The US government released the figures on Friday in a report sure to provide new ammunition for Democrats trying to unseat US President George Bush.
The Census Bureau's annual report showed the number of people living below the poverty line rose to 34.6 million last year, from 32.9 million in 2001, when the national economy first went into recession.
The official poverty threshold for a family of four in 2002 was $18,392 annually, $14,348 for a family of three, $11,756 for a family of two and $9183 for individuals.
Tax cuts not working
A sluggish recovery has failed to create new jobs for the 3.3 million private sector employees who have been thrown out of work since Bush took office in January 2001.
Bush blames the 11 September attacks and a wave of corporate scandals for the economy's failure to pull out of recession.
The report said the real median income fell 1.1% last year to $42,409. Of 292 million Americans, 12.1% are living in poverty as defined by the government.This percentage grew for the second year in a row from 11.7% in 2001.
Bush, who faces re-election in 2004, blames the 11 September attacks and a wave of corporate scandals for the economy's failure to pull more quickly and strongly out of the recession of early 2001.
He says tax cuts he has pushed through will fix the nation's economic malaise and says they are already starting to show results.
But his Democrat opponents blame the tax cuts themselves in large part for the soft economy, as well as bulging federal deficits that have abruptly taken the place of fat surpluses projected just a few years ago.