The Relationship Between GDP vs Poverty Rate in Texas

Texas is often referred to as the economic giant of the United States. Strong enough to compete in the global economy, the lone star state has seen a steady rise in Gross Domestic Product. However, Texas’ record on the poverty is not so stellar. In an ideal world, one would assume that an increase in economic growth would directly or indirectly decrease poverty rates over time. After assessing the data provided by the United States Census Bureau, I provide two conclusions. My first conclusion is that when GDP is increasing, there is no direct impact on poverty. However, my second conclusion is that when GDP is decreasing, it negatively impacts poverty in a significant way.

To evaluate this relationship, we’ve assessed 15 years’ worth of data pertaining to the Texas poverty rate and the Gross Domestic Product. Figure 1 below displays these trends.

Figure 1: Texas Gross Domestic Product and Poverty Rates (2000–2015).

First Analysis: No Link Between GDP Increase and Poverty Rates

As I stated, poverty in the Lone Star State did not show a direct relationship between an increasing GDP and poverty rate. In the year 2000, there was approximately 3,041,115 Texans living in a state of poverty per the United States Census Bureau. The poverty rate for that year was approximately 13.4%. In comparison, it was estimated that nearly 4,255,690 Texans lived in poverty in the year 2015 at a poverty rate of 15.9%. During this fifteen-year period, there was an increase of about 1,214,575 Texans who went into poverty, an increase of about 39.93%. The yearly increase of about 3.99%.

Throughout the years 2000 to 2015, Texas was often rated the largest economy in the United States. Per Investopedia, GDP “measures economic progress” and is “an easy-to-follow indicator of economic health.” The year 2000 shows the Gross Domestic Product of Texas at $741,115,000, compared to $1.6 billion in the year 2015. During a period of fifteen years, the Gross Domestic Product of Texas more than doubled by 119.94% by an increase of about $889 billion.

Figure 1 above displays the state trends between the Gross Domestic Product and poverty rate from the years 2000 to 2015. To put these figures in perspective, the Gross Domestic Product of Texas increased by roughly $732 thousand dollars for every person who went into poverty during the years 2000 to 2015.

Second Analysis: The 2008 GDP Dip and the effects on Unemployment and Poverty

Figure 2: Texas Unemployment Rate and GDP (2000–2015)

As stated above, when the GDP decreases, it means that there will be lasting, negative impacts on every member of society and significantly increases the chances of someone from middle-class America to fall into poverty. Between late 2007 and mid-2009 Texas suffered a hefty number of lay-offs and a rising unemployment rate while the GDP took a significant dip. Economic insecurity led thousands into poverty. Figure 2 displays the increase of the unemployment rate in Texas during the sharp decrease of Gross Domestic Product.

Figure 3: Texas Poverty Rate and Unemployment Rate (2000–2015)

Figure 3 above displays the relationship between the unemployment rate and poverty rate. Clearly, there is a correlation between the two variables. This proves that a negative trend in Gross Domestic Product indirectly impacts poverty. If Texas can lead the nation as an economic power house, then surely it can be a leader in the fight against poverty and unemployment.

Works Cited:

Assignment #1, Project Proposal

Assignment #2, Data Analysis Prototype

Assignment #3, Draft

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<https://www.census.gov/quickfacts/table/PST045216/48>.

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&7003=200&7004=naics&7001=1200&7002=1&7090=70>.

“The Relationship Between Poverty and Economic Growth Revisited.” Stevans, Lonnie K.

Sessions, David N. Hofstra University, March 2008. 05 Apr. 2017.

“National Income.” FRED. N.p., 30 Mar. 2017. Web. 05 Apr. 2017.

<https://fred.stlouisfed.org/series/NICUR/>.

Smith, Lisa. “Does High GDP Mean Economic Prosperity?” Investopedia. N.p., 25 Feb. 2016. Web. 05 May 2017. <http://www.investopedia.com/articles/economics/08/genuine-progress-indicator-gpi.asp>.

“Notice: Data Not Available.” U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, n.d. Web. 05 May 2017. <https://data.bls.gov/pdq/SurveyOutputServlet>.

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