Economic Calendar

Wednesday, September 14, 2011

Rubber Futures Drop in Tokyo as European Debt Crisis Seen Lowering Demand

By Aya Takada and Supunnabul Suwannakij - Sep 14, 2011 11:49 AM GMT+0700

Rubber dropped amid speculation that slowing growth in Asian economies and Europe’s sovereign- debt crisis may weaken demand for the commodity used in tires.

The February-delivery contract fell as much as 0.7 percent to 362.2 yen a kilogram ($4,707 a metric ton) before trading at 362.5 yen on the Tokyo Commodity Exchange at 1:44 p.m. local time. Futures earlier gained 0.4 percent.

Oil fell from a six-week high in New York and Asian currencies weakened, led by South Korea’s won, after the Asian Development Bank cut its 2011 growth forecast for the region excluding Japan today. It also said inflation will put pressure on regional policy makers to manage price increases even as a faltering global recovery reduces economic growth.

“The downward revision of growth forecast of Asian countries raised concern that slowing economy will hurt demand,” said Chaiwat Muenmee, analyst at Bangkok-based commodity broker DS Futures Co. “Besides, debt issues in Europe remain unresolved.”

The Manila-based lender cut its 2011 growth forecast to 7.5 percent from an April estimate of 7.8 percent, according to the Asian Development Outlook 2011 Update report released today. It raised the region’s inflation estimate to 5.8 percent this year, from a previous forecast of 5.3 percent.

The euro maintained a four-day decline against the yen on concern Greece’s debt woes will raise borrowing costs for other countries in the region. U.S. Treasury Secretary Timothy F. Geithner will urge European governments to step up their crisis- fighting efforts when he meets finance ministers this week, a euro-area official said.

Thailand Floods

Rubber declined 12 percent this year after reaching a record 535.7 yen on Feb. 18 amid worries that the crisis in Europe would hurt the global economic recovery.

“Flooding in Thailand caused some concerns over the supply situation, while the macro economy is still uncertain,” Ker Chung Yang, an analyst at Phillip Futures Pte., said by phone from Singapore. Investors are worried that the debt crisis in Europe may spread and lower demand, he added.

Flash floods and landslides in Thailand have submerged 48 of the country’s 77 provinces in the last two months, according to the Department of Disaster Prevention and Mitigation, with 21 provinces still affected. About 3.68 million rai (588,800 hectares) of farm land may have been damaged, the Ministry of Agriculture and Cooperatives said on its website yesterday.

The cash price of Thai rubber was at 141.4 baht ($4.67) a kilogram today, according to the Rubber Research Institute of Thailand. In Shanghai, rubber for January delivery fell 2 percent to 33,045 yuan ($5,167) a ton at midday break.

Natural-rubber imports by China, the world’s largest consumer, were 200,000 tons in August, according to a statement on the country’s customs agency website on Sept. 10. That compares with 130,000 tons in July and 160,000 tons a year ago, according to Bloomberg data.

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at; Aya Takada at

To contact the editor responsible for this story: Richard Dobson at


Gold Advances for Second Day as European Debt Risk Drives Haven Demand

By Glenys Sim and Phoebe Sedgman - Sep 14, 2011 11:18 AM GMT+0700

Gold advanced for a second day as concern about Europe’s sovereign-debt crisis spurred demand for the metal as a haven investment.

Immediate-delivery gold rose as much as 0.6 percent to $1,844.98 an ounce and traded at $1,836.85 at 12:04 p.m. in Singapore. The metal rebounded yesterday from a two-day drop as investors sought safe assets. December-delivery bullion gained as much as 1 percent to $1,848.20 an ounce in New York before trading at $1,840.30.

“The one monetary asset that doesn’t have a central bank working against it is gold,” Robert Sinche, global head of currency strategy at RBS Securities Inc., said in a Bloomberg Television interview. “With liquidity still being abundant in the global environment we do think gold probably still has some good risk-reward characteristics even at these levels.”

Greek Prime Minister George Papandreou will hold a conference call with German Chancellor Angela Merkel and French President Nicolas Sarkozy today amid increasing speculation that Greece will default. Merkel has said she won’t let Greece go into “uncontrolled insolvency”.

Chinese Premier Wen Jiabao said at the World Economic Forum today that China is willing to help Europe and warned that the most important issue is to prevent the crisis from spreading. Greece’s perceived chance of default in the next five years has soared to 98 percent, based on a standard pricing model of credit-default swaps.

$2,000 Gold

Gold is expected to hit highs of “well above $2,000 in the coming months” on lower bond yields, expectations of poor risky asset returns and volatility, growing European sovereign debt concerns and general risk aversion owing to uncertain global economic conditions,” TD Securities analysts including Bart Melek wrote in a report.

The firm expects gold to average $1,975 an ounce in 2012 and $1,750 an ounce in 2013, compared with previous estimates of $1,850 an ounce for 2012 and $1,650 an ounce for 2013. Cash gold reached a record $1,921.15 an ounce on Sept. 6.

“There’s increasing uncertainty in the European market,” Natalie Robertson, a commodity analyst at Australia & New Zealand Banking Group Ltd., said by phone from Melbourne. “Markets are going to continue to react in a risk-off manner and that will be supportive for gold.”

Cash silver fell 0.2 percent to $40.9075 an ounce. Spot platinum was little changed at $1,815 an ounce, while palladium dropped 0.2 percent to $724.50 an ounce.

To contact the reporters for this story: Phoebe Sedgman in Melbourne at; Glenys Sim in Singapore at

To contact the editor responsible for this story: James Poole at


Crude Oil Drops From Six-Week High on Concern Economic Recovery to Falter

By Ben Sharples - Sep 14, 2011 11:44 AM GMT+0700

Oil fell from a six-week high as investors speculated that gains this week were exaggerated amid concern that Europe’s debt crisis and the faltering U.S. economic recovery will temper fuel demand.

Futures slipped as much as 1.6 percent after technical indicators signaled the biggest gain in almost a week yesterday may have been excessive. Treasury Secretary Timothy F. Geithner will meet European finance ministers this week to discuss efforts contain the region’s sovereign-debt troubles. The International Energy Agency yesterday cut global oil-consumption forecasts for this year and 2012.

“There is overall reduced demand as a consequence of weaker than expected economic growth in the developed economies,” Ric Spooner, a chief market analyst at CMC Markets in Sydney, said by telephone today. “Growth in the big Western economies is weaker than it was a few months ago and getting weaker all the time.”

Crude for October delivery dropped as much as $1.48 to $88.73 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.90 at 2:42 p.m. Sydney time. The contract yesterday advanced $2.02 to $90.21, the highest close since Aug. 3. Prices are 16 percent higher the past year.

Brent oil for October settlement fell 62 cents, or 0.6 percent, to $111.27 a barrel on the London-based ICE Futures Europe Exchange. The European benchmark contract’s premium to U.S. futures was at $22.37, compared with a record close of $26.87 on Sept. 6.

Technical Indicators

New York oil’s five-day stochastic oscillators rose above 70, signaling prices increased too quickly this week, according to data compiled by Bloomberg. Futures also stopped advancing before the 50-day moving average, which was at $90.72 a barrel today. A failure to breach technical resistance typically means prices will change direction.

Geithner will meet European Union finance ministers in Wroclaw, Poland, on Sept. 16 and 17. It will be the first time he has attended a session of Europe’s Economic and Financial Affairs Council, known as Ecofin.

The Paris-based IEA lowered its estimate for oil consumption this year by 200,000 barrels a day and by 400,000 in 2012. Worldwide demand will rise 1.2 percent to 89.3 million barrels a day this year and 1.6 percent to 90.7 million next year. The full resumption of Libyan exports following the ouster of Muammar Qaddafi will be “long and difficult,” it said.

U.S. Economy

“The market will focus on developments in the Eurozone, ongoing weakness in economic data, and the restart of production in Libya,” Tom Pawlicki, a Chicago-based analyst at MF Global Holdings Ltd., said in a note today.

U.S. retail sales probably climbed 0.2 percent in August, the slowest pace in three months, as job and income growth weakened, according to the median estimate in a Bloomberg News survey of 73 economists before a report today. Sales increased 0.5 percent in July.

Gasoline inventories rose 2.76 million barrels last week, the American Petroleum Institute said yesterday. That compares with a forecast decline of 500,000 barrels in an Energy Department report today, according to the median of 14 analyst estimates in a Bloomberg News survey.

Crude supplies fell 5.05 million barrels, the API said. The Energy Department report may say they dropped 3 million barrels after Tropical Storm Lee shut output in the Gulf of Mexico, according to the Bloomberg News survey.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey. API crude stockpiles are 4.2 percent higher than the five-year average. Gasoline stockpiles are 1.9 percent higher.

Maria, the 14th named storm of the Atlantic hurricane season, gained speed on a path that may take it toward refineries in Canada.

To contact the reporter on this story: Ben Sharples in Melbourne at

To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at


JPMorgan, Morgan Stanley Warn Investors of Tough Quarter for Trading Units

By Michael J. Moore and Dawn Kopecki - Sep 14, 2011 2:48 AM GMT+0700

Enlarge image Morgan Stanley Point to Difficult Trading Environment

Morgan Stanley, based in New York, posted negative fixed-income trading revenue of $29 million in the fourth quarter of 2010, or positive $813 million excluding the impact of its own credit spreads, the lowest figure since 2008. Photographer: Mario Tama/Getty Images

JPMorgan Chase & Co. signage is displayed in front of the headquarters building in New York. Photographer: Jin Lee/Bloomberg

JPMorgan Chase & Co. (JPM) and Morgan Stanley (MS) warned investors that their stock- and bond-trading businesses are facing a difficult third quarter as the U.S. economy weakens and Europe’s debt crisis intensifies.

JPMorgan’s trading revenue will drop about 30 percent this quarter from the prior three months, James E. Staley, chief executive officer of the firm’s investment bank, said today at a Barclays Capital conference in New York. Morgan Stanley Chief Financial Officer Ruth Porat said at the same event that the fixed-income trading environment has been worse than in 2010’s fourth quarter, when the five biggest U.S. investment banks posted their lowest trading revenue since the financial crisis.

Corporations pulled back from the market, particularly in August, when the Dow Jones Industrial Average posted 400-point moves on four consecutive days for the first time ever, Staley said. Investors have been grappling with fallout from Standard & Poor’s downgrade of the U.S. credit rating and the risk that a default by Greece could hurt European banks.

“This quarter, the market environment clearly remains difficult with challenging credit markets in particular due to wider spreads and illiquidity,” Porat, 53, said. “Macro products have been relatively better than credit, but the volatility has prevented clients from taking much risk given difficulty in trading.”

Morgan Stanley, based in New York, posted negative fixed- income trading revenue of $29 million in the fourth quarter of 2010, or positive $813 million excluding the impact of its own credit spreads, the lowest figure since 2008. The firm reported $2.09 billion of fixed-income trading revenue last quarter.


Morgan Stanley continued to reduce its value-at-risk during the third quarter after cutting back in mid-June, Porat said. While equity volume has increased this quarter, much of the business has been in lower-margin electronic trading, she said.

JPMorgan, also based in New York, earned $5.5 billion in equity and fixed-income trading during the second quarter. Third-quarter fees from investment banking will fall by about half, Staley said, projecting about $1 billion in total fees compared with $1.92 billion in the second quarter.

JPMorgan will report a “modest loss” in its private- equity unit of about $100 million and asset-management revenue will likely be hurt by the equity-market declines, Staley, 54, said.

To contact the reporters on this story: Michael J. Moore in New York at; Dawn Kopecki in New York at

To contact the editor responsible for this story: David Scheer at


Greece Should ‘Default Big’: Blejer

By Eliana Raszewski and Camila Russo - Sep 14, 2011 6:18 AM GMT+0700

Enlarge image Greece Should ‘Default Big’

Greek taxi drivers hold a banner reading "Union of Kozani" as they chant slogans during a demonstration in central Athens on September 13, 2011. Photographer: Aris Messinis/AFP/Getty Images

Sept. 14 (Bloomberg) -- Stephen Wood, the New York-based chief market strategist for Russell Investments, talks about euro region's debt crisis and the outlook for U.S. equities. Wood speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Clashes broke out between police and demonstrators Sept. 10, 2011 as people took to the streets of Greece's second city of Thessaloniki in a mass protest against austerity measures. Photographer: Aris Messinis/AFP/Getty Images

Mario Blejer, who managed Argentina’s central bank in the aftermath of the world’s biggest sovereign default, said Greece should halt payments on its debt to stop a deterioration of the economy that threatens the European Union.

“This debt is unpayable,” Blejer, who was also an adviser to Bank of England Governor Mervyn King from 2003 to 2008, said in an interview in Buenos Aires. “Greece should default, and default big. A small default is worse than a big default and also worse than no default.”

World Bank and International Monetary Fund officials will meet in Washington Sept. 23-25 as European Union officials work to keep the currency union from unraveling and the Greek crisis worsens. Europe is facing “a full-blown banking crisis” said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., in an interview yesterday.

Rescue programs backed by the IMF and European Central Bank are “recession-creating” efforts that will leave Greece saddled with more debt relative to the size of its economy in coming years and stifle growth, Blejer said. A Greek default would push Portugal to do the same and would put Ireland “under tremendous pressure to at least symbolically default” on some of its debt, he added.

‘Totally Ridiculous’

“It’s totally ridiculous what is going on,” Blejer, 63, said. “If you assume that these countries do everything that is in the program, they do all these adjustments and privatizations, at the end of 2012 debt-to-GDP will be bigger than this year.”

The statements by Blejer, who ran Argentina’s central bank in the months after its default on $95 billion in debt, put him at odds with German Chancellor Angela Merkel, who said the risks of contagion from a Greek default are too big and that an “uncontrolled insolvency” would further agitate turbulent global markets.

German coalition officials stepped up their criticism of Greece last week after a delegation from the European Commission, European Central Bank and IMF suspended a report on progress made in Athens toward meeting the terms of its rescue program. The delay threatened to derail a payment to Greece due next month.

“It doesn’t make sense to give money to Greece so Greece can pay the Germans back,” Blejer said when asked about the aid programs. “All these projects, all the euro projects don’t make sense economically.”

‘Recipe for Disaster’

Domenico Lombardi, a former IMF board official and a senior fellow at the Brookings Institution in Washington, said a “disorderly default” in Greece would be “a recipe for disaster.”

“The spreading of the European crisis has gone so far that it would be really impossible to contain its spillover effects to the rest of the euro area,” Lombardi said in an interview.

An orderly default with private investor engagement would be better for Greece, he said.

Greece’s government now expects the economy to shrink more than 5 percent this year, more than the 3.8 percent forecast by the European Commission, as austerity measures deepen a three- year recession. Prime Minister George Papandreou approved a plan to help repair the budget deficit at the weekend amid swelling resistance from Greeks.

It costs a record $5.8 million upfront and $100,000 annually to insure $10 million of Greece’s debt for five years using credit-default swaps, up from $5.5 million in advance on Sept. 9, according to CMA.

‘Very Complicated’

Blejer didn’t advocate Greece leaving the euro zone, which he said would be a “very complicated” move that would force a rewriting of business contracts and would push more lenders toward bankruptcy. Germany and France will have to bear the brunt of financing efforts to help Greece and other countries that default re-start their economies, he said.

“Someone will have to pay,” said Blejer, who is a vice chairman of mortgage bank Banco Hipotecario SA (BHIP) and a board member of energy company YPF SA. (YPFD) “If they are not willing to pay for the euro they will have to get out of the euro.”

Greece’s 10-year bond yield rose 94 basis points, or 0.94 percentage point, to 24.48 percent at 5 p.m. in New York, after earlier climbing to a euro-era record of 25 percent.

Italian borrowing costs also jumped at a 6.5 billion-euro ($8.8 billion) bond auction yesterday as contagion from Europe’s debt crisis leaves investors shunning the region’s most-indebted nations. Italy’s Treasury sold 3.9 billion euros of a benchmark five-year bond to yield 5.6 percent, up from 4.93 percent for similar maturity securities sold in July.

Argentina Crisis

Blejer took the reins of Argentina’s central bank for five months starting in January 2002, when the country was reeling from the effects of its default and the loss of four presidents in just over two weeks. The government had just ended the peso’s one-to-one peg with the dollar when Blejer accepted the position from then-President Eduardo Duhalde.

To help stabilize the currency after the devaluation, Blejer created short-term bonds known as lebacs that paid an annual interest rate of as much as 140 percent, he said.

Argentina’s economy shrank 10.9 percent in 2002 before starting a nine-year growth streak, aided by rising commodity prices and an expansion in neighboring Brazil.

Blejer left the central bank in June 2002 after disputes with then-Economy Minister Roberto Lavagna over lifting restrictions on the withdrawal of bank deposits.

To contact the reporters on this story: Eliana Raszewski in Buenos Aires at; Camila Russo in Buenos Aires at

To contact the editors responsible for this story: Joshua Goodman at; James Hertling at


World Must ’Get House in Order,’ Not Rely on China: Wen

By Bloomberg News - Sep 14, 2011 11:43 AM GMT+0700

Enlarge image China's Premier Wen Jiabao

Wen Jiabao, China's premier. Photographer: Nelson Ching/Bloomberg

Sept. 14 (Bloomberg) -- Patrick Chovanec, a professor at Tsinghua University’s School of Economics and Management in Beijing, talks about China's the potential role as an emergency lender to Italy amid the European debt crisis. Chovanec, speaking with Rishaad Salamat on Bloomberg Television's "On the Move Asia," also discusses China's economy. (Source: Bloomberg)

Chinese Premier Wen Jiabao, facing calls to widen support for indebted European countries, signaled that developed nations should cut deficits and create jobs rather than relying on China to bail out the world economy.

“Countries must first put their own houses in order,” Wen said today at the World Economic Forum in the Chinese city of Dalian. “Developed countries must take responsible fiscal and monetary policies. What is most important now is to prevent the further spread of the sovereign debt crisis in Europe.”

Wen reiterated his message in June that China can offer “a helping hand” to Europe through investing there. At the same time, his government would ensure the nation’s economic growth remained stable, he said today. Wen called on the European Union and the U.S. to open their markets in return.

“What he is basically saying is China wants to help, they want to invest, but we can’t help you take the proper measures to control the debt crisis, you’ve got to do that on your own,” said William Rhodes, a senior adviser to Citigroup Inc. who was at Wen’s speech.

Stocks dropped in Asia, while oil and the euro fell following Wen’s comments. The MSCI Asia Pacific Index gave up its early gain of as much as 0.3 percent to trade 1.8 percent lower at 12:05 p.m. in Hong Kong. Crude oil in New York was 1.4 percent lower at $88.91 a barrel, while 104.87 yen bought one euro, from 105.56 yen earlier today.

‘Doomsday’ Scenario

Greek Prime Minister George Papandreou will hold a conference call with German Chancellor Angela Merkel and French President Nicolas Sarkozy today amid increasing speculation that Greece will default. Spain is scheduled to sell debt tomorrow, after demand fell at an auction by Italy yesterday.

A default by Greece would be a “doomsday” scenario, Rhee Chang Yong, chief economist of the Asian Development Bank, said in Hong Kong today. “That’s the responsibility of the European and advanced economies’ policy makers not to let this happen, because if this happens, there would be huge turmoil in the global financial market.”

Treasury Secretary Timothy F. Geithner will press EU finance ministers when he meets with them this week, a euro-area official said. The official spoke on condition of anonymity because preparations for the meeting in Wroclaw, Poland, on Sept. 16 and 17 are confidential. It will be the first time Geithner has attended a session of Europe’s Economic and Financial Affairs Council, or Ecofin.

Sustainable Growth

The European crisis was “very, very damaging in the American economy last summer,” Geithner told Bloomberg Television on Sept. 9. “It’s very important to the world that Europeans do what they need to do so that the problems they’re facing don’t spread.”

Wen said he was confident that China would achieve “longer term, better quality” economic expansion, and that this would be the country’s contribution to sustainable global growth. The Chinese government would adopt policies to avoid volatility in its economy, he said.

In return, Wen called on the U.S. to maintain fiscal and financial stability and “ensure the interests of global investors.” China’s $3.2 trillion of foreign exchange reserves make it the biggest holder of U.S. Treasuries.

The U.S. needs to lift export restrictions and, together with the EU, open markets to investment by Chinese companies, Wen said.

Quid Pro Quo

“We have on many occasions expressed our readiness to extend a helping hand, and our readiness to increase our investment in Europe,” Wen said. At the same time “we believe they should recognize China’s full market economy status” before the 2016 deadline set by the World Trade Organization. “To show one’s sincerity on this issue a few years ahead of that time is the way a friend treats another friend,” he said.

Market economy status would help Chinese exporters defend themselves in investigations that they are selling goods at below cost in the EU. As part of its accession agreement to join the WTO in December 2001, China agreed to be recognized as a non-market economy for 15 years in anti-dumping probes.

“China is increasingly using these investments as a way to get some political influence,” said Jan Lambregts, global head of financial market research at Rabobank International in London. “If there is a quid pro quo for the Chinese, they would be interested.”

The Chinese government shouldn’t buy bonds issued by individual euro-area countries because their leaders and the European Central Bank are in disarray, said Yu Yongding, a former adviser to China’s central bank.

Bailout Target

The nation is not a lender of last resort for “troubled countries,” Yu, who is based in Beijing, said in e-mailed comments today. “China has to wait until it can see a clearer road map by euro countries for solving sovereign-debt problems.”

Brazilian Finance Minister Guido Mantega said yesterday that officials from Russia, India, China and South Africa will discuss next week ways to help Europe overcome its debt crisis.

The European “countries are not poor,” said Rhodes, author of “Banker to the World: Leadership Lessons from the Front Lines of Global Finance.” “They have got to get their act together, just like we have to in the United States.”

Italian officials held talks in the past few weeks with Chinese counterparts about potential investments in the country, an Italian government official said Sept. 12, adding that bonds weren’t the focus. Italy joins Spain, Greece and Portugal among borrowers that turned to China since the 2007 collapse in U.S. mortgage securities set off a crisis that widened to engulf euro-region sovereign debtors.

“A few months ago, China said it would buy Eurozone debt but then they bought really little of it at auctions,” Lambregts said. “They haven’t really been putting their money where their mouth is.”

To contact the editor responsible for this story: Peter Hirschberg at


Decline in U.S. Household Income Raises Stakes for 2012 Presidential Race

By Catherine Dodge - Sep 14, 2011 11:00 AM GMT+0700

Enlarge image Poverty in U.S. Rose to 17-Year High in 2010, Income Fell

“Families are struggling to put food on the table, and they don’t have the purchasing power to help the economy recover,” said Isabel Sawhill , a senior fellow at the Brookings Institution in Washington. Photographer: Kevork Djansezian/Getty Images

Sept. 13 (Bloomberg) -- The U.S. poverty rate rose to the highest level in almost two decades and household income fell in 2010, underscoring the lingering impact of the worst economic slump in seven decades. Data released by the Census Bureau today showed the proportion of people living in poverty climbed to 15.1 percent last year from 14.3 percent in 2009 and median household income declined 2.3 percent. Shannon Pettypiece reports on Bloomberg Television's "InBusiness with Margaret Brennan." (Source: Bloomberg)

A teenager who collects bottles and cans and lives in a city shelter walks near Times Square on April 14, 2011. Photographer: Spencer Platt/Getty Images

Stagnating incomes and rising poverty will be at the heart of the 2012 presidential campaign that’s focusing on joblessness, and will give added urgency to debates in Washington and statehouses across the U.S. over budget cuts to programs designed to protect families from hardship. Photographer: Mario Tama/Getty Images

U.S. household income fell to its lowest level in more than a decade in 2010 and poverty rose to a 17-year high, setting the stage for the debate over jobs and the economy that will dominate the 2012 presidential race.

Median household income declined 2.3 percent, and the proportion of people living in poverty last year climbed to 15.1 percent, or almost one in six Americans, from 14.3 percent in 2009, a U.S. Census Bureau report yesterday showed.

Income and poverty issues are at the heart of the political discussion in Washington, with President Barack Obama pushing a $447 billion jobs proposal and a special congressional committee deliberating over $1.5 trillion in deficit cuts. Policy makers are wrestling with the question of whether to extend initiatives designed to address hardship stemming from the recession, the nation’s worst economic slump in seven decades.

“All of that raises the stakes for the decisions that President Obama and Congress will make in coming months,” Robert Greenstein, president of the Center on Budget and Policy Priorities in Washington, said in a statement.

The census report underscored that middle-class Americans continued to struggle during the recovery. Those trends may worsen this year as the economy weakened.

“I can’t think of ways the picture could be much worse,” said Ron Haskins, a senior fellow at the Brookings Institution in Washington. “We have had more than a decade of difficult numbers. It’s not about to end.”

Lowest Since 1996

Yearly median household income reached its lowest level since 1996, slipping to $49,445 from $50,599 the year before. The 46.2 million Americans living in poverty was the highest in the 52 years since the Census Bureau began gathering that statistic and was up from 43.6 million in 2009.

“The distress the consumers are feeling now is historic in its scope,” said Mark Cole, chief operating officer at CredAbility, a provider of non-profit credit counseling.

An index that tracks the financial condition of the average household published by Atlanta-based CredAbility hit a low in the fourth quarter of 2009. Out of the 31 years CredAbility has measured consumer distress, the worst rankings have occurred in the last 13 quarters.

The number of Americans who didn’t work at least one week out of the year increased to 86 million from 83 million in 2009, said Trudi Renwick, chief of the Census Bureau’s poverty statistics branch. If unemployment insurance benefits were excluded from income, 3.2 million more Americans would have been in poverty, the Census Bureau said.

Obama’s ‘Broken Promise’

The Republican National Committee issued a statement highlighting the report as evidence of Obama’s “broken promise on poverty” and the failure of his economic policies.

The home state of Texas Governor Rick Perry, the frontrunner in the contest for the Republican presidential nomination, saw its poverty rate climb to 18.4 percent from 17.3 percent and had the sixth-highest rate among the 50 states.

Americans’ financial difficulties add urgency to the arguments in Washington and statehouses across the U.S. over budget cuts to programs designed to protect families from falling into poverty. The census figures showed the third consecutive annual increase in the U.S. poverty rate.

That trend won’t reverse itself without “concerted action” on the part of policy makers, said Melissa Boteach, who leads a campaign to reduce poverty at the Center for American Progress, a Washington-based research group with ties to the Obama administration.

Falling Income

Since 2007, the year before the recession, median household income has fallen 6.4 percent, the Census Bureau said. The number continued to decline even as the U.S. economy expanded 3 percent in 2010. Growth has slowed this year to an annual rate of less than 1 percent, sparking concern that the financial plight of families will intensify and hamper the recovery.

The data show that in 2010, a year when corporate profits were soaring and the economy was pulling out of recession, Americans saw their fortunes decline. The earnings of women who worked full time were about 77 percent of those of men, about the same gap as in 2009.

“Even in good economic times, the number of Americans who were struggling to make ends meet and had declining income was going in the wrong direction,” said Boteach. “People are right to have some frustration that the economic gains of the last decade, when they were happening, weren’t shared.”

U.S. households have little to cheer about as job creation stagnated last month and hourly wages retreated. The unemployment rate has hovered at or above 9 percent for more than two years. Consumer confidence fell to the second-lowest level this year for the week that ended Sept. 4.

Recouping Losses

Since the low point in the labor market downturn in February 2010, nonfarm payrolls have increased by 1.9 million, showing that without stronger growth, it will take years to recoup about 8.7 million jobs lost as a result of the recession that began in December 2007 and ended in June 2009.

The 2010 figures “tell us how the changing economic conditions have really impacted the American family.” said Robert Groves, director of the Census Bureau, on a conference call with reporters.

The numbers are part of an annual report on income, poverty and health insurance released by the Census Bureau. The data are based on a survey of about 100,000 addresses that’s used as the primary source of figures about the nation’s labor force.

As defined by the Office of Management and Budget and updated for inflation using the Consumer Price Index, the weighted average poverty threshold for a family of four in 2010 was $22,314.

Declines in Midwest

Among ethnic groups, median income declined for white and black households, and changes in Hispanic and Asian households weren’t statistically significant. Incomes declined in the Midwest, South and West and were little changed in the Northeast.

Adding to the woes is the number of Americans without health insurance. It increased to 49.9 million from 49 million, or about 16.3 percent of the population, though the bureau said the change wasn’t statistically significant. The overall percentage of people with insurance didn’t change.

The number of Americans with private insurance was 195.9 million, unchanged from 2009, the bureau said. The number enrolled in public programs including Medicaid and Medicare grew to 31 percent, or 95 million, from 93.2 million in 2009.

Medicaid enrolled about 48.6 million people last year, the bureau said, or 15.9 percent of the population. The figures were little changed from 2009.

To contact the reporter on this story: Catherine Dodge in Washington at

To contact the editor responsible for this story: Mark Silva at