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Jobless claims hold steady, as the Delta wave continues to roll out

1 day ago

– by New Deal democratEvery day brings a bit more evidence in support of the forecast that the Delta wave is rolling out, at roughly the same rate as it rolled in. Meanwhile, this week’s report on  jobless claims pulled back a bit from last week, but kept the low trend intact.Initial claims rose 16,000 to 351,000, while the 4 week average declined 750 to 335,750, the latter yet another pandemic low:Continuing claims rose from last week’s pandemic low by 131,000 to 2,845,000:Now that all emergency pandemic assistance programs have ended, watch to see if continuing claims decline precipitously in the next several weeks. Obviously they didn’t this week.Here are both the 4 week average of initial claims and continuing claims from 1983 through the end of 2019 (both normed to zero as of this

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Coronavirus dashboard for September 22: the Delta wave rolls out?

2 days ago

– by New Deal democratAt last it appears that the Delta wave may be receding, as for now the US is on a definite downslope in cases. As of yesterday the US recorded 135,000 cases, a 31,000 decrease from the peak only 20 days before:Deaths have continued to rise, but may peak out below the 2400 level I identified previously as the low end of the range for a likely top by the end of this month.A look at the regional breakdowns shows that the Northeast and Midwest have continued to rise, albeit slowly, and may or may not be peaking. The West has declined, mainly driven by California. But the big news is that in the South, where Delta hit early and severely, cases have declined by 30%:Further, when we look at the 10 worst jurisdictions for cases, only South Carolina is from the Deep South.

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August housing construction shows stabilization, following interest rate moderation

3 days ago

– by New Deal democratThis morning’s report on August housing permits and starts shows that the stabilizing of mortgage rates in the past few months has now stabilized housing construction.Housing starts increased 3.9% m/m, and total permits increased 6.0%. The less volatile single family permits increased 0.6%. As a result, the overall trend for all three metrics for the past several months is sideways:Last month I noted that the YoY comparisons were going to become much more challenging, given the boom in construction late last year. With the stabilization of construction, both measures of permits as well as starts remained above their levels of one year ago:Normally I show the changes in mortgage interest rates YoY and compare them with housing construction. This month let me show you

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Median household income and housing affordability

4 days ago

– by New Deal democratLet’s take a look at the affordability (or not!) of housing, since there is no economic news of note today.Last week the Census Bureau released their annual report on median household income for the US, covering 2020. Since this is the best measure to gauge housing affordability, rather than average wages or income, this is a good time to update this information.Median household income declined in the US last year due to the pandemic, and the tsunami of unemployment that accompanied it. Still, at $67,521 it was still 40% higher in nominal terms than it was at the peak of the housing bubble in 2006, when it was $48,201:Below I compare house prices measured by the FHFA house price index and the Case Shiller national index, deflated by median household income (dark and

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Weekly Indicators for September 13 – 17 at Seeking Alpha

6 days ago

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.Despite the fact that Delta has been almost as bad as last winter’s wave of infections, which was the worst to date, and has been almost as bad in terms of deaths as the first wave that hit the NYC area hard, it has had almost no effect on the economy, and in particular consumer behavior.In the longer term, relatively low unemployment and higher inflation may spur the Fed to raise rates sooner rather than later, but this has not dragged down the long leading indicators too much at this point.As usual, clicking over and reading should bring you nearly up to the moment as to the economic situation, and bring me some lunch money.

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August retail sales rebound slightly, argue for continued strong jobs growth in autumn

7 days ago

– by New Deal democratLet’s take a look at retail sales, which are perhaps my favorite monthly economic indicator, since they tell us so much about average consumer behavior, and are also a good short leading indicator for jobs.Nominally retail sales increased 0.7% for August, after a -0.6% downward revision to -1.7% for July.  Since consumer prices rose 0.3% in August, real retail sales increased 0.4%. Although real retail sales are down -3.8% from their April peak, they are 11.5% higher than they were just before the pandemic hit:While the recent decline from April is consistent with a slowing economy ahead, if sales stabilize here I don’t see this as a harbinger of an actual downturn.As I have written many times over the past 10+ years, real retail sales YoY/2 has a good record of

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Jobless claims continue in normal mid-cycle range

8 days ago

– by New Deal democratLast week I encouraged readers to take the very low jobless claims number with a grain of salt due to Labor Day artifacts, and see if the big reduction was maintained or reversed this week. This week did indeed reverse the pattern somewhat, but not enough to interfere with the overall declining trend.Initial claims rose 20,000 to 332,000, while the 4 week average declined 4,250 to 335,750, the latter yet another pandemic low:Continuing claims declined 187,000 to 2,665,000, also another pandemic low (which, to reiterate, may have much to do with the expiration of emergency pandemic benefits in many States):Here are both the 4 week average of initial claims and continuing claims from 1983 through the end of 2019 (both normed to zero as of this week’s numbers) for

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Industrial production now exceeds pre-pandemic level

9 days ago

– by New Deal democratIndustrial production, the King of Coincident Indicators, was reported this morning for August, and was positive in a particularly significant way.Total production increased 0.4% in August, and the manufacturing component increased 0.1%. Nothing particularly special about that; in fact the manufacturing component was a little weak compared with most recent months. Additionally, the July numbers were revised slightly (not significantly) higher and lower for each, respectively.But what is important, as shown in the graph below in which the respective values are normed to 100 as of February 2020, is that both total and manufacturing production have now exceeded their pre-pandemic levels:Total production is 0.3% above its February 2020 love, and manufacturing is 1.5%

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Coronavirus dashboard for September 13: on the downside of the Delta wave, vaccinations make all the difference

11 days ago

– by New Deal democratWith each passing day, it becomes increasingly likely that the peak of the Delta wave was just before Labor Day. We’ll probably get a pop in the weekly average number tomorrow, as today’s numbers replace the Labor Day holiday numbers, but unless there is a big surprise, it appears we are into the downside of the wave.But we are still on the upside when it comes to deaths, which probably won’t peak for another week or two.Below are cases (solid line) and deaths (dotted line) for the past year:The winter wave peaked at an average of 250,000 cases and 3,500 deaths/day. If that ratio exists for this wave, deaths will peak at roughly 2400/day. But at the June trough, there were 11,300 cases and 218 deaths. Cases increased over 14x to their peak. If deaths do the same,

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Weekly Indicators for September 6 – 10 at Seeking Alpha

13 days ago

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.The big surprise of the past several months has been how little effect the Delta wave has had on the data, and in particular consumer data. As usual, clicking over and reading hopefully is rewarding to you, and a tiny bit rewarding to me as well.

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Coronavirus dashboard for September 10: was Labor Day indeed the peak of the Delta wave?

14 days ago

– by New Deal democratI have been saying for some time that the Delta wave would probably peak around Labor Day. It’s not certain yet, but it is looking increasingly likely to have been the case.The Delta wave struck in both the US and Israel at almost the same time, with almost the same vaccination profiles. Here’s what cases per capita (bold lines) and deaths per capita (dotted lines) look like for each: Cases in both countries appear to have peaked in the last week (repeating the pattern in the Delta waves in India, the Netherlands, and the UK). Deaths have either stabilized or (more likely) are still slowly increasing.Data in the US was affected by the Labor Day weekend. Here is the daily count of cases for the last 4 weeks in the US:Note the difference in last Monday and Tuesday,

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Jobless claims blow away the Delta wave (but beware Labor Day seasonality)

15 days ago

– by New Deal democratThis morning’s initial jobless claims report makes it shockingly evident that the Delta wave has had no appreciable effect on at least the “firing” side of the jobs market (vs. the “hiring” side, where it might have).Initial claims declined 35,000 to 310,000, and the 4 week average also declined 16,750 to 339,500, both yet more pandemic lows:By way of reference, it took almost 5 years into the last expansion – until spring 2014 – for initial claims to be this low.Continuing claims declined 22,000 to 2,783,000, also another pandemic low:In the last expansion, this number was first seen in early 2014 as well.These are, to put it bluntly, normal expansion numbers.With one caveat: Labor Day seasonality may have driven some of the decline. The below graph shows the % by

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July JOLTS report shows market still out of equilibrium, no additional hiring from early termination of benefits

16 days ago

– by New Deal democratThis morning’s JOLTS report for July is particularly important, because July was the first full month after a number of GOP-controlled States terminated enhanced unemployment benefits, on the theory that they were excessive and were coddling idle workers. Thus we should be seeing a big drop in unfilled job openings, as those people were incentivized to rush out and accept new employment.It didn’t happen.Job openings increased roughly 750,000 to yet another new all-time record of 10.934 million (blue in the graph below). Meanwhile actual hiring *decreased* by about 250,000 (red):Here are the month over month percentage changes for each of those metrics:Voluntary quits also rose, and are higher than any other prior month except this past April, as to which they were

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The unemployment rate is not *uniquely* overestimating the “true” employment situation

17 days ago

– by New Deal democratBill McBride a/k/a Calculated Risk put up an entry over the weekend positing that the employment situation is worse than the unemployment rate indicates.He basis this on the expectation that the overall labor force was expected to grow by 100,000 a month in 2020 and this year, whereas as of last month there were a little more than 2.9 million less people employed compared with just before the pandemic. This shortfall, he calculates, amounts to an “adjusted” unemployment rate of 7.9% vs. the official 5.2%.This type of calculation is similar to many that were floating around for almost the entire duration of the last expansion – that the employment situation was far worse than the “official” headlines. My take is a completely different one. I start out with the

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Weekly Indicators for August 30 – September 3 at Seeking Alpha

20 days ago

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.Even the indicators which should be most sensitive to rhe raging of the Delta variant show no significant deterioration. A few indicators actually improved.As usual, clicking over and reading should reward you with knowledge and reward me a little bit for my efforts.

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August jobs report: some weak points, but the underlying very good trend continues

21 days ago

– by New Deal democratWhile the NBER has declared that the recession ended in April 2020, neither the King nor Queen of Coincident Indicators, industrial production and jobs, have recovered to their pre-pandemic levels. The former is only off by -0.2%, but the latter – which is most important to ordinary Americans – as of this morning’s report is still -3.5% below its level in February 2020.While this morning’s report came in well short of expectations, with the big positive revision to last month’s blockbuster report, which I’ll get into more detail about below, the 6 month average of monthly gains is still over 600,000.Here’s my synopsis of the report:HEADLINES:235,000 jobs added. Private sector jobs actually added a little more, but government (mainly education) shed -8,000 jobs,

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Jobless claims show continuing improvement, now well within normal expansion range

22 days ago

– by New Deal democratWay back at the beginning of spring, I set a goal of initial claims being 400,000 or less by Labor Day as a marker for a good COVID recovery – which I was reminded of because the aforesaid holiday is this weekend. Well, we blew through that a while ago, and at this point all of the jobless claims markers are well within the range of a normal expansion.This week initial jobless claims declined 14,000 to 340,000. The 4 week average of claims declined by 11,750 to 355,000. Both set new pandemic lows:The same is true for continuing claims, which declined 160,000 to another new pandemic low of 2,748,000:From the long term perspective, below is the current level of continuing claims  (blue), together with the 4 week average of initial claims* (red), and the unemployment

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Producer sector remains on fire, while two most important indicators of consumer sector falter

23 days ago

– by New Deal democratAs has been the pattern for the last several months, August data started out with a strong reading on manufacturing, while July ended with weak data on housing construction. As a side note, the latest read on motor vehicle sales also slid south. Both the overall and new orders components of the ISM manufacturing index remained very strong, with the former increasing slightly m/m from 59.5 to 59.9 and the latter by 1.8 from 64.9 to 66.7, both far above the breakeven point of 50.0:As I have said virtually all this year, the simplest way to read this is that the manufacturing sector remains on fire.The story remains different with this morning’s release of July construction spending. Total nominal spending increased 0.5%, and spending in the long leading residential

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Coronavirus dashboard: the Delta wave starts to recede in the South, and migrates North

24 days ago

– by New Deal democratUltimately, that I have to continue to post this material is depressing. At least 80% of all US adults and most teenagers should have been fully vaccinated by now, with the threat of mass outbreaks, even from Delta, retreating into the past.So let me begin with the best graphic representation I have seen so far of where the resistance to vaccination is coming from (via Morning Consult):Note that for all the attention the opposition of the Trumpist GOP has received, an even *greater* share (39%) of the Young Invincibles, age 18-34, are either uncertain or unwilling, and 62% have been or have plans to get vaccinated. Additionally, right behind the GOPers, 33% of Blacks are uncertain or unwilling, and only 67% have been or have plans to get vaccinated. Further, when we

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A fundamentals-based look at the consumer indicates the expansion is in good shape for now

25 days ago

– by New Deal democratI was going to update the Coronavirus dashboard today, but since half of the States no longer bother to report over the weekend, Monday is basically useless. There may be a few interesting things happening … but let’s wait until tomorrow.In the meantime, I see where Bill McBride posted a graph of spending on gas as a percent of total consumer spending, which brought to mind one of my “alternative” methods for forecasting (at least on the very near term) a recession.Start with oil shocks. As the graph below shows, all three of the non-pandemic recessions in the past 30 years were immediately preceded by a large jump in oil prices compared with income:Certainly in the past year there has been a comparable jump, but note that, *unlike* right before those recessions,

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Forecast-palooza: Weekly Indicators, Short Term, and Long Leading Forecast all posted at Seeking Alpha

27 days ago

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.Despite the Delta wave raging, the consumer data continues to be very positive.But wait, this week there’s more!!!My biannual Short Term forecast for the next 6 months has also been posted.As has my biannual Long Leading outlook through mid year 2022.(Hint: the situation changes as we get into and past Q1 of next year).As usual, clicking over and reading will not just bring you up to the virtual moment on the economy, and this week, it will give you a pretty good look at what is in the near and farther distance ahead. And it will pay my bar tab, which is a positive as well.

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July personal income and spending: return to normalcy, and normalcy is good

28 days ago

– by New Deal democratHow well personal income and spending held up throughout the pandemic is one of the best things about the government response. That has continued to be the case as of this morning’s report for July.Real personal income (blue) increased 0.7%, and is 4.2% above where it was in February 2020. Real personal spending (red) decreased -0.1%, but is still 2.7% above its immediate pre-pandemic level:Further, the “cushion” in personal savings due to the emergency pandemic programs continues, as the savings rate remains significantly above where it was before the pandemic (the below graph subtracts 7.0%, which was the lowest level in the immediate few years before 2020, better to show this):Real personal spending is basically the other side of the coin compared with real

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Initial and continuing jobless claims: the good news continues

29 days ago

– by New Deal democratThe good news for both initial and continued claims continued this week.Initial jobless claims rose 4,000 to 353,000 from last week’s pandemic low. The 4 week average of claims declined by 11,500 to 366,500, another new pandemic low:Significant progress in the decline of initial claims had stalled for the last 2 months, but that has ended.The story is the same for continuing claims, which declined 3,000 to another new pandemic low of 2,862,000 (with last week’s preliminary estimate of 2820,000 being revised substantially higher):This continues this series’ recent declining trend that began on May 29. As I have noted before, this may reflect the termination of special pandemic benefits in many States, the impact of $15 minimum wages and signing bonuses being offered,

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Coronavirus dashboard for August 25: is the Delta wave close to peaking?

August 25, 2021

– by New Deal democratI’ve been writing for about a month that, if the US outbreak followed the cycle of India and the UK, in which the Delta wave hit its peak about 6 to 8 weeks after onset, in the US the peak would be about Labor Day. As the graph below (which is in log scale better to show accelerating and decelerating trends) shows, it looks like that is about to happen:For the US as a whole, cases over the last 7 days increased by about 10%. One week prior, on August 17, it was about 20%. On August 10 it was 30%. On August 3 it was 50%. On July 27% it was almost 70%. So if the pattern continues, it looks like the Delta wave is about 1 week from peaking – I.e., right about and maybe a little before Labor Day.That the Delta wave may be approaching its peak by noting in how many States

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July new home sales down nearly 30% from peak, as prices perhaps start to plateau

August 24, 2021

Here – by New Deal democratUnlike yesterday’s existing home sales, today’s report on new home sales is much more economically significant. The reason I prefer single family housing permits as a measure is that the sales data is extremely volatile, and heavily revised over the next several months. But with those caveats, let’s take a look.New home sales (blue in the graph below) increased 1% for the month, but are still down 28.7% since their January peak:In the graph I also show single family permits (red) and deflated residential construction spending (gold). Not unusually, new home sales surged earlier than either of the other two metrics, peaking on a 3 month averaged basis last September. Permits and construction spending were far less noisier, but peaked a few months later.The

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A note on existing home sales

August 23, 2021

– by New Deal democratExisting home sales are the least noteworthy of the housing data, because of the very limited economic activity moving into or out of an existing home provokes compared with the construction, furnishing, and landscaping of a new home. But it’s worth a brief look, so let’s note this month’s report.Existing home sales (blue in the graph below) are only up 1.7% compared with one year ago, as opposed to new single family home sales (red), which are off over 30%! :Prices for all existing homes (blue) and single family existing homes (violet) are up almost 20% – which is still less than the 23% YoY increase recorded one month ago. Note that the median price for new single family homes (red) is also higher, but much less so at 10%:It is likely that the supply constraint of

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Weekly Indicators for August 16 – 20 at Seeking Alpha

August 21, 2021

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.Surprisingly, Delta still has not made much of an impact on the coincident indicators. People as a whole are still out shopping and dining with nearly full enthusiasm. And there are signs that the Delta wave is beginning to peak.As usual, clicking over and reading will bring you up to the virtual moment on the economy, and bring me some pocket change for brunch.

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Housing update for 2022 at Seeking Alpha

August 20, 2021

– by New Deal democratFollowing up on Wednesday’s post here, I took a comprehensive look at housing construction and sales, and their implications for the 2022 economy, over at Seeking Alpha.As usual, clicking over and reading should be educational for you, and additional for me by a few pennies in my financial condition.While I am at it, I haven’t updated my Big Picture short term and long term forecast for the economy since February, so I expect to do that at some point in the next week.

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Initial claims: simply, good news

August 19, 2021

– by New Deal democratThe bottom line for both initial and continued claims this week is simple: unadulterated, absolute good news.Initial jobless claims declined 29,000 to 348,000, 20,000 below their previous pandemic low. The 4 week average of claims declined by 19,000 to 377,750, 6,750 below its previous pandemic low of 384,500:Significant progress in the decline of initial claims had stalled for the last 2 months, but as of this week, that has ended.The story is the same for continuing claims, which declined 79,000 to another new pandemic low of 2,820,000:This continues this series’ recent declining trend that began on May 29. As I have noted before, this may reflect the termination of special pandemic benefits in many States, the impact of $15 minimum wages and signing bonuses being

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July housing permits and starts: yellow flag for economy in 2022

August 18, 2021

– by New Deal democratLast month I noted that, from here on, the comparisons with 2020 in housing would become much more challenging. And so they have.While permits (gold in the graph below) did increase this month, their declining trend remains intact. Starts (blue), and more importantly, single family permits (red, right scale) – the least volatile measure of all – both decreased again, as they have almost relentlessly since the beginning of this year:Viewed YoY, all three are only 2.5%-6.0% above last July:Here is a graph I have run many times, the inverted YoY change in interest rates (blue) vs. the YoY% change in single family permits (red/10 for scale):Note that in late 2018-early 2019, in the face of a similar increase in interest rates, permits actually declined YoY. Almost

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