Sunday , March 7 2021
Home / [email protected] (New Deal democrat)

New Deal Democrat



Articles by New Deal Democrat

January personal income and spending show how important government stimulus has been to keeping the economy afloat

8 days ago

– by New Deal democratThis morning’s 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.After adjusting for inflation both personal income and spending rose in January, by +9.7% and +2.0%, respectively:The huge increase in income is not a mistake. It follows from the renewed Congressional stimulus package providing $600 checks to most households. And it’s pretty obvious that had an impact on spending, which rose to levels equivalent to 2019 and only about 2% off peak.The importance of the stimulus is shown dramatically when we subtract government transfer receipts from the equation, shown in red in the graph below:Real personal income excluding

Read More »

Initial jobless claims: it appears that the worst of the winter 2020-21 increase is behind us

10 days ago

– by New Deal democratLet me start off this week’s review of initial jobless claims by pre-debunking something I am sure is going to be said elsewhere: a lack of reporting in Texas did *not* appreciably skew this week’s numbers. Applying the same workaround I did for Hurricanes Sandy and Harvey, I.e., subtracting the affected State’s data from the unadjusted number, to see how much it is at variance with all the other States, shows that Texas’s underreporting due to its electricity crisis was less than 20,000 at worst in a week with little seasonal adjustment. In other words, being very generous, the “real” seasonally adjusted number of initial claims at worst probably would have been only about 30,000 higher – I.e., 760,000 – but for Texas issues.Additionally, last week’s nationwide

Read More »

New home sales rise m/m, but signal caution for housing market going forward

11 days ago

– by New Deal democratNew home sales increased to a three month annualized high of 923,000 in January. This is of a piece with the positive news last week on housing permits. At the same time, the pace remains below the recent high of 979,000 annualized set six months ago in July. The below graph compares housing starts (blue) with the much less volatile single family permits (red) and the even more volatile, and heavily revised, new home sales (gold), normalized to 100 as of January 2020:The reason to pay attention to new home sales is that, despite their volatility, they tend to peak and bottom before any other housing metric including permits and starts. So the fact that they have not made a new high in 6 months adds a note of caution to the otherwise sizzling housing market.New home

Read More »

Coronavirus dashboard for February 23: vaccinations start to have a dramatic effect

12 days ago

– by New Deal democratTotal US coronavirus deaths: 500,310Total US confirmed infections: 28,190,159Total US vaccinated (at least 1 dose): 44,138,118Total US vaccinated (both doses): 19,438,495The good news is, roughly 9.5% of the US population age 18 or over has received both doses of a vaccine. Over 20% has received at least one dose.The bad news is that we have reached the milestone of half a million dead. Further, probably at least 40,000,000 people have been infected, since many who have no or mild symptoms don’t ever get tested.Here’s the graph of the 7 day average of new infections and deaths for the US over the last 12 weeks:While there has been a decline of over 2/3’s in infections, and 40% in deaths, this only puts us even with the very worst levels of the summer outbreak.But

Read More »

You’re reading the right blog: 2021 economy edition

13 days ago

– by New Deal democrat“You’re reading the right blog” is an old chestnut (for me anyway) that I used to say from time to time to highlight a correct forecast that your (not so?) humble blogger made well in advance of more widely read sources.Well, please bear with me for one more self-pat on the back.For at least 6 months, I have been saying that the economy was poised to pick up strongly in 2021 once the pandemic loosened its grip. Most recently I repeated that in my short term and long term forecasts for 2021 over at Seeking Alpha.And this morning, January’s index of leading indicators came in at plus 0.3%, the 9th positive reading in a row:If the next 3 months are simply unchanged, the YoY comparison is going to be the most positive in two decades.Meanwhile, as Bill McBride has

Read More »

Weekly Indicators for February 15 – 19 at Seeking Alpha

15 days ago

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.We are continuing to see breakout strength in a number of  short leading indicators, as well as housing. The continued elevated reading in new jobless claims is the one contrary signal.As usual, clicking over and reading helps put a little $$ in my wallet, and brings you up to the virtual minute in how the economy is doing.

Read More »

Strength in housing and cars, oh my!

16 days ago

– by New Deal democratThe two consumer goods which turn down before recessions, and up before recoveries, are houses and motor vehicles, in that order.Since January housing permits and starts came out yesterday, let’s take a look at both.First, while housing starts retreated slightly from their December levels, the more leading and less volatile permits, and the even less volatile single family permits, both made new 14 year highs. The below graph normalizes all three series to 100 as of yesterday’s report, better to show the long term context:Starts were not so high as in prior booms, but permits were higher than at virtually all past periods except for the early 1970s and the early 2000s bubble.That’s really strong, and as I’ve said many times over the past half a year, bodes really

Read More »

Jobless claims: huge upward revisions for the second week in a row

17 days ago

– by New Deal democratThe story this week is the repeated massive upward revisions to last week’s numbersThis week, on a unadjusted basis, new jobless claims declined by 5,702 to 862,351. Seasonally adjusted claims increased by 13,000 to 861,000 (meaning last week’s original number of 793,000 was revised higher by almost 50,000! – the 2nd week in a row for huge upward revisions). The 4 week moving average declined by 3,500 to 833,250. Here is the close up since the end of July (these numbers were in the range of 5 to 7 million at their worst in early April): The “relatively good” news is that, despite the upward revisions, the recent increases seem to have plateaued. At the same time, both adjusted and unadjusted claims remain above their worst levels at the depths of the Great

Read More »

Industrial production continues strong growth

18 days ago

– by New Deal democratIf real retail sales (reported on in the prior post) is the best proxy for the health of the consumer, Industrial production, the King of Coincident Indicators, is the same for production. And the news there was also very good. Overall production rose 0.9% in December, and the manufacturing component rose 1.0%. As a result, overall production is only -1.9% below its level just before the pandemic hit last February, while manufacturing is only down -0.8% since then:At the current pace, manufacturing should be *up* YoY in one month, and overall production in two.Manufacturing, along with housing, has been the very best sector of the economy since the bottom of the pandemic recession last April, and it continues on a very good trajectory now. As I said with retail

Read More »

Blockbuster January retail sales presage gains in jobs

18 days ago

– by New Deal democrat[NOTE: I’ll report separately on industrial production later this morning.]Real retail sales is my bellwether for the health of the consumer. And after 3 months of declines, we got a huge upturn in January. Before adjusting for inflation, retail sales jumped 5.3% – not annually, 5.3% in one month! After adjusting for inflation, sales were up 5.0%, to a new all-time high:This is simply very good news, and adds to the evidence that, once the pandemic is under control, the economy is going to accelerate.I also use retail sales as a very good short leading indicator for employment. Because the series is somewhat noisy, I use the YoY% change (which was up 6.0% in real terms)  to anticipate what is likely to happen with the jobs numbers several months down the road. And

Read More »

My long leading forecast for all of 2021

19 days ago

– by New Deal democratI have a new post up at Seeking Alpha. Usually after Q4 GDP is posted at the end of January, I update my long leading indicators for the next 12 month outlook. I’m about 3 weeks late this year, mainly because the pandemic remains in control of the economy. But with vaccinations picking up steam, and the prospect of many people resuming more normal kinda-sorta activity in the next few months, it’s worthwhile to take a more comprehensive look at what is likely to happen once the logjam breaks.As usual, clicking over and reading should be informative for you, and puts a penny or so in my pocket as well.

Read More »

On the effects of COVID vaccination, Israel is the bellwether

20 days ago

– by New Deal democratI’m beginning to see some clickbait reports of COVID diagnoses after two doses of the vaccine, together with breathless reporting by some RW’ers and LW’ers that the vaccines are not very effective. I’m here to tell you to beware these headlines and reports.For example, here is a report out of Oregon that 4 people were diagnosed with COVID after their second doses of vaccine. Sounds scary, right? But if you read carefully, you see that while the *diagnosis* was made more than 14 days after the 2nd dose of the vaccine. That doesn’t mean that the *infection* occurred more than 14 days after administration of the 2nd dose, which would be more significant. In other words, it is perfectly likely that the infection started before the 2nd dose took full effect.Further, of

Read More »

Weekly Indicators for February 8 – 12 at Seeking Alpha

22 days ago

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.We are beginning to see some changes in the short leading timeframe. Most notably, this week, for the first time since last February, temporary staffing is higher YoY. That means that employers are hiring more staff in anticipation of better economic conditions in the months ahead, but aren’t certain enough to make a firm commitment yet.As usual, clicking over and reading will bring you up to the virtual moment, and help me out with a little pocket change.

Read More »

Welcome to the vaccination Hunger Games

23 days ago

– by New Deal democratThat, dear reader, is a slight variation on what my sibling unit said to me when I related the saga of my attempts to schedule a COVID-19 vaccination.As I have mentioned from time to time, I am an Old Fossil. And, well, the shortage in supply of the COVID vaccines has set off a fierce (if anything involving Old Fossils can qualify as “fierce”) competition for very limited slots.What your helpful neighborhood MegaPharmacy has chosen to do is to open up their website for vaccination appointments pretty much in the middle of the night. If you haven’t made your appointment for a date in the next week by the time of your first morning coffee, you are shut out.So yesterday I intrepidly opened the vaccination portal immediately after getting up in the morning, only to

Read More »

Initial and continued jobless claims: signs that the worst of the pandemic related layoffs may be behind us

24 days ago

– by New Deal democratSome – very relative – good news in unemployment claims this week. It looks like the recent increase in new claims has peaked, while continued claims continue to decline. With new daily infections, still horrible at 100,000/day, only 40% of their 250,000/day peak, and vaccinations slowly increasing near 1.5 million/day, we may have seen the worst.To today’s data: on a unadjusted basis, new jobless claims declined by 36,354 to 813,145. Seasonally adjusted claims declined by 19,000 to 793,000 (meaning last week’s original number was revised higher by nearly 40,000!). The 4 week moving average also declined by 33,500 to 823,000. Here is the close up since the end of July (these numbers were in the range of 5 to 7 million at their worst in early April): Both adjusted

Read More »

January inflation still tame; real wages still above previous 1973 peak

25 days ago

– by New Deal democratSeasonally adjusted consumer prices rose 0.3% in January. As a result, over the past several months there has been a slight uptick in YoY inflation to 1.3% from 1.1% in October. 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. As of this month that number is only 1.8%, 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:While inflation is running higher than in 2019, in the longer term scheme of things there is no cause for concern.Now let’s take a look at how inflation has affected real wages. Because wages are “stickier” than prices, typically

Read More »

December JOLTS report shows renewed stalled jobs market due to out of control pandemic

26 days ago

– by New Deal democratThis morning’s JOLTS report for December confirmed a jobs market recovery that has  paused due to the increasing effects of the out of control pandemic. Most importantly, hires declined sharply – down by over 5% in a single month!While the JOLTS data is a deep dive into the dynamics of the labor market, since it only dates from 2001, there are only 2 previous recoveries with which to compare the present. Nevertheless it is worthwhile to make the comparison.In the two past recoveries: first, layoffs declinedsecond, hiring rosethird, job openings rose and voluntary quits increased, close to simultaneouslyLet’s examine each of those in turn. In each case.What appears below is that, although there has been some variation, the year 2020 through December has recapitulated

Read More »

The short term 2021 economic forecast + brief coronavirus update

27 days ago

– by New Deal democratAt the beginning of each year, I have usually posted both short and long term forecasts. Because of the impact of the pandemic, I refrained from doing so. But with light at the end of the tunnel courtesy of the vaccines, it makes sense to do updates now.So . . . my K.I.S.S. short term forecast is up at Seeking Alpha. As usual, clicking on over to the link will give you some useful economic information about the likely trajectory of the economy through midyear, and also reward me a little bit for the effort I put in.Meanwhile, some significant news on the pandemic front.While we wait to see if the Super Bowl was another super spreader event, the one week average of cases through yesterday was at the lowest point in 3 months:If the downward trajectory continues, we’ll

Read More »

Weekly Indicators for February 1 – 5 at Seeking Alpha

29 days ago

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.All of the leading sectors – manufacturing, housing, interest rates, money supply – are revving in place, just waiting for the pandemic to be brought under control.As usual, clicking over and reading will bring you up to the virtual moment, and bring me a tiny bit of jingle in my pocket.

Read More »

January 2021 jobs report: a strong divergence between very weak job gains, but a big drop in unemployment; but the only critical number is the doses of vaccine administered

February 5, 2021

– by New Deal democratFor the past several weeks, based on the increase in initial jobless claims, I have warned that the December employment report might have a negative number, or at very least a very weak positive. Once again this was an accurate forecast.There was a strong divergence between the household and establishment reports this month. And to cut to the chase, the only real critical number is the amount of vaccinations administered.HEADLINES:49,000 million jobs added, only 5,000 of which were in the private sector and 43,000 in government. The alternate, and more volatile measure in the household report indicated a gain of 201,000 jobs, which factors into the unemployment and underemployment rates below.U3 unemployment rate declined 0.4% at 6.3%, compared with the January 2020

Read More »

Initial claims decline, continuing claims set another new pandemic low

February 4, 2021

– by New Deal democratOn a unadjusted basis, new jobless claims declined by 23,525 to 816,247. Seasonally adjusted claims declined by 33,000 to 779,000. The 4 week moving average also declined by 1,250 to 848,250. Here is the close up since the end of July (these numbers were in the range of 5 to 7 million at their worst in early April): Because of the huge swings caused by the scale of the pandemic – typically claims only vary by 20,000 or less from week to week, but since the start of the pandemic, swings of 50,000 or 100,000 per week have happened as often as not, I have been posting the YoY% change in the numbers as well, since they will be much less affected by scale. As a result, there is less noise in the numbers, and the trend can be seen more clearly:Here’s what that looks

Read More »

Q4 GDP’s long leading indicators suggest slowing by year-end 2021

February 3, 2021

– by New Deal democratLast Thursday GDP for Q4 was released. That report contains two long leading indicators, which help fill in the picture for year-end 2021.I put up a fuller report over at Seeking Alpha.As usual, clicking over and reading rewards m a little bit for the effort I put into this endeavor.

Read More »

Coronavirus dashboard: Groundhog Day

February 2, 2021

– by New Deal democratToday is Groundhog Day, America’s version of the midwinter festival, where people can at least begin to look ahead to the coming of spring in the near future. That’s a good analogy for where we are in the COVID pandemic. Let me start with the ghastly news.First, there have been over 26 MILLION confirmed cases. Since many unsymptomatic cases have gone undiagnosed, it is very likely that over 33 million, or 1 in every 10 Americans, has been infected with the disease:  Further, in the 10 worst hit States, roughly 1 in every 500 people in the entire population has died. In the case of New Jersey, it’s 1 in 400:As has been the case throughout the pandemic, panic has bred caution. The total number of new infections in the past week has been at a 3 month low:And all 4

Read More »

The two most leading sectors of the real economy – manufacturing and construction – remain “on fire”

February 1, 2021

– by New Deal democratData for January 2021 started out this morning with the ISM manufacturing index, while the December laggard of construction spending was also reported. While the ISM manufacturing reading declined from 60.7 to 58.7, since 50 is the break even point, this is still a very strong positive. The even more leading new orders subindex also declined from 67.9 to 61.1, also still a very positive reading:The manufacturing sector remains very healthy.Turning to construction, one of my consistent themes in the past few months has been how the housing market is priming the economy for strong growth in 2021 as soon as the pandemic is brought under control. That was further confirmed as December construction spending surged yet again, confirming what we have already been seeing in

Read More »

The historical use of the filibuster in the Senate

January 31, 2021

– by New Deal democratI came across the below table and explanation in the twitter feed of Matt Yglesias, I think, and wanted to post it here for preservation. It is a recapitulation by decade through 2009 of the use of the filibuster, and cloture motions, in the Senate:Note that in the two year period of 2007-09, cloture was invoked more often than in the entire decades before 1980. And the Congress of 2009-11 had even more cloture motions than that.In short, the filibuster has gone from a rarely-used, extreme instrument, to an ordinary course of business during our lifetimes.Beyond that, as it currently exists, the filibuster overwhelmingly favors the GOP agenda. Since they don’t want to pass any new programs, or even enforce existing ones, a 60 vote requirement to enact those suits

Read More »

Weekly Indicators for January 25 – 29 at Seeking Alpha

January 30, 2021

– by New Deal democratMy Weekly Indicators post is up at Seeking Alpha.After many weeks of stability, there is some turmoil – in opposing directions – among the short leading indicators in particular. It is an indication of the bifurcated nature of the economy at present, where portions of the service sector have a pandemic-sized hole blown in them, while  manufacturing is barreling ahead.As usual, clicking over and reading will bring you up to the virtual moment, while putting a pittance in my pocket.

Read More »

Real personal spending declines in December, while income rises; not quite enough to start a “double-dip” recession

January 29, 2021

– by New Deal democratThis morning’s report on personal income and spending for December reversed the pattern we have seen all during the second half of 2020. After rebounding strongly for 6 months, real personal spending (blue in the graph below) declined for the month by -0.2%, and is 3.6% below its February peak. Meanwhile real personal income (red), which has generally declined since April, rose 0.6%, and remains 1.3% higher than it was in February just before the pandemic hit:The continued strength in income compared with prior to the pandemic has everything to do with the emergency stimulus Congress put in place early on after the pandemic hit. This has greatly ameliorated the privation which would otherwise have occurred.Further, real personal income excluding transfer payments

Read More »

Upward trend confirmed in new jobless claims

January 28, 2021

– by New Deal democratOn a unadjusted basis, new jobless claims declined by 101,498 to 873,966. Seasonally adjusted claims also declined by 67,000 to 847,000. The 4 week moving average, however, rose by 16,250 to 868,000. Since the 4 week average has risen above 850,000, and weekly claims were above 900,000 for several weeks in a row, jobless claims have finally met my criteria confirming a change to an upward trend.Here is the close up since the end of July (these numbers were in the range of 5 to 7 million at their worst in early April): Because of the huge swings caused by the scale of the pandemic – typically claims only vary by 20,000 or less from week to week, but since the start of the pandemic, swings of 50,000 or 100,000 per week have happened as often as not – and because the

Read More »

The Quick and Dirty economic indicator forecast: another vote for “Here Comes the Sun”

January 27, 2021

– by New Deal democratStill no important economic news yet this week, so let’s take a look at something I haven’t updated in awhile: the Quick and Dirty economic indicator of stock prices vs. new jobless claims.Both metrics are short leading indicators, although historically stock prices have been more leading (3-9 months) than jobless claims (roughly 2-3 months). Both have the advantage of being updated daily or weekly, so we don’t have to wait a month for each update. If they are both going in the same direction (i.e., positive or negative) it’s a pretty good proxy for the overall direction of the economy in the months to come.Here is the historical view of the actual readings of two stock market indexes – the Wilshire 5000 Total Market Index (blue) and the S&P 500 (green), plus the

Read More »

Coronavirus dashboard for January 25: a vaccination race against time vs. the new mutations

January 25, 2021

– by New Deal democratAll of the significant economic data is backloaded this week, onto Thursday and Friday. So don’t be surprised if I take a day off between now and then.In the meantime, here is a Coronavirus update.First things first: the most ominous thing I’ve read about the new coronavirus mutations comes from Dr. Eric Fiegl-Ding, who says, quite bluntly, “We need to switch to KN95, KF94, or European FFP2 masks ASAP. The new B117 COVID 19 is just too contagious. Cloth isn’t enough anymore folks.”Everyone needs to take heed of that advice. There’s also evidence that the B117 variant infects people with much higher viral loads (I.e., copies of the virus at the outset), increasing the fatality rate significantly for older people. In the meantime, here is where we stand.Total

Read More »