The poverty data published by INDEC this Thursday was as dramatic as it was anticipated. Private measurements that read the Permanent Household Survey (EPH) had anticipated that the publication for the first half of the year was going to be in a range slightly higher than 50%. The UCA did it, for example, at the beginning of the month. At that time, the president celebrated that the measurement broken down by quarters showed a decrease between the first and second quarters of the year. IT’S HAPPENING, tweeted in capital letters. Is it happening?
The Government tried to install that reading this Thursday, almost late at night, when the Ministry of Human Capital sent a statement titled “The National Council for the Coordination of Social Policies of the Ministry of Human Capital visualizes a slowdown in poverty rates.” The text was spread three hours after the index was known and, at that same moment, Karina Milei uploaded a photo with Susana Giménez and the dog Thor to the networks.
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“In the second quarter, poverty fell to 51.0%, which implies a slowdown of 3.8%,” Minister Sandra Pettovello tweeted. The official statement stated that “poverty had its maximum peak in the first quarter of 2024, reaching 54.8%, and began to decrease to 51% in the second quarter.” He added that “this trend is expected to continue over the coming quarters.”
The linear view is that the worst is over and that, as inflation goes down and incomes recover, poverty will decrease.
Even so, it is difficult to digest the jump that the indicator showed in the first semester: there are 24.5 million poor people. Poverty rose from 41.7% in December to 52.9% in June. This means that some 5.2 million people joined the enormous mass of the population that does not have the necessary income to cover the minimum basket of goods and services.
Almost 3 million people fell into indigence, which rose from 11.9% at the end of the year to 18.1%. Although the Government more than doubled the amount of the AUH to weather the income crisis that the December devaluation accelerated, 8.3 million people did not gather basic resources to eat. When looking at the historical series, the dimension of the inflationary tragedy of the last stretch of the Frente de Todos government is taken into account: in two years, indigence jumped ten points, or 123%.
Poverty in the population up to 17 years old rose 9 points in six months, to 67.1%. Although the population over 65 years of age continues to have the best coverage, indigence among older adults jumped from 2.6% to 4% and poverty from 17.6% to 29.7%. The data is known when the Olivos barbecue is still smoking with the deputies who ratified the veto of the extra increase in pensions.
With this photo, the Government needs inflation to drop further and the economy to start functioning. There are foggy signals on both fronts.
inflation
That poverty peak of 54% in the first quarter that the Government seeks to anchor as the end of the slide occurred at the worst moment for salaries and with inflation still in double monthly digits. Income has since regained some ground, but inflation has stabilized in the 4% range as of May. Only this month would it pierce that number, due to the reduction of the PAIS tax on imports.
Federico Pastrana, economist at the consulting firm CP, noted that, in parallel, the salary recovery that had started in May slowed down. “The recovery of real wages in May and June, with parity rates at 6.5% and inflation at 4%, seems to have reached a limit,” he described in a report. “In July and August, the nominal monthly variation of the average parity was 4.2%,” he continued. In August, with inflation that does not drop below 4%, salaries stagnated and the recovery found a limit,” he concluded.
The brake on disinflation also interrupted the recomposition of pensions that are now indexed by CPI: “The process of recovery of pensions that began with the change of formula is interrupted,” CP indicated.
Is this sustained deterioration in income beginning to wear out patience? This is what opinion studies seem to begin to notice, as Pablo Ibáñez detailed in Cenital.
The number of people who responded to the consulting firm Proyección that they cut back on expenses or simply do not make ends meet increased in September. Inflation (although far from the peaks at the beginning of the year) and low income continue to be at the top of respondents’ concerns, with a rapid increase in fear of unemployment.
The poverty nowcast prepared by Martín González Rozada at the Torcuato Di Tella University (UTDT) estimated, for the March / August moving semester, a rate of 50.3%. As the recovery of income and the disinflationary process slows down, the decline in poverty since that peak in March slows down.
The activity
The Consumer Confidence Index prepared by UTDT corresponds quite well with social and political humor. In September, the indicator showed a monthly drop of 5.92%, the second of the year but the deepest. According to the report, the drop was 11.68% monthly in lower-income households and only 0.13% in high-income households.
“The drop was greater in Future Expectations than in Present Conditions, which denotes that in September concern about the macroeconomic trajectory and the long term increased,” the report reads.
This drop in expectations is linked to the stagnation observed in the economy. This Wednesday, the Minister of Economy, Luis Caputo, celebrated that the INDEC reported that the Monthly Estimator of Economic Activity (EMAE) grew 1.7% monthly. It was, once again, an expected figure, which different private sector reports had anticipated, and which is partly explained by the low level of activity in June. The problem is that in August the negative inter-monthly numbers returned.
Equilibra estimated that activity fell 0.4% monthly in August. He also found that the agricultural rebound stopped pulling, that activity would have fallen 4.5% year-on-year. “We maintain our projection of an average contraction of 3.5% of GDP by 2024,” he stated.
The General Activity Indicator (IGA) from the consulting firm Ferreres showed a drop of 0.6% monthly and 5.6% annually in August. Trade fell 9.1% annually, “affected by a more persistent decline in consumption than anticipated,” said the firm run by former presidential advisor Fausto Spotorno.
Consultants and businessmen agree that the recovery would be slow and heterogeneous. The flip side is that, in the best of cases, the eleven additional points of poverty that triggered the economic policies of adjustment and disinflation will be reversed very little by little.