American flag is seen displayed at the Time Square in New York City, United States.
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Americans’ inflation-adjusted incomes rose and poverty declined in 2025, according to new Census Bureau data released Tuesday, as the Federal Reserve meets to decide whether inflation still requires higher interest rates.
Real median household income rose by 2.6% to $87,460 last year, the Census Bureau reported as part of a suite of data releases Tuesday. The poverty rate fell by a nearly half-point to 10.2%. The poverty threshold for a family of four last year was $32,970.
Treasury Secretary Scott Bessent celebrated the data, which were released as he was testifying to a House committee about the economy. The Census Bureau data are “several inconvenient facts” for the Trump administration’s political opponents, he said.
Democrats used the committee hearing to assail Bessent over high gas prices and other economic strains. The average rate for new 30-year fixed-rate mortgage rose above 7% last week. Prices increases by 3.4% in August from the year before, as measured by consumer price index.
The Census data covers 2025 and doesn’t account for recent changes in inflation or other economic shifts since the Iran war started. But for the first year of Trump’s presidency, the data show the median American household’s income rose even after adjusting for inflation.
The agency doesn’t break down the causes for the improvements’ in Americans’ livelihoods. The underlying data suggest that an improving labor market helped boost household income.
The decline in poverty appeared to be concentrated among families with children and working-age families, rather than among retirees.
Another measure of poverty that accounts for families’ gains from the social safety net was unchanged for 2025. That may come under pressure as Republican’s tax-and-policy law enacted in the summer of 2025 is phased in. The measure known as the “Big, Beautiful Bill” cut taxes on some working families but paid for it in part by reducing federal outlays through tightening restrictions on parts of programs for low-income people.
The Congressional Budget Office projects that spending on food stamps, known as SNAP, will fall by $211 billion through 2035 years as a result of the law because fewer people will be eligible for nutrition assistance.
Meanwhile the Fed is on the precipice of raising its benchmark short-term interest rate. New Chairman Kevin Warsh has said he is concerned about inflation. The Fed’s tool to fight inflation — interest rates — is a blunt instrument. By raising rates, the Fed raises borrowing costs across the economy. That slows price increases by generally weakening economic growth.
The Fed has to weigh that risk against the damage inflation does to Americans’ livelihoods. Fed officials have frequently pointed out that price increases weigh most heavily on the lowest tier of earners who have the least ability to change their spending plans.
The Fed will announce its rate decision Wednesday afternoon.
