Washington Memo: 50 Years Later, War on Poverty Is a Mixed Bag

But looked at a different way, the federal government has succeeded in preventing the poverty rate from climbing far higher. There is broad consensus that the social welfare programs created since the New Deal have hugely improved living conditions for low-income Americans. At the same time, in recent decades, most of the gains from the private economy have gone to those at the top of the income ladder.

Half a century after Mr. Johnson’s now-famed State of the Union address, the debate over the government’s role in creating opportunity and ending deprivation has flared anew, with inequality as acute as it was in the Roaring Twenties and the ranks of the poor and near-poor at record highs. Programs like unemployment insurance and food stamps are keeping millions of families afloat. Republicans have sought to cut both programs, an illustration of the intense disagreement between the two political parties over the best solutions for bringing down the poverty rate as quickly as possible, or eliminating it.

For poverty to decrease, “the low-wage labor market needs to improve,” James P. Ziliak of the University of Kentucky said. “We need strong economic growth with gains widely distributed. If the private labor market won’t step up to the plate, we’re going to have to strengthen programs to help these people get by and survive.”

In Washington, President Obama has called inequality the “defining challenge of our time.” To that end, he intends to urge states to expand their Medicaid programs to poor, childless adults, and is pushing for an increase in the minimum wage and funding for early-childhood programs.

But conservatives, like Representative Paul D. Ryan of Wisconsin, have looked at the poverty statistics more skeptically, contending that the government has misspent its safety-net money and needs to focus less on support and more on economic and job opportunities.

“The nation should face up to two facts: poverty rates are too high, especially among children, and spending money on government means-tested programs is at best a partial solution,” Ron Haskins of the Brookings Institution wrote in an assessment of the shortfalls on the war on poverty. Washington already spends enough on antipoverty programs to lift all Americans out of poverty, he said. “To mount an effective war against poverty,” he added, “we need changes in the personal decisions of more young Americans.”

Still, a broad range of researchers interviewed by The New York Times stressed the improvement in the lives of low-income Americans since Mr. Johnson started his crusade. Infant mortality has dropped, college completion rates have soared, millions of women have entered the work force, malnutrition has all but disappeared. After all, when Mr. Johnson announced his campaign, parts of Appalachia lacked electricity and indoor plumbing.

Many economists argue that the official poverty rate grossly understates the impact of government programs. The headline poverty rate counts only cash income, not the value of in-kind benefits like food stamps. A fuller accounting suggests the poverty rate has dropped to 16 percent today, from 26 percent in the late 1960s, economists say.

But high rates of poverty — measured by both the official government yardstick and the alternatives that many economists prefer — have remained a remarkably persistent feature of American society. About four in 10 black children live in poverty; for Hispanic children, that figure is about three in 10. According to one recent study, as of mid-2011, in any given month, 1.7 million households were living on cash income of less than $2 a person a day, with the prevalence of the kind of deep poverty commonly associated with developing nations increasing since the mid-1990s.

Both economic and sociological trends help explain why so many children and adults remain poor, even putting the effects of the recession aside. More parents are raising a child alone, with more infants born out of wedlock. High incarceration rates, especially among black men, keep many families apart. About 30 percent of single mothers live in poverty.

In some cases, government programs have helped fewer families because of program changes and budget cuts, researchers said. For instance, the 1996 Clinton-era welfare overhaul drastically cut the cash assistance available to needy families, often ones headed by single mothers.

“As of 1996, we expected single mothers to go to work,” Professor Ziliak said. “But if they’re shelling out most of their weekly pay in the form of child care, they can’t make sense of doing it.”

The more important driver of the still-high poverty rate, researchers said, is the poor state of the labor market for low-wage workers and spiraling inequality. Over the last 30 years, growth has generally failed to translate into income gains for workers — even as the American labor force has become better educated and more skilled. About 40 percent of low-wage workers have attended or completed college, and 80 percent have completed high school.

Economists remain sharply divided on the reasons, with technological change, globalization, the decline of labor unions and the falling value of the minimum wage often cited as major factors. But with real incomes for a vast number of middle-class and low-wage workers in decline, safety-net programs have become more instrumental in keeping families’ heads above water.

The earned-income tax credit, for instance, has increased employment among single mothers and kept six million Americans above the poverty line in 2011. Food stamps, formally known as Supplemental Nutrition Assistance Program benefits, kept four million Americans out of poverty in 2011.

Above all, the government has proved most successful in aiding the elderly through the New Deal-era Social Security program and the creation of Medicare in the 1960s. The poverty rate among older Americans fell to just 9 percent in 2012 from 35 percent in 1959.

But for working-age households, both conservatives and liberals agree that government transfer programs alone cannot eliminate poverty. The answer, the White House has said, is in trying to improve households’ earnings before tax and transfer programs take effect.

“Going forward, the biggest potential gains that could be made on poverty would be in raising market incomes,” said Jason Furman, the chairman of Mr. Obama’s Council of Economic Advisers. “In the short run, that means things like the minimum wage, and in the long run, things like early education.”

If Congress approved a proposal to raise the federal minimum wage to $10.10 an hour from its current level of $7.25, it would reduce the poverty rate of working-age Americans by 1.7 percentage points, lifting about five million people out of poverty, according to research by Arindrajit Dube of the University of Massachusetts, Amherst.

But in the meantime, the greatest hope for poorer Americans would be a stronger economic recovery that brought the unemployment rate down from its current level of 7 percent and drew more people into the work force. The poverty rate for full-time workers is just 3 percent. For those not working, it is 33 percent.

Markets in Flux After Mixed Data Reports

U.S. stocks declined slightly on Monday after mixed economic reports, which showed a slowdown in growth in the U.S. services sector and a rebound in new orders for factory goods.

The technology sector was the day’s leading decliner after a downgrade by Morgan Stanley. Notes on Twitter and eBay weighed on the shares of both companies.

Despite the day’s decline, the Dow Jones industrial average and the S&P 500 were still significantly above than their 200-day moving averages - a move below these technical levels often triggers more selling.

In the United States, data showed the pace of growth in the services sector slowed for a second straight month in December while new orders for U.S. factory goods rebounded in November.

Globally, service industry growth slowed sharply in China in December but picked up across most of Europe, suggesting that an uneven global economic performance persists.

“We believe a slower, extended economic recovery provides a supportive backdrop for stocks,” said Jonathan Golub, chief U.S. market strategist at RBC Capital Markets, in New York. The firm raised its year-end target on the S&P 500 to 2,075, about 13 percent above current levels.

The Dow Jones industrial average fell 0.3 percent to close at 16,425.10. The S&P 500 ended the day at 1,826.77, while The Nasdaq Composite closed at 4,113.68.

Volume was expected to be lighter than usual due to icy conditions that snarled travel across the U.S. Midwest. Thousands of flights were canceled or delayed over the weekend, as forecasters warned that life-threatening cold was heading eastward.

Apparel retailer Men’s Wearhouse mounted a hostile bid for rival Jos. A. Bank Clothiers with an increased offer, days after the smaller rival raised its buyout defenses. Men’s Wearhouse shares gained 2.2 percent to $51.68, and Jos. A Bank shares added 4.5 percent to $56.87.

Twitter shares fell 3.9 percent to $66.29 after being downgraded by Morgan Stanley. The stock had surged nearly 70 percent in the past six weeks.

Morgan Stanley cut eBay to “neutral weight,” sending its shares down 2.8 percent to $51.78.

Ford Motor Co and its local partners boosted sales in China by nearly 50 percent last year, nudging past Japanese giants Toyota and Honda to make big inroads into the world’s largest auto market. Ford shares rose 0.7 percent to $15.58.

Solar panel shares were in focus. ReneSola rose 3.7 percent to $4.22 after the company secured a contract to supply solar panels to a solar project developer based in Japan. SolarCity jumped 9.1 percent to $64.67 after Goldman Sachs added the stock to its “conviction buy” list.

The U.S. Senate is set to vote at 5:30 p.m. (2230 GMT) to confirm Janet Yellen as the next chair of the Federal Reserve. Yellen, who has been the Fed’s vice chair since 2010, is poised to become the first woman to head the U.S. central bank. She is widely seen as continuing the policies set in place by Ben Bernanke, who will step down as Fed chairman at month’s end.

(Editing by Jan Paschal)

Markets Close Mixed, Buffeted by Jobs Data and Syria Concerns

U.S. stocks had a mixed close after volatile trading on Friday, after job market data removed some uncertainty about Federal Reserve policy and after Russian President Vladimir Putin said he would maintain his long-standing support for Syria if the West were to attack.

The Standard & Poor’s 500 index gained 0.09 points or 0.01 percent, closing at 1,655.17. The Dow Jones industrial average fell 14.98 points or 0.1 percent, to 14,922.50, and the Nasdaq Composite added 1.23 points or 0.03 percent, closing at 3,660.01.

For the week, the S&P 500 is up 1.04 percent and the Nasdaq is up 1.1 percent. The Dow is up 0.6 percent after four weekly declines.

The U.S. August payrolls report showed about 169,000 jobs were added, fewer than the 180,000 that had been expected, and July’s figure was revised sharply lower. The unemployment rate fell to 7.3 percent, its lowest since December 2008, though the decline reflected a drop in the share of working-age Americans who either have a job or are looking for one.

Many analysts said despite the weak jobs report the U.S. central bank would not adjust plans to slow its stimulus, currently at $85 billion a month in bond purchases.

Kansas City Fed President Esther George, a consistent hawk who has argued for a tapering in bond purchases all year, said reducing purchases to $70 billion a month could be “an appropriate next step toward normalizing monetary policy.”

Such a reduction would be in line with expectations that have been falling in the last few months.

“Tapering is going to happen but there is a wide range of opinions in terms of how much the Fed is going to taper,” said Joseph Tanious, global market strategist at JPMorgan Asset Management in New York.

“The market is comfortable with the idea (of winding down stimulus) as it is justified by economic growth,” he said, pointing to recent data including an almost eight year high in the pace of growth in the U.S. services sector.

Investors are continuing to assess the possibility of a U.S.-led strike against Syria in retaliation for an alleged chemical weapons attack against its civilians.

Putin made clear on Friday that Russia did not want to be sucked into a war over Syria, signaling that Moscow would maintain ongoing support to Damascus in the event of foreign military intervention.

Tanious said, getting clarity on Russia’s point of view helps ease some concerns about the implications of an attack on Syria, but any U.S. intervention is likely to impact oil and other markets.

“The (equities) market is jittery and that is understandable,” he said.

Energy prices have been among the most volatile on the issue, with investors concerned that military action in the Middle East will weigh on oil supplies. U.S. crude oil has spiked almost 4 percent over the past two weeks and was up 1.7 percent on Friday.

Facebook shares rose 3 percent to $43.95 after hitting $44.56, its highest since the stock’s debut on Nasdaq more than a year ago.

American Tower Corp rose 4.6 percent to $71.91 after the company agreed to buy Global Tower Partners for $4.8 billion.

E*Trade Financial shares jumped 4.6 percent to $16.26 after Goldman Sachs upgraded the brokerage’s stock to “buy” from “neutral” two days after the company received approval to use capital from its bank subsidiary for broader corporate purposes.

Wall Street Ends Mostly Flat on Mixed Earnings

The stock market finished pretty much where it started on Wednesday as a mixed collection of earnings from big-name American companies left investors uninspired.

The Standard & Poor’s 500-stock index, the market’s most widely used indicator, ended just barely higher, by 0.01 point.

The Dow Jones industrial average slid 43.16 points, held back by big drops in Procter & Gamble and AT&T. P.& G. issued a weak quarterly profit forecast, and AT&T lost subscribers from its contract-based plans for the first time.

Investors are taking their cue from a heavy dose of earnings this week.

Procter & Gamble, the maker of Tide detergent and Gillette razors, dropped $4.82, or 5.9 percent, to $77.12 after its profit forecast came in below analysts’ expectations.

AT&T dropped $1.96, or 5 percent, to $37.04 after it lost phone subscribers from its contract-based plans in its latest quarter, in a sign that industry growth was slowing now that most Americans have smartphones.

But the mood on Wall Street was tempered by Boeing and General Dynamics, which reported strong quarterly profits.

Boeing, a Dow component, climbed $2.65, or 3 percent, to $90.83 after the airplane maker said its first-quarter net income rose 20 percent despite problems with the 787 Dreamliner. The company said it would still meet its financial and delivery targets this year.

General Dynamics, the aerospace and military contractor, surged $4.63, or 6.9 percent, to $71.73 after posting a profit that was better than expected.

So far, 175 of the companies in the S.& P. 500, or 35 percent, have reported quarterly earnings. Two-thirds of the Dow’s members have reported. While the majority have delivered better-than-expected profits, their sales have not been as strong, suggesting they were struggling to grow.

Sixty-nine percent of companies in the S.& P. 500 have beaten earnings expectations, better than the 10-year average of 62 percent, according to S&P Capital IQ. But only 39 percent have beaten revenue forecasts.

Looking ahead, the outlook dims. Of the 35 companies that have given earnings forecasts for the second quarter, 28 are negative, according to S&P Capital IQ, with only four positive and three in-line.

“We think that most managements are appropriately cautious in their outlooks, because it’s very possible that the second quarter will continue to slow,” said Jim Russell, a regional investment director at U.S. Bank.

The Dow closed down 0.3 percent, at 14,676.30. The S.& P. 500 index was up 0.01 point, to 1,578.79.

The Nasdaq composite edged up 0.32 point to 3,269.65.

The market’s gains in April have slowed sharply after a first-quarter surge pushed both the Dow and the S.& P. 500 to nominal highs.

The Dow is up just 0.7 percent this month while the S.& P. 500 has gained 0.6 percent.

During the first three months of the year, the Dow and the S.& P. 500 averaged monthly gains of more than 3 percent, driven by optimism that the housing and job markets were recovering and that company earnings would continue to climb.

Companies are still making money in the first quarter, however, and are on track to increase their earnings by an average of almost 3 percent, according to S&P Capital IQ.

“Over all, I’m really quite comforted,” said David Kelly, chief global strategist at JPMorgan Funds. “It’s not an easy environment in which to make money, but companies are finding ways in which to hold costs in line and grow earnings.”

In the bond market, the price of the Treasury’s 10-year note rose
1/32, to 102 22/32, while its yield slipped to 1.70 percent, from 1.71 percent late Tuesday.

This article has been revised to reflect the following correction:

Correction: April 24, 2013

Because of an editing error, an earlier version of this article misstated the day's trend in the Nasdaq composite index. It closed up, not down, by 0.01 percent.

Wall Street Ends Mostly Flat on Mixed Earnings

The stock market finished pretty much where it started on Wednesday as a mixed collection of earnings from big-name American companies left investors uninspired.

The Standard & Poor’s 500-stock index, the market’s most widely used indicator, ended just barely higher, by 0.01 point.

The Dow Jones industrial average slid 43.16 points, held back by big drops in Procter & Gamble and AT&T. P.& G. issued a weak quarterly profit forecast, and AT&T lost subscribers from its contract-based plans for the first time.

Investors are taking their cue from a heavy dose of earnings this week.

Procter & Gamble, the maker of Tide detergent and Gillette razors, dropped $4.82, or 5.9 percent, to $77.12 after its profit forecast came in below analysts’ expectations.

AT&T dropped $1.96, or 5 percent, to $37.04 after it lost phone subscribers from its contract-based plans in its latest quarter, in a sign that industry growth was slowing now that most Americans have smartphones.

But the mood on Wall Street was tempered by Boeing and General Dynamics, which reported strong quarterly profits.

Boeing, a Dow component, climbed $2.65, or 3 percent, to $90.83 after the airplane maker said its first-quarter net income rose 20 percent despite problems with the 787 Dreamliner. The company said it would still meet its financial and delivery targets this year.

General Dynamics, the aerospace and military contractor, surged $4.63, or 6.9 percent, to $71.73 after posting a profit that was better than expected.

So far, 175 of the companies in the S.& P. 500, or 35 percent, have reported quarterly earnings. Two-thirds of the Dow’s members have reported. While the majority have delivered better-than-expected profits, their sales have not been as strong, suggesting they were struggling to grow.

Sixty-nine percent of companies in the S.& P. 500 have beaten earnings expectations, better than the 10-year average of 62 percent, according to S&P Capital IQ. But only 39 percent have beaten revenue forecasts.

Looking ahead, the outlook dims. Of the 35 companies that have given earnings forecasts for the second quarter, 28 are negative, according to S&P Capital IQ, with only four positive and three in-line.

“We think that most managements are appropriately cautious in their outlooks, because it’s very possible that the second quarter will continue to slow,” said Jim Russell, a regional investment director at U.S. Bank.

The Dow closed down 0.3 percent, at 14,676.30. The S.& P. 500 index was up 0.01 point, to 1,578.79.

The Nasdaq composite edged up 0.32 point to 3,269.65.

The market’s gains in April have slowed sharply after a first-quarter surge pushed both the Dow and the S.& P. 500 to nominal highs.

The Dow is up just 0.7 percent this month while the S.& P. 500 has gained 0.6 percent.

During the first three months of the year, the Dow and the S.& P. 500 averaged monthly gains of more than 3 percent, driven by optimism that the housing and job markets were recovering and that company earnings would continue to climb.

Companies are still making money in the first quarter, however, and are on track to increase their earnings by an average of almost 3 percent, according to S&P Capital IQ.

“Over all, I’m really quite comforted,” said David Kelly, chief global strategist at JPMorgan Funds. “It’s not an easy environment in which to make money, but companies are finding ways in which to hold costs in line and grow earnings.”

In the bond market, the price of the Treasury’s 10-year note rose
1/32, to 102 22/32, while its yield slipped to 1.70 percent, from 1.71 percent late Tuesday.

This article has been revised to reflect the following correction:

Correction: April 24, 2013

Because of an editing error, an earlier version of this article misstated the day's trend in the Nasdaq composite index. It closed up, not down, by 0.01 percent.

Wall Street Halts Slide, but Ends Week Mixed

Stocks rose on Friday, as strong earnings from big companies lifted the Dow Jones industrial average, but the broader Standard & Poor’s 500-stock index posted its first weekly loss of the year.

The Dow closed up 119.95 points, or 0.9 percent, at 14,000.57, its third-biggest daily gain this year. The S.& P. 500 rose 13.18 points, also 0.9 percent, to 1,515.60. The Nasdaq composite index rose 30.33, or 1 percent, to 3,161.82.

The S.& P. 500 and Nasdaq closed slightly lower for the week, while the Dow edged higher.

Bill Stone, chief investment strategist with PNC Wealth Management, said he expected stocks to hold up despite the volatility this week.

“You’re going to get bumps and bruises along the way, but we do believe things are actually getting better, so I think there’s underlying demand” for stocks, Mr. Stone said.

Investors sent stocks plunging Wednesday after minutes from the Federal Reserve’s latest policy meeting revealed disagreement over how long the Fed should continue to buy bonds in an effort to support the economy. The slide continued Thursday. The Dow lost 155 points over those two days.

Many analysts say the Fed’s bond-buying and resulting low interest rates have driven this year’s stock rally, which lifted indexes to their highest levels since before the 2008 financial crisis. The Dow is now just 164 points below its nominal record close of 14,164, reached in October 2007.

United States stocks followed European stocks higher after a survey of German business optimism showed an increase in sentiment, adding to evidence that the country would avoid a recession. Germany’s economic vitality is crucial for the beleaguered region, offsetting economic contraction in surrounding countries.

“Germany is really the bedrock,” Mr. Stone said. “If it gives way, then you have real problems.”

The CAC-40 in France rose 2.2 percent, and the Germany DAX gained 1 percent.

The biggest gainer on Friday in both the Dow and S.& P. 500 was Hewlett-Packard, which beat all forecasts when it posted its first-quarter results late Thursday, a relief after months of bad news. H.P.’s shares on the New York Stock Exchange rose $2.10, or 12.3 percent, to $19.20.

Cabot Oil & Gas was the S.& P. 500’s second-best performer, a day after the company reported earnings above analysts’ expectations. Its stock rose $5.95, or 11.1 percent, to $59.81.

Shares in the American International Group jumped after the company’s fourth-quarter operating results exceeded analysts’ forecasts. Its net loss was $4 billion, mainly because of claims related to Hurricane Sandy. A.I.G. shares rose $1.17, or 3.1 percent, to $38.45. Abercrombie & Fitch shares sank after a crucial sales measure declined in the all-important holiday quarter. The stock fell $2.19, or 4.5 percent, to $46.86.

Stock in WebMD Health, a health Web site operator, soared after the company reported better-than-expected revenue and an optimistic outlook for 2013. The shares rose $4.14, or 25.4 percent, to $20.44.

Texas Instruments stock rose strongly after the company said it would increase its dividend by a third and buy back up to $5 billion more of its own stock. Its shares gained $1.70, or 5.2 percent, to $34.18.

Interest rates were steady. The Treasury’s benchmark 10-year note rose 3/32, to 100 11/32, and the yield fell to 1.96 percent, from 1.97 percent late Thursday.