we should at least note that the US fiscal year ends in 8 days, on September 30, and as of today there hasn’t been any serious movement in Congress to pass a budget to fund the government past October 1st….in addition, sometime after mid-October, the Treasury is expected to run out of accounting tricks it has been using to make its mandated payments and be stopped from further spending by the artificial constraint of the legislated debt ceiling…in what was largely a theatrical move, the republican majority in the House did vote on Friday to continue funding government operations at last years level’s, including the sequestered cuts, until December 15, but to also defund Obamacare, which is supposed to go into operation on October 1st, in the process…the thinking had been that the GOP would avoid an October 1st government shutdown and use the leverage of the debt ceiling to extract demands out of the president and the Senate, but it is now looking more likely that a shutdown may occur on Tuesday, October 1st and probably last the rest of that week…even Bill McBride at Calculated Risk, who is the last one to be alarmist, has warned of the possibility that the employment report for September, due Oct 4th, may not be released on time…in that manner, a shutdown would be an inconvenience, but would not have the serious economic impact that the specter of a government default associated with a debt ceiling impasse could precipitate

census income and poverty table 5 this past week saw the release of an annual demographic report on Income, Poverty and Health Insurance Coverage in the United States in 2012 from the Census Bureau; which showed that neither median household incomes nor the percentage of American in poverty budged from the levels they were at a year earlier, while the percentage of people without health insurance decreased…based on data collected in February, March, and April, the Census found that the national median household income in 2012 was $51,017, which was not statistically different than the revised 2011 median income of $51,100, which was originally reported as $50,054, down 1.5% from 2010′s median of $50,831…the 2012 median was 8.3% less than the inflation adjusted median income of prerecession year of 2007 and 9.0% less in real dollars than the real median household income high water mark of $56,080 in 1999…in fact, real median household incomes in 2012 were still 1.3% below the 1989 real household median of $51,681…understand that this median income data includes households of any number of number of employed persons living under one roof; census breaks this household category down into family and non-family households; the real median incomes for family households was at $64,053, while nonfamily households had a median household income of $30,88…our 2012 Gini-coefficient, a measure of income inequality, was at .477 in 2012, statistically unchanged from 2011; this put us on a par with the inequality of Ecuador and China, and more unequal than Iran, Nigeria, and Uganda…the historical data for household real median incomes since 1967 are included in the table along the side of this text, and a chart showing the trajectory of this median income data is included below…both the table and the chart are from the 57 page pdf webinar supplement to the 88 page pdf report, so you can gather that we’re just scratching the surface here…

census income and poverty graphs 3

 Census found that 46.5 million Americans were living at or below the poverty line in 2012, which was 15.0% of the estimated population at the time of the survey; this marks the 3rd consecutive year and only the 6th time in the history of this series that the US poverty rate has been at 15% or above, as you can see on the adjacent table. or on the chart below9.5 million families were in poverty in 2012 and the poverty rate for families was at 11.8%, essentially unchanged from 2011…the poverty rate for married couples was at 6.3%, while 16.4% of families headed by a male householder and 30.9% of families headed by a female were living in poverty…9.1% of those over 65 were considered in poverty, while the poverty rate for adults between 18 and 64 was 13.7%…however, 16.1 million children under the age of 18 were living in poverty, which translates to 21.8% of all children in this country in families below the threshold…the poverty threshold varies by family size and composition; in 2012, the weighted average poverty threshold for a family of four in 2012 was $23,492, while the poverty threshold for an elderly couple was an income of $13,878; poverty thresholds for other family combinations are in Appendix B on page 51 of the pdf report, and levels for previous years can be viewed here  some government transfers,.such as social security. are included within that threshold; others, such as food stamps, are not…without social security, the poverty rate among the elderly would have been more than 44%

census income and poverty graphs 2

this report also found that 263.2 million Americans were covered by health insurance in 2012, up from the 260.2 million who were covered in 2011; this leaves 48.0 million people without coverage in 2012, statistically unchanged within the accuracy range of this survey from the 48.6 million uncovered in 2011…the percentage of us without health insurance coverage declined to 15.4%  from 15.7% in 2011; the percentage of youngsters under the age of 18 who were not covered declined from 9.4%, or 7.0 million in 2011 to 8.9%, or 6.6 million in 2012, while the percentage of those in other age brackets was statistically unchanged…54.9% were covered by employment-based health insurance, at 170,877,000 statistically unchanged from the 170,102,000 covered by employers in 2011…another 50,903,000 were covered by Medicaid, which was also statistically unchanged from the year earlier Medicaid coverage…those covered by Medicare, however, increased to 48,884,000 in 2012 from 46,922,000 in 2011..

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the key economic release of this past week was from the Fed on August Industrial Production and Capacity Utilization, which showed that industrial production rose a seasonally adjusted 0.4% in August, the largest monthly increase since Februarythe seasonally adjusted industrial composite index, which is benchmarked at 2007 equal to 100, is now at 99.4, up from 99.0 in July, up from 98.1 at year end and 2.7% higher than last August….manufacturing, which accounts for over three-fourths of the composite, was up 0.7% in August after being down 0.4% in July; the manufacturing index rose to 96.0 in August from 95.3 in July, and is now up 2.6% year over year, although July’s’ index was at the same level as December’s….mining, which includes gas and oil drilling and accounts for 14.62% of industrial production, increased 0.3% in August after a 2.4% jump in July; the mining index at 121.1 is now 7.5% higher than its reading of a year earlier…meanwhile, utility output fell more than a percent for the 5th straight month, down 1.5% in August after falling 1.3% in July and 2.0% in June..the utility index is now at 95.6, 3.9% below a year ago, which you may recall saw record summer heat…our FRED graph below shows shows the production index for all industry in black, the manufacturing production index in blue, the utility production index in green, and the mining production index in red from the beginning of the index year of 2007, at which time they were all benchmarked to equal 100….we can see the industrial production index has closely tracked manufacturing as it has recovered slowly, while the mining index continues to hit new highs as domestic oil & gas operations expand…

FRED Graph

in the breakdown of industrial production by market group, August saw seasonally adjusted production of consumer goods increase by 0.3% to an index level at 94.1 after a 0.5% decrease in March…changing production of consumer durables accounted for most of the swing, rising 2.5% in August after falling 2.2% in July…a swing in production of automotive products in turn accounted for most of the change in production of consumer durables, as August saw automotive products production rise 4.4% after it fell 4.2% In July, although the index for appliances, furniture, and carpeting also increased 2.0% in August after a 0.1% increase in July…meanwhile, the production of consumer non-durables, which has not seen an increase since March and which accounts for 21.33% of industrial production, fell 0.3% in August; production of food and tobacco increased 0.6% while production of clothing increased 1.3%, but those were offset by a 1.0% decrease in output of chemical products, a 0.2% decrease in production of paper products, and a 1.5% decrease in output of consumer energy products…meanwhile, production of business equipment was up 0.9% in August, after a 0.9% decrease in July, as production of transportation equipment increased 3.6%, reversing its July 3.2% slide…production of defense and space equipment was also up 1.0, after slipping 0.1% in July…the output of construction supplies rose 0.3% in August, after rising 0.5% in July and 0.7% in June; the index for construction supplies is now at 81.8, 5.3% higher than a year ago…production of business supplies, however, was unchanged in August after being down 1.0% in Jule and 0.1% in June; that index is at 90.3, down from 90.4 in 2012…production of materials, which accounts for 46.54% of industrial production, increased 0.4% in August and was 3.4% above the year-earlier level…production of durable inputs rose 1.0% in August as the production of consumer parts rebounded 2.5% and the output of equipment parts rose 1.7%…output of non-durable materials rose 0.7% as production of textiles was up 0.7%, paper production saw a 1.0% increase and chemicals output rose 0.6%…meanwhile, the output of energy materials decreased 0.3% in August, although the index for energy materials remains 4.4% above the year earlier reading at 115.6…

capacity utilization for total industry, which is the percentage of our plant and equipment that was in use during the month, rose 0.2% from 77.6% in July to to 77.8% in August, up from an operating rate of 77.2% in August of last year…the operation rate for manufacturing was at 76.1%, up from 75.7% in July, as capacity utilization for durables manufacturing rose from 75.5% to 76.2% and utilization for non-durables manufacturing rose from 77.3% to 77.4%…meanwhile, the operating rate for mining, which includes oil & gas rigs, slipped from 90.1 in July to 90.0% in August, and utilities operated at 74.7% of capacity in August, down from 74.8% in July and 75.8% a year earlier…over the year between August of 2012 and August of 2013, manufactures added 1.5% to their capacity, utilities expanded their plant base by 1.1%, and mining saw capacity growth of 4.2%…the FRED graph above shows the track of capacity utilization for total industry since 2007 in pink; note that it’s a percentage, rather than an index number like the other metrics tracked on the same graph

this week also saw the release of the Consumer Price Index for All Urban Consumers (CPI-U) for August from the BLS, which showed that except for rent and medical care, prices either fell or showed subdued increases when compared to a month earlier…the seasonally adjusted weighted average of August prices was 0.1% above the index for consumer prices in July, while the unadjusted CPI, which is based on prices between 1982 and 1984 being equal to 100, rose .12% from 233.596 in July to 233.877 in August, and was 1.51 % higher than the 230.379 reading of a year ago …the Core CPI, which strips out price changes in foodstuffs and energy, also rose a seasonally adjusted 0.1%, and was at a level 1.8% higher than a year earlier…the unadjusted Core index rose 0.2%, from 233.792 in July to 234.258 in August…

  the seasonally adjusted food index rose 0.1% in August, while the unadjusted food index barely budged, rising from 237.001 in July 237.406 in August….food away from home rose 0.2% and was 3.0% higher than a year earlier while food at home rose at a seasonally adjusted 0.1% and was 1.0% higher than last August…prices for the cereal and baked good group were 0.3% higher than July and 1.3% higher than a year ago as bread rose 1.1% over the month and was 2.8% higher than last year while breakfast cereal fell 0.9 in August leaving average breakfast cereal prices 0.4% below last August….the meat, poultry, fish and eggs index was up 0.6% in August and 2.2% over a year, with bacon up 2.4% in August and 8.2% since last August; chicken parts also saw a 2.6% price jump in August, while frozen seafood fell 3.6%…dairy products rose 0.4% for the month as cheese prices rose 1.1% and fresh whole milk prices fell 0.3%; over the preceding year, milk rose 1.8% while the dairy index just rose 1.0%…in addition, fruits and vegetables increased by 1.2% in August and 3.6% over the past year as potatoes were up 3.0% for the month and 11.9% in a year while oranges, which were up 6.5% over the year, fell 2.5% in August…meanwhile, the prices for beverages fell 0.1% in August and 1.0% for the preceding year as the price of roast coffee was off 2.1% for the month and 7.6% year over year…but it was the large “other foods” category, which was down 1.0%, that brought the food index down, as sugars and sweets fell 1.1% for the month, frozen foods were 1.4% cheaper, and snack prices dropped 1.6% below the July average…

the seasonally adjusted energy price index declined 0.3% in August, while the unadjusted energy index fell 0.54%, from 251.370 in July to 250.011 in August…while fuel oil rose 1.5% for the month and gasoline fell just 0.1%, the overall index was dragged down by a 0.7% decrease in the energy services index, driven by a 2.3% decrease in piped natural gas prices and a 0.1% decrease in the cost of electricity…in an August 2012 to August 2013 comparison, gasoline prices were 2.4% lower, fuel oil prices were unchanged, while electricity prices rose 2.8% and natural gas utility prices saw a 4.8% price increase…

the cost of shelter, the largest component of the CPI at 31.638% of the total index, was up 0.2% in August and 2.4% year over year….the rent of one’s primary residence was rose 0.4% for the month, home owner’s equivalent rent was up 0.2%, while prices for lodging away from home fell 0.8%…medical care costs, up 0.6% for the month, were the other major driver of the rise in the August CPI; prices for medical care commodities rose 0.4% as prices for prescriptions, which had been slightly down this year, rose 0.8%, while medical care services rose 0.7% for the month as both inpatient and outpatient hospital services rose 1.9%…in contrast, the transportation index fell 0.2%, as prices for used cars fell 0.1% and prices for new cars were unchanged while the transportation services index fell 0.5% as air fares fell 2.0% and car insurance fell 0.1%….the education and communication index was also down 0.1% for the month, although year over year prices were 1.6% higher; tuition and fees were said to be down 0.2% in August, while telephones services were down 0.1% while postage and delivery fees were up 0.3%…meanwhile, the recreation index was unchanged, as prices of recreation commodities fell 0.3% on  0.9% decrease in TV prices and 1.0% lower prices for sports vehicles including bikes while recreation services price were up 0.2% as club dues and gym fees rose 0.4% and admissions to sports events rose 1.1%…finally, the clothing index, which accounts for just 3.462% of the CPI, was up 0.1% in August, as men’s apparel was down 0.5%. women’s apparel was up 1.0%, and footwear prices were unchanged…

our first FRED graph below shows the track of these major aggregate price indexes going back to 1997, when two of these composite indexes were reset; the rest represent recent price indexes based on prices from 1982 to 1084 = 100… the price index for food and beverages, which is 15.1% of the CPI, is shown in blue while the composite price index for housing, which includes rent or equivalent, maintenance, and utilities and accounts for 41.1% of the CPI, is in red…meanwhile, the apparel index in violet, has actually been falling since the 1990s until just recently…the rising orange line is the medical care composite index, which accounts for 7.144% of the CPI; it’s now at 426.866, an increase of more than fourfold from the index years; next, in light green, we have the volatile transportation index, which at 17.194% of the CPI reflects the gyrating cost of gasoline and fuel related costs of transportation services, moderated by the slow steady rise in the cost of vehicles; lastly, we have our two indexes benchmarked to 1997 prices equal to 100: education and communication price changes are shown in dark green and account for 6.695% of the aggregate CPI, while the recreation index, at 5.936% of the CPI, is shown in bright blue…

FRED Graph

next, we have a FRED bar graph below which maintains the same color coding as the above and shows the monthly percentage changes in each of those major CPI components over the past year, with increases in prices above the “0” line and price decreases below it…clearly, prices changes in food in blue and housing, which is mostly rent, have been modest month to month, while the clothing index in violet does exhibit some unexpected volatility…but it’s also obvious that the only index which continually shows monthly changes greater than 1 percent is transportation, again reflecting the volatile prices changes in the cost of fuel..

FRED Graph

(the above is my weekly commentary that accompanied my sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)