Analysis of Federal Funds Rate, Discount Rate, and Government Spending Correlation With U.S. Poverty

Abstract

Every year, the U.S. federal government makes economic decisions that impact the wellbeing of our society. One common yearly goal of the federal government is to reduce the amount of people living in poverty. Both the official and supplemental poverty measures are based on estimates of the level of income needed to cover basic needs. Those who live in households with earnings below the basic needs income level are considered to be in poverty. To effectively control the U.S. poverty rate, the federal government must make decisions regarding how much money it spends on the public and how it sets various interest rates. The degree to which the federal government changes its actions each year depends on economic and societal conditions of the time period and often affects the U.S. poverty rate. Businesses also have a large influence on those living in poverty through their decisions and strategies, which affect worker morale and productivity. The main focus of this paper is to determine the degree to which the federal government can implement or change major economic policies to reduce the U.S. poverty rate. To analyze the relationships between federal economic policies and the U.S. poverty rate, statistical analysis mainly using regressions was done; inferences about how the federal funds rate, the discount rate, and federal government spending impact the U.S. poverty rate were also made.