The ranks of the financially stricken in the world's most powerful economy climbed 1.3 million to 35.9 million people in 2003, pushing up the poverty rate to 12.5 percent from 12.1 percent, the Census Bureau said.
The poverty threshold is an annual income of 18,810 dollars for a family of four or 9,393 dollars for a single person.
At the same time, the number of people living without health insurance climbed 1.4 million to 45.0 million.
The annual survey is sure to be brandished as a political weapon in the tight race leading up to the November 2 presidential election.
Democratic contender John Kerry accuses President George W. Bush of mismanaging the economy, giving tax breaks to the wealthiest while squeezing the middle class.
Not all the news was bad, however.
A widely used measure of the income gap between rich and poor - the "Gini" index - was unchanged last year.
Even as the number of people without insurance grew, the number with insurance also swelled by 1.0 million to 243.3 million.
The median, or middle-of-the-range, household income was unchanged last year after accounting for inflation, following two consecutive years of decline.