bedroom apartment she shares with her 11-year-old son and a 9-year-old daughter in Washington.   Continued...

<p>A homeless man sits on a bench with a cup of chili that he received from the Salvation Army's "Gate Patrol" in Washington, December 9, 2008. The Patrol runs every night providing food and clothing in the city for up to 200 homeless people and the working poor. Picture taken December 9, 2008. To match feature USA-ECONOMY/POVERTY REUTERS/Jim Young</p>