Washington ? Income declined while poverty levels rose last year, the Census Bureau reported Tuesday, a double dose of bad economic news that coincided with the first recession in a decade.

After nearly a decade of decline, the U.S. poverty rate stood at 11.7 percent last year, up from 11.3 percent the previous year, which was the lowest level since 1974. More than 32.9 million people lived in poverty last year, 1.3 million more than in 2000.

The median household income declined 2.2 percent to $42,228 after remaining flat the previous year. It was the first statistically significant decline in a decade. Median income refers to the point at which half of households earn more and half earn less.

Income levels fell for every group except the richest and poorest. All racial groups experienced a decline, although Asians and blacks experienced the most substantial drops.

Democrats seized on the dreary numbers to criticize Republican policies and push for an extension of unemployment benefits.

Senate Banking Committee Chairman Paul Sarbanes, D-Md., said the Bush administration had focused too much attention on tax cuts and not enough on the needs of the most vulnerable citizens.

“The administration needs to show that it has some understanding that there’s an economic problem out there and that they’re prepared to do something about it,” Sarbanes said.

President Bush remains upbeat about the economy.

“When you combine the productivity of the American people with low interest rates and low inflation, those are the ingredients for growth,” he said. “But I understand we got a lot of work to do.”

Joel Naroff, economist and president of Naroff Economic Advisers of Holland, Pa., said the declines were cyclical and were to be expected after a decade of growth.