PHILADELPHIA (Reuters) - Many of the poorest people in the United States are still struggling to recover from the effects of a recession that ended six years ago, making them very vulnerable as the country stands on the brink of a new downturn.

Philadelphia resident Mattie McQueen leaves her home in a government-assisted housing project in Philadelphia, Pennsylvania, October 19, 2007. Many of the poorest people in the United States are still struggling to recover from the effects of a recession that ended six years ago, making them very vulnerable as the country stands on the brink of a new downturn. REUTERS/Tim Shaffer

In 2006, the latest year for which Census Bureau figures are available, 12.3 percent of Americans were living in poverty, compared with 11.7 percent in 2001, the year of the last recession.

“It’s unusual in an economic recovery that ... we still have poverty higher than it was in the recession that preceded it,” said Sharon Parrott, a policy analyst for the Center on Budget and Policy Priorities, a liberal think tank in Washington.

This shows the poor have largely missed out on the gains made when the economy was expanding, Parrott said. The recent expansion was “much stronger for the people at the top than for people at the bottom.”

Few places illustrate this more readily than Philadelphia.

Mattie McQueen, 43, put off paying her phone bill in December so she could afford a few Christmas treats for herself and her 1-year-old granddaughter, who lives with her.

“You’ve got to rob Paul to pay Peter,” she said.

By holding on to the $162 that she owed the phone company, McQueen, a resident of South Philadelphia, was able to buy turkey, chicken, collard greens, and a few toys for her granddaughter, Mayliyah.

Without the budget adjustment, it would have been a cheerless Christmas dinner.

BELOW POVERTY

McQueen, who is diabetic and unemployed, lives on welfare payments of $637 a month from the City of Philadelphia, another $102.50 every two weeks in supplementary social security for her granddaughter, and $89 a month in food stamps.

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That adds up to an annual income a little over $11,000, well below the $13,690 set by the federal government as the official poverty level for a family of two.

She spends $319 a month in rent, $425 a month on groceries, and $60 for the phone. She says she can’t afford to use public transportation, and sometimes has to borrow money from family members to make ends meet. She has had help with child care from Episcopal Community Services, a church-based social services organization.

Formerly homeless and now living in public housing, McQueen would seem to be far removed from the worries of some more affluent people hit by the foreclosure crisis gripping the United States, people who bought their own homes in the last few years but now find they cannot afford the mortgage payments.

But the foreclosure crisis is making itself felt throughout the U.S. economy and threatening to send the United States into recession, which is often defined as a decline in economic growth for two or more successive quarters.

That is bad news for poor people like McQueen and the other 354,000 people in Philadelphia -- or 25.1 percent of the city’s population -- who live at or below the official poverty line.

“Historically, when the economy falters and unemployment rises, we see an increase in poverty,” Parrot said.

Predictions of a new recession mean that poverty rates are likely to start rising again without ever recovering to the level they were at during the last recession, which ended in November 2001.

Poverty advocates like the Center on Budget and Policy Priorities note that two rounds of tax cuts by Congress during the administration of U.S. President George W. Bush have failed to trickle down to the nation’s poor.

Philadelphia’s poverty rate, almost twice the national average, is the highest among the 10 largest U.S. cities. For young people under 18, the poverty rate rises to 35.3 percent, while almost a fifth of the city’s over 65-year-olds fall below the poverty line. Blacks, about half of the city’s overall population, make up almost a third of the poor.

EDUCATION

Sister Mary Scullion, a Catholic nun who has worked with homeless people in Philadelphia for more than 30 years, said the city’s shelters are now operating at 115 percent of capacity. She blamed the rise in poverty on a range of factors including the loss of manufacturing jobs, low wages, rising housing costs, and an influx of ex-offenders from overpopulated prisons.

But she said deteriorating public education is the most important cause of poverty in a city where 24 percent of high school students leave before graduating, and whose schools were taken over by the state in 2001 because of their widespread failure to meet required standards.

“When I was in high school, education was pretty much available to every child,” she said. “Today, there is such an increase in resources going into private education.”

Boosting public schools is a key plank in platform of Democratic presidential contender John Edwards, the only candidate in this year’s election with a comprehensive plan to address poverty, which he aims to end within 30 years.

But opinion polls suggest that either Sen. Hillary Clinton or Sen. Barack Obama will have secured the Democratic Party nomination before Pennsylvania’s primary elections on April 22.

In West Philadelphia, Shaheed Moseley and his seven children aged from seven to 15 moved into a renovated row home in mid-December after six weeks living in one room at his sister’s house.

Moseley, a single parent since his wife was killed by a stray bullet while sweeping their front step three years ago, previously spent nine months renting what he described as a “slum” where the roof caved in, ruining much of his furniture and possessions.

Standing in the unfurnished front room of his new rental home -- obtained for him by SafeHome Philadelphia, a private nonprofit for homeless families -- the 33-year-old Moseley said he hopes to find a job in the construction industry where he worked before quitting to take care of his kids.

The family lives on $2,500 a month in welfare payments plus food stamps. They depend on state assistance to pay utility bills and get health insurance from the City of Philadelphia. Moseley said he had a car but sold it to pay bills when he quit his job three years ago.

Despite the help from various agencies, it’s not easy getting by, Moseley said. “We’re just barely making it.”