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Monthly consumer inflation rate increases by most in 10 years; real wages decline, but real aggregate wages increase

4 days ago

– by New Deal democratSeasonally adjusted consumer prices rose 0.6% in March. This was the biggest single month gain since June 2009, coming out of the Great Recession:Leaving aside the pandemic, since the 1980s recessions have only happened when CPI less energy costs (red) had risen to close to or over 3%/year, usually driven by increases in the price of oil by more than 40% YoY. Even with this month’s spike, YoY inflation ex-energy is only up 1.9%:Because in the first few months of the pandemic during the lockdowns there was a spurt of deflation as shown above in the first graph, in the below graph I’ve normed the values to 100 as of May of last year. In the 9 months since, total inflation has been up 3.5% (for a 4.7% annual rate), while inflation ex-energy has risen 2.0%, (for a 2.7%

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Coronavirus dashboard for April 12: more good news, more bad news

5 days ago

– by New Deal democratThe good news is, vaccinations work.Vaccine effect in the UK:By age group:Vaccine effect in France (in the face of an increasing case count):Vaccine effect even in Chile:While confirmed cases have gone up by 100% in Chile, deaths have “only” gone up by 50%. Even employing a 4 week lag, 4 weeks ago cases had gone up 50%, while deaths are up 33% from 4 weeks ago:Vaccine effect in the US:Now, the bad news.A 4th wave has clearly begun in the US, as confirmed cases are up over 30%, from 53,300 3 weeks ago to just over 70,000. Deaths have plateaued:One week ago I said that Michigan would be the acid test for what happened with deaths in the face of a 4th wave of infections even with a substantial portion of the population having been vaccinated. And the news is not

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Weekly Indicators for April 5 – 9 at Seeking Alpha

7 days ago

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.The big news continues to be bifurcation between the currently unfolding Boom, fueled by the fire hose of monetary and fiscal stimulus, and the fallout in the long leading forecast based on the increase in interest rates as a result.As usual, clicking over an reading will bring you up to the virtual moment on the economic data, and reward me with a penny or two for my efforts.

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With a Booming economy comes at least transitory inflation: March producer prices

8 days ago

– by New Deal democratOne of the economic subjects you are going to hear a lot about this year is inflation. We are recovering from a sharp if brief recession, and with the dual firehoses of fiscal and monetary stimulus, entering a Boom such as we have probably not seen in over 50 years.Unsurprisingly supplies of commodities and goods that had been cut back during the recession are going to be stretched thin and much competed for now, generating at least a brief burst of inflation.With that background noted, this morning producer prices for March were reported up 1.3% for that month alone. YoY producer prices are up 6.0% (blue in the graphs below):Much of the increase has been due to gasoline. Take out energy costs and producer prices were up a more modest 3.3% (red in the graph

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Jobless claims: progress pauses, as a new surge in COVID in Michigan and the Northeast causes concern

9 days ago

– by New Deal democratNew jobless claims are likely to the most important weekly economic data for the next 3 to 6 months. As the number of those vaccinated continues to increase, I expect a big increase in renewed consumer and social activities, with a concomitant gain in monthly employment gains – as we saw in the March jobs report last week.Three weeks ago I set a few objective targets: I am looking for new claims to be under 500,000 by Memorial Day, and below 400,000 by Labor Day. This week didn’t help us, although it is more of a pause than a significant increase.On a unadjusted basis, new jobless claims rose by 18,172 to 740,787. Seasonally adjusted claims rose by 16,000 to 744,000. The 4 week average of claims also rose by 2,000 from last week’s pandemic low of 721,250 to

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February JOLTS report showed a pandemic still in control

10 days ago

– by New Deal democratYesterday morning’s JOLTS report for February showed that the pandemic was still in control of the numbers.This report has only a 20 year history, and so includes only two prior recoveries. In those recoveries: first, layoffs declinedsecond, hiring rosethird, job openings rose and voluntary quits increased, close to simultaneouslyThe recovery from the worst of the pandemic almost one year ago at first followed this script, but the winter surge, which led to a few month of flat, or worse, jobs reports, disrupted that trend.Layoffs have followed the above script, reverting to normal levels back in last May, and continuing at those levels since:But the situation is different with hirings, openings, and quits. Here is the long-term record of the entire series:But now,

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American plutocracy in two simple graphs; plus, when will wage growth bottom?

11 days ago

– by New Deal democratThe JOLTS report for February comes out later this morning; I may post on it later or tomorrow.In the meantime, here are updates on several graphs I used to run during the last expansion in order to examine how shared out (or not) economic growth was.First, here is a graph comparing corporate profits adjusted for inflation, and total nonsupervisory wages, also adjusted for inflation. Both are also adjusted for population growth, so that we can see how much each has grown (or not) per person:During the era of strong unions, ordinary workers got an increasing share of the pie. That reversed after the 1970s, took off in the 1990s, and really exploded after 2000. By 2020, real corporate profits per capita had grown by 75% more than total wages per capita:All of which

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Coronavirus dashboard for April 5: the problematic cases of Chile . . . and Michigan

12 days ago

– by New Deal democratAs you probably already know, the news on the vaccination front continues to be good, as the US is now administering on average over 3 million doses a day – and still climbing. At this rate of improvement, every adult in the US could be vaccinated by Memorial Day at the end of next month.One bit of not so good news is that the percentage of seniors who have received at least one dose has almost stalled out at roughly 75%. For example, yesterday that percentage improved by exactly 0.1%. If 1/4 of even the most vulnerable population simply refuses to be vaccinated, we are not going to achieve herd immunity.Further, while in the past few weeks I have been highlighting the success stories in vaccination, particularly in Israel and the UK, there are a number of

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I bookmarked a prediction about the coronavirus by supply-sider Scott Grannis one year ago …

13 days ago

– by New Deal democrat As I mention from time to time, I read a number of economic observers with whose opinions I usually strongly disagree, partly because it is good to consider other points of view, and partly because some compile excellent and interesting data, even if I disagree with their conclusions about what the data means.The “Calafia Beach Pundit,” Scott Grannis, is one of those writers. His chart work is frequently compelling and often challenging. But, when it comes to the ideologically-inspired response to COVID-19, he has been out of his mind.So almost exactly one year ago, on March 27, 2020, I bookmarked one of his observations and forecasts, because I expected that the truth would be very different than he thought: Since the normal flu season began last October, the

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Weekly Indicators for March 29 – April 2 at Seeking Alpha

14 days ago

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.One fairly unique service I think I provide is not just forecasting the next few months, but into the next year as well. So in the second half of last year I was writing about how all of the indicators were lining up for strong growth in 2021 if the pandemic could be brought under control.Now I am beginning to look at 2022, and what I see are increasing signs of jumps in the prices of important middle class commodities and assets, mainly houses and gasoline. Which means, we could see the old-fashioned type of end of an economic boom.As usual, clicking over and reading will not just bring you right up to the moment in the nowcast and the forecasts, but also reward me a little for bringing that information to you.

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Blockbuster March jobs report, but still a long way to go

15 days ago

– by New Deal democratHEADLINES:+916,000 million jobs added. The alternate, and more volatile measure in the household report indicated a gain of 609,000 jobs, which factors into the unemployment and underemployment rates below.U3 unemployment rate declined 0.2% to 6.0%, compared with the January 2020 low of 3.5%, and the April 2020 high of 14.8%.U6 underemployment rate declined 0.4 to 10.7%, compared with the January 2020 low of 6.9%, and the April 2020 high of 22.9%Those on temporary layoff decreased -203,000 to 2,026,000.Permanent job losers decreased -65,000 to 3,432,000.January was revised upward by 67,000, and February was also revised upward by 89,000, for a net gain of 156,000 jobs compared with previous reports.Leading employment indicators of a slowdown or recessionI have been

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ISM manufacturing at multi-decade highs in March, while construction chilled in the February Big Texas Freeze

16 days ago

– by New Deal democratTwo months ago I wrote that both the manufacturing and housing sectors were “on fire.” Then last month I wrote that they had “turned white hot,” with both construction spending and ISM manufacturing data at levels not seen in years.While construction backed off, manufacturing is even … well, hotter than white hot?The overall ISM manufacturing reading rose from 60.8 to 64.7, the highest reading since 1984! The even more leading new orders subindex also rose from 64.8 to 68.0, the highest reading since 2004:Turning to construction, the Big Texas Freeze showed up in February spending for residential construction, which declined -0.2% for the month, while total construction spending declined -0.8%:Taking into account inflation – deflating by the PPI for construction

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New jobless claims rise slightly, expect a big payrolls gain tomorrow

16 days ago

– by New Deal democratNew jobless claims are likely to the most important weekly economic data for the next 3 to 6 months. They are going to tell us whether, as the number of those vaccinated continues to increase, there will be a veritable surge in renewed commercial and social activities and attendant consumer spending, leading in turn to a strong rebound in monthly employment gains.Three weeks ago I set a few objective targets: I am looking for new claims to be under 500,000 by Memorial Day, and below 400,000 by Labor Day. This week initial jobless claims increased from last week’s pandemic lows. On a unadjusted basis, new jobless claims rose by 63,282 to 714,433. Seasonally adjusted claims rose by 61,000 from last week’s downwardly revised 658,000 to 719,000. The 4 week average of

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Housing and the economy, now and in 2022 – recession caution?

17 days ago

– by New Deal democratMy long-form review and forecast of the housing market and its potential effect on the 2022 economy is up at Seeking Alpha.If the market stays like 2014 when interest rates went up, no biggie. But if it’s more like the 1950s, we have a problem.As usual, clicking over and reading should be informative for you, and it rewards me a little bit for my efforts.

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This may be the most important housing chart of springtime 2021

18 days ago

– by New Deal democratMy longform housing market analysis is almost complete, and will probably get posted later today or tomorrow at Seeking Alpha. I’ll post a link here once that is done.In the meantime, consider the following. The Case Shiller national house price index had another sharp increase in February, and is now up 11.2% YoY, the highest rate since the days of the housing bubble in 2002 (green in the graph below):Meanwhile look at inventory (gold). In absolute terms, the seasonally adjusted inventory of new homes for sale bottomed last August and October. Last August inventory was down -12.3% YoY. As of last month, it was only down -4.6% YoY. At this rate of change, it will be *up* YoY by about May.Multiple offers over asking prices within days if not hours are now becoming

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Coronavirus dashboard for March 28: good news … < sigh > … and bad news

19 days ago

– by New Deal democratAccording to the CDC, there have been 30.3 Million *confirmed* cases of COVID-19 in the US, and 550,000 deaths.The true number of actual infections is probably much higher.On the good news front, the CDC says that 36.2% of the entire US adult population has received at least one shot; a full 20%, or 1 in every 5 adults, has been fully vaccinated. Among those 65 years of age or higher, the news is even better: just shy of 3/4’s (72.4%) have received at least one dose, and just shy of 50% (48.4%) are fully vaccinated.As a result, as of one week ago, both cases and deaths among senior citizens have declined by nearly 90% since their December peak. Here are cases: And deaths among senior citizens have all but disappeared:The situation among nursing home and other long

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Weekly Indicators for March 22 – 26 at Seeking Alpha

21 days ago

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.For the first time since I started tracking this data, literally every single one of the coincident indicators is positive. We are starting to experience a boom in economic growth that I expect to continue throughout most if not all of this year.As usual, clicking over and reading will bring you up to the virtual moment as to what is happening in the economy, and reward me with a penny or two for the time and effort I put in to creating this weekly portrait.

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February personal income and spending decline: the back end of January stimulus payments

22 days ago

– by New Deal democratLast month I wrote that the:“report on January personal income and spending shows just how important the stimulus packages enacted by the federal government both last spring and last month have been to sustaining the economy.”The truth of that was confirmed on the back end in this morning’s report for February, in which January’s 10% increase in income was followed by a -7.1% decrease (red). January’s increase of 3.4% in spending was also partially reversed by a -1.0% decrease in February (blue):In its release, the Census Bureau confirmed this analysis, writing:“The decrease in personal income in February was more than accounted for by a decrease in government social benefits to persons. Within government social benefits, ‘other’ social benefits, specifically the

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Jobless claims make new pandemic lows at last

23 days ago

– by New Deal democratNew jobless claims are likely to the most important weekly economic data for the next 3 to 6 months. They are going to tell us whether, as the number of those vaccinated continues to increase, there will be a veritable surge in renewed commercial and social activities and attendant consumer spending, leading in turn to a strong rebound in monthly employment gains.Two weeks ago I set a few objective targets: I am looking for new claims to be under 500,000 by Memorial Day, and below 400,000 by Labor Day. This morning was (relatively!) good news, as we finally made new pandemic lows for initial claims. On a unadjusted basis, new jobless claims fell by 100,412 to 656,789. Seasonally adjusted claims also declined by 97,000 to 684,000. The 4 week average of claims

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Seconding Paul Krugman: inflationary pressures will be a transient phenomenon in 2021 (but will they cause a recession in 2022?)

25 days ago

– by New Deal democratPaul Krugman argues once’s again this morning that any increase in inflation this year as part of a post-pandemic boom will be transitory:I agree. I want to elaborate on one point he hasn’t emphasized; namely, you can’t have a wage-price inflationary spiral if wages don’t participate!To make my point, let me show you three graphs below, covering wages and prices in three different periods: (1) the inflationary 1960s and ‘70’s, (2) the disinflationary Reagan-era 1980s and early ‘90’s, and (3) the low inflation period of the late 1990s to the present.In addition to the YoY% change in CPI, I also show CPI less energy (gold), better to show oil shocks, and also that it takes about a year for inflation in energy prices to filter through to inflation in other items. Also,

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Coronavirus dashboard for March 22: crossing an important threshold, to the *good* side

26 days ago

– by New Deal democratThe US is on the verge of crossing an important threshold: as of today, the 7 day average of COVID 19 deaths in the US has declined to exactly 1000:The last time the US averaged less than 1000 deaths a week from the virus was the beginning of November, almost 5 months ago. Since the January peak, deaths have declined by 70%.The story is even more breathtaking in nursing homes and other long term care facilities. For the week ending March 7, there were a total of 1,204 cases, a more than 96% decline from peak. There were 492 deaths, a 92% decline from peak:Both numbers were the lowest weekly totals since data began to be kept 10 months ago. Since deaths follow cases, I expect deaths to decline further in the next couple of weeks.Even if the recklessly irresponsible

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Democrats: legislate the society you want to live in first; worry about how to pay for it afterward

27 days ago

– by New Deal democratI want to add my voice to and amplify several themes I have read elsewhere in recent weeks. To summarize:1. If there is no majority to kill the Senate filibuster, reforming it into an actual talking filibuster is almost as good, and maybe even better.2. Each element of the democratic constituency should have at least one tangible and visible priority of theirs enacted during the Congress, and all other democratic constituencies should support that enactment, so that at midterm election time, Democrats have something to tout to their voters.3. In contrast to how democrats governed when they had both the Presidency and Congressional majorities in 1993-94 and 2009-10, when they adopted “pay-go,” meaning they had to come up with revenue sources before passing their

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Weekly Indicators for March 15 – 19 at Seeking Alpha

28 days ago

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.Both the nowcast and the short term forecast continue to be red hot. But interest rates continue to batter the long term forecast.As usual, clicking over and reading will bring you up to the virtual moment, and reward me a tiny bit for the efforts I put in.

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February declines in housing permits and starts: another likely effect of the Big Texas Freeze

March 17, 2021

– by New Deal democratHousing is an important long leading indicator. What we see now in mortgage applications, new home sales, permits and starts is informative of what the economy will be like 12+ months from now in 2022.The headline numbers for both permits and starts for February, released this morning, were both poor, off -10.8% and -10.3%, respectively. The temptation is to say, “higher interest rates, We’re DOOOMED!!!” Not so fast. In context, the declines were well within normal month to month variation, and at least some of the declines looks like more fallout from the Big Texas Freeze that we saw yesterday in industrial production and retail sales.Here is the headline graph covering the last 5 years for both starts (blue) and permits (red):Two things are of interest here: (1)

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Big (weather related) declines in February production and sales

March 16, 2021

– by New Deal democratThis morning we got the most important single metrics for both the consumer and producer side of the economy for February, respectively, retail sales and industrial production. Both were big misses, one explicitly and the other likely due to the big freeze in Texas and neighboring States.Let’s turn to production first.Total industrial production declined by -2.2% in February, while manufacturing production declined -3.1%. Both of these were the first declines of any significance since last April:Before the DOOOMERS go screaming, “Double-dip!” however, here is the what the Fed itself had to say about this report:The severe winter weather in the south central region of the country in mid-February accounted for the bulk of the declines in output for the month. Most

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Coronavirus dashboard for March 15: good news, and cause for concern

March 15, 2021

– by New Deal democratA year ago today I wrote about the accuracy of Jim Bianco’s forecast of exponential spread of COVID-19. At that time there were exactly 2952 cases, but increasing at 30% each day, and I wrote, “I have not seen any government action significant enough to stop this exponential projection being correct.” As of yesterday, there have been 29,438,775 *confirmed* cases – 9% of the total US population. There have certainly been many more cases which have never been confirmed by testing, primarily but not always because they were mild or asymptomatic.The good news is that vaccinations in the US are making better and better progress. In the past week, about 2.5 million doses were administered each day. At this rate the entire adult population could be vaccinated by the end of

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Weekly Indicators for March 8 – 12 at Seeking Alpha

March 13, 2021

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.Although rising long term interest rates are likely to have consequences in 2022, 2021 is shaping up to be a blowout year for economic (and hopefully employment) growth, driven by dual huge monetary and fiscal stimuli.As usual, clicking over and reading should bring you up to the figurative moment, and reward me just a little bit for my efforts.

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January JOLTS report: during the wintertime pandemic surge, hiring hit a brick wall

March 12, 2021

– by New Deal democratYesterday morning’s JOLTS report for January was confirmatory of the weak jobs report for that month, showing a largely paused recovery. Further, for the second month in a row, hires were down sharply. Let’s examine this in accord with the data from the prior two recoveries covered by this report, which has only a 20 year history.In the two past recoveries: first, layoffs declinedsecond, hiring rosethird, job openings rose and voluntary quits increased, close to simultaneouslyWhat we will see below is that the big decline in hiring in December and January is a big outlier compared with the prior two recoveries. The remaining data is largely in accord with the pattern from the last two early recoveries: the first two data series to turn – layoffs and hires – did

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New jobless claims continue to decline, just above pandemic low

March 11, 2021

– by New Deal democratNew jobless claims are likely to the most important weekly economic data for the next 3 to 6 months. They are going to tell us whether my suspicion that, as a critical mass of those vaccinated is reached, there will be a veritable surge in renewed commercial and social activities and attendant consumer spending, leading in turn to a strong rebound in monthly employment gains considerably greater than the roughly 250,000 we saw in February, is correct.This week, the *relatively* good news continued. On a unadjusted basis, new jobless claims declined by 47,170 to 709,548. Seasonally adjusted claims declined by 42,000 to 712,000, only 1,000 above November’s pandemic low. The 4 week moving average declined by 34,000 to 759,000. Here is the close up since the end of July

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February consumer inflation begins to heat up a little

March 10, 2021

– by New Deal democratSeasonally adjusted consumer prices rose 0.4% in February. As a result, over the past several months there has been a significant uptick in YoY inflation to 1.7% from 1.1% in November. Aside from the pandemic, for the past 40 years, recessions had happened when CPI less energy costs (red) had risen to close to or over 3%/year, usually driven by increases in the price of oil by more than 40% YoY:Despite recent increases in the price of oil, now up 30% YoY as shown in the graph below, as of this month CPI less energy is only 1.6%, showing no real price pressure at all: Because pandemic affects are probably influencing seasonality, below I show both the  m/m adjusted and non-seasonally adjusted change in CPI:Here are the non-seasonally adjusted m/m% increases in prices

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