November data starts out strong with a very positive ISM manufacturing index

The first November data point, the ISM manufacturing index, was reported this morning, and while it declined from last month, it remained very strongly positive.

The overall index declined from 59.3 to 57.5, and the more forward-looking new orders index declined from 67.9 to 65.1:

Since any reading above 50, however, indicates expansion, these were positive readings. The overall index is at levels equivalent to where it was during the strongest parts of the last decade’s expansion, and this month, like 3 of the last 4 months, the new orders component is equal to its strongest levels of the past 16 years.

Manufacturing has been very strong in the last half of this year,

Coronavirus dashboard for November 3

Total US confirmed infections: 13,383,320*

Average US infections last 7 days: 162,365 (vs. latest low of 34,354 on Sept 12)
Total US deaths: 266,873
Average US deaths last 7 days: 1,430 (vs. latest low of 701 on Oct 16)
*I suspect the real number is 18-19,000,000, or between 5 to 6% of the total US population
Source: COVID Tracking Project
Infections are out of control over much, if not most, of the country. North and South Dakota, the 2 worst States, now have had confirmed infections in over 10% and over 9% of their entire populations (and probably much worse than that since many asymptomatic cases go undetected):

While the earliest hard hit States, NY and NJ, still have had the highest death tolls, 8 more States

October personal income declines, but still well above pre-pandemic peak; increased likelihood of negative pandemic reversal in jobless claims

Before I turn to this week’s report on jobless claims, a brief word first about October’s personal income and spending.

Although personal income declined in October compared with September, more importantly depending on how you measure it, real personal income is still 2.6% to 3.4% *higher* than it was at its peak in February just before the onset of the pandemic:

Much of that is the emergency pandemic aid passed by Congress. When you take out such “government transfer receipts,” personal income actually continued to improve in October, but is still -0.8% below its February peak.

This demonstrates the

Benjamin Franklin vs. John Locke on the Legislature vs. the Executive

An initial note: there is very little economic data this week. Some house price information gets updated tomorrow, and then on Wednesday we get a slew of data, including Q3 corporate profits, jobless claims, new home sales, durable goods orders, and personal income and spending. That’s probably worth two days’ of posts, at least one of which will probably be at Seeking Alpha.

Shorter version: don’t be surprised by light posting here this week!

In the meantime, as we wait to see whether the GOP Michigan and Pennsylvania legislatures will officially turn the United States into a banana republic, here are a couple of quotes worth your noting about Legislative and Executive power. Bolded

Economy still expanding, but with retail consumption outpacing production

This morning saw two important releases of October data: industrial production and retail sales. Both showed continued strength.

Industrial production is the King of Coincident Indicators, and more than any other metric typically shows whether the overall economy is expanding or contracting. In October it increased by 1.1%, while manufacturing production increased by 1.0%. The overall number more than reversed last month’s decline, while past manufacturing numbers were revised higher. In the below graph I’ve normed both to 100 as of February to show the pandemic impact:

Note that their actual peaks were in November and December 2018, respectively. After declining about 20% at

Democrats: the “less unpopular” party
No economic news today  (Nov. 16). I hope to put up an updated Coronavirus Dashboard (hint: it’s pretty unremittingly awful) later.

In the meantime, I wanted to add a postscript to yesterday’s post about the Democrats’ problem obtaining a durable electoral majority.

It occurred to me after I put up yesterday’s piece is that the essence of what I wanted to say in response to the meme that “Democrats have won 7 of the last 8 popular votes” is that, while Democrats may be “more popular than” the GOP, on an absolute scale the truthful statement is this:

“Democrats are *less UNpopular* than the GOP.”

Here’s why. If you average the popular votes that the two parties have gotten beginning with 1996 you get the following:

Lack of inflation in September consistent with weak demand; real wages increase, but will the pandemic derail the gains?

Consumer prices were unchanged in October, both on a seasonally adjusted and unadjusted basis:

But while the lack of inflation is good news in isolation, the last two months can also be viewed as a sign of economic weakness – lack of demand – from a recession.

Digging a little deeper, for the past 40 years, recessions had typically happened when CPI less energy costs (red) had risen to close to or over 3%/year. We are nowhere near that now (last 15 years shown in graph):

Again,  note that the YoY% change in inflation has decelerated since the outset of the pandemic, potentially another sign of weakness.

On the bright side,

New and continued jobless claims: best week of the pandemic; can it survive a new emergency?

This week’s new and continued jobless claims, both seasonally adjusted and unadjusted, declined to new pandemic lows – but at levels roughly equivalent to their worst readings during the Great Recession.
On an unadjusted basis, new jobless claims declined by 20,799 to 723,105. Seasonally adjusted claims declined by 48,000 to 709,000. The 4-week moving average also declined by 33,250 to 755,250. Here is the close up since the end of July (for comparison, remember that these numbers were in the range of 5 to 7 million at their worst in early April):

Unadjusted continuing claims (which lag initial claims typically by a few weeks to several months) declined by

September JOLTS report shows jobs recovery has been real – but will it continue?

Yesterday’s (Nov. 10)  JOLTS report for September showed a jobs market that continues to be, ever so slowly, on the mend. Openings and quits were up (good), and layoffs and discharges were down (also good). The only negative was that hires actually declined, although slightly.
We are far enough past the worst of the pandemic jobs losses that it is worthwhile to compare the state of the various JOLTS components with the 2 previous recoveries from recession bottoms in the series’ histories (this because the JOLTS data only dates from 2001.
In the two past recoveries:
first, layoffs declined
second, hiring rose
third, job openings rose and voluntary quits increased, close to

Coronavirus dashboard for November 9: Wow (and not in a good way)

US total infections: 9,968,155*
US average last 7 days: 108,737
US total deaths: 237,570
US average last 7 days: 939

*I suspect that the real number is about 16 million, or about 5% of the total US population
Source: COVID Tracking Project

While we have been riveted by the 2020 election, the pandemic has continued to rage out of control in parts of the US, particularly in parts of the upper Midwest and northern Mountain States.

At its peak, NY had an average daily rate of 51 infections per 100,000 people. Now,  17 States have infections rates higher than that:

The worst is North Dakota, at 174 infections per 100,000 people. By contrast, the worst country on the planet, Czechia, had

The 2020 Presidential and Senate races: a postmortem

Way back in June I started writing nowcasts for the 2020 elections. Here’s what my very first map looked like:

And here’s what the last one looked like:

When I pushed the “toss-ups”, by lowering the threshold from 3% to 1%, NC, GA, and FL also became “lean Biden” States.

Here’s how the election actually turned out, based on results through today (note: Alaska has only counted 50% of its votes, so the outcome there is still unknown):

Two weeks ago, I wrote 

“The “blue wall” is extremely likely to hold. And if it does, Trump’s chances of victory are foreclosed.”

That turned out to be right on point.

Further, last week, and almost every week beforehand, I included a sentence like this:

October jobs report: extremely strong monthly gains overall, but at this rate still another 18 months from full jobs recovery
HEADLINES:
638,000 million jobs gained. The gains since May total about 55% of the 22.1 million job losses in March and April. The alternate, and more volatile measure in the household report was 2,243,000 jobs gained, which factors into the unemployment and underemployment rates below.
U3 unemployment rate declined -1.0% from 7.9% to 6.9%, compared with the January low of 3.5%.
U6 underemployment rate declined -0.7% from 12.8% to 12.1%, compared with the January low of 6.9%.
Those on temporary layoff decreased -1,432,000 to 3,205,000.
Permanent job losers decreased by 72,000 to 3,684,000.
August was revised upward by 4,000.

Slow pace of improvement in jobless claims continues

This week’s new jobless claims were essentially unchanged (but at their pandemic low), while continued claims continued their decline, also to a new pandemic low.
On a non-seasonally adjusted basis, new jobless claims declined by only 543 to 738,166, just above October 3’s revised pandemic low of 731,249. Seasonally adjusted claims declined by 7,000 to 751,000, a new pandemic low (which was also last week’s number before revision this week). The 4-week moving average also decreased by 4,000 to 787,000, also a new pandemic low. Here is the close up since the end of July – for comparison, remember that these numbers were in the range of 5 to 7 million at their worst in early April:

Continuing claims

The Morning After

Last night was truly a dark night of the soul. The rule of law in an American Republic simply will not withstand the re-election of Donald Trump, together with a continuing GOP majority in the Senate. Not to mention the prospect of continuing to shelter in place for perhaps years as the COVID pandemic is allowed to run free.

As of this morning, absentee and mail-in ballots are still being counted in many swing States. As a result, as of when I type this, Biden has carried Arizona, assumed a slight lead in Wisconsin, maintains a slight lead in Nevada, is only ~13,500 away from taking the lead in Michigan with about 10% of ballots still to be counted, and the NYT says that Georgia is back in play and slightly leading towards Biden. And

September housing construction and October manufacturing both on a tear

It’s the first of the month, so we get the last laggard for September (construction spending) and the first read on October (ISM manufacturing). Both were very positive in their important components.

While total construction spending was only up 0.3% from a downwardly revised August, private residential construction spending (i.e., non-public housing construction) increased 2.8%:

This is yet more evidence of a very strong housing rebound brought about by record low mortgage rates.

The ISM manufacturing index, including its new orders component, was even more positive. The total index increased 3.9 to 59.3, the highest reading since 2018. The new orders component was even

The final 2020 Presidential Electoral College forecast: Biden 350, Trump 181, 7 toss-ups

Here is my final nowcast for the Presidential 2020 election, based on State rather than national polling in the past 30 days, since that directly reflects what is likely to happen in the Electoral College. For this final installment, I am also including forecasts from 3 “fundamentals” models, including the one based on the Index of Leading Indicators that already forecast a result over half a year ago.
At only 2 days from Election Day, the polls are probably less than 1.5% off the final result. All of the fundamentals are known, and Trump’s attempt at an “October surprise” fizzled. There is some evidence of previously undecided partisan voters “coming home” in the

The final 2020 Senate nowcast: 51 Democrats, 48 GOPers, 1 true toss-up

Here are the final maps for the Senate, including all polls since October 1. I’ll post the Presidential nowcast separately later since it is going to be significantly longer this week.
To refresh, In the first map below:
– States where the race is closer than 3% are shown as toss-ups.
– States where the range is between 3% to 5% are light colors.
– States where the range is between 5% and 10% are medium colors.
– States where the candidate is leading by 10% plus are dark colors.

This results in a map showing 50 Democratic seats, 43 GOP, and 7 toss-ups.

In the 2nd map below, any race with a gap of 1%+ but less than 5 is designated a “lean:”

There are 5 Senate races where the

Jobless claims: continued slow progress

A quick note about the first report of Q3 GDP released this morning: the rebound is only about 2/3’s of the decline from last year. We are still about 3.5% below that number. On a *relative* basis, this was a “good” number, but on an absolute basis, this is still quite depressed.
This week’s new jobless claims continued to decline further below 800,000, and continued claims also made a new pandemic low.
On a non-seasonally adjusted basis, new jobless claims declined by 28,354 to 732,223. This would be a new pandemic low, except October 3’s number was revised to 731,249. Seasonally adjusted claims declined by 40,000 to 751,000, a new pandemic low. The 4 week moving average also decreased by 25,000 to 787,250, also a

Personal income and spending both surprisingly continued to increase in September, plus a note on GDP

Yesterday the first estimate of Q3 GDP was reported. Since this report includes 2 long leading indicators, it gives us insight into what the economy might be like in the 2nd half of next year.

I have a post on that up at Seeking Alpha. As usual, clicking over and reading should be informative for you, and it rewards me a little bit for my efforts.

This morning personal income and spending for September was reported. Both real income and spending increased, which is positive – and surprising.

On the spending side, below I show real personal spending (blue) in comparison with real retail sales (red), both scaled to 100 as of January of this year:

Coronavirus dashboard for October 27: The EU is now worse than the US

Total US confirmed infections: 8,777,432*
Average US infections last 7 days: 71,833 (new record high)
Total US deaths: 226,695
Average US deaths last 7 days: 806 (vs. recent low of 689 11 days ago)
*I suspect the real number is about 15,000,000, or 4.5% of the total US population
Source: COVID Tracking Project
The pandemic is once again raging out of control in parts of the country, and it is likely to be far worse over the winter months.
Let’s start today by comparing the US with the EU countries plus Canada.

While in Canada the virus is still under control, on average, the EU is seeing nearly twice as many daily infections per capita as the United States:

The EU is at parity with

An examination of the Framers’ arguments as to how the US Supreme Court would function: The Federalist Papers No’s. 78, 79, and 81

This is a follow-up on yesterday’s post regarding the history of the Judiciary under republics. In that post I pointed out that the concept of an independent judiciary is a modern one that started in the era of Britain’s Glorious Revolution of 1688, and was radically expanded by the US Constitution.

How the framers envisioned the US Supreme Court fit into the scheme of three independent branches of government was set forth in The Federalist Papers numbers 78 through 83. Of those, 3 are not relevant to this discussion: Number 80, which deals with types of court jurisdiction, Number 82 on relations between the State vs.

The 2020 Presidential and Senate nowcasts: in 2020 the “blue wall” looks very likely to hold, but expect surprises in the Senate

Here is my weekly update on the 2020 elections, based on State rather than national polling in the past 30 days, since that directly reflects what is likely to happen in the Electoral College.
At only 9 days from Election Day, the polls, while actually nowcasts rather than forecasts, are probably less than 1.75% off the final result. All of the fundamentals of the election are already “baked into the cake,” and it appears Trump’s attempt at an “October surprise” has fizzled. I’ve been suggesting for several months that some GOP voters would likely  “come home” in the closing days of the election, and that appears to be

A brief history of the Judiciary under Republics; the radical departure of the US Constitution, and how to reform it now

I’ll have a note up, probably at Seeking Alpha tomorrow, on new home sales, which get reported later this morning.

In the meantime, especially with the likely confirmation of the 6th movement conservative Justice today, who will probably immediately start to rule on election issues, I want to flesh out in outline form my thoughts on the Supreme Court. I am going by memory in this note, so some of this info is not entirely correct and will need to be checked further.
1. Historically, the judiciary was not an independent branch of government. In monarchies, the sovereign typically could both appoint and remove judges at pleasure. In

Coronavirus dashboard for October 20: some good news among the gloom

Total US confirmed infections: 8,273,296*
Average US infections last 7 days: 59,527 (vs. recent low of 34,354 on Sept 12)
Total US deaths: 221,052

Average US deaths last 7 days: 738 (vs. recent low of 689 4 days ago)
*I suspect the real number is 14-15,000,000, or over 4% of the total US population
Source: COVID Tracking Project

As we head into the cold weather, experts are warning that, as bad as the pandemic has been up until now, it is likely to be far worse over the next few months.

We’ll look at the bad news. But first, let’s look at some good news: 60,000,000 Americans live in two large States that have largely contained the pandemic – California and New York.

My benchmark,

Jobless claims: a very positive reversal

This week’s new jobless claims report not only reversed last week’s increase but declined below 800,000 for the first time on an *un*revised basis. I say that because revisions from two weeks ago now have that week as the lowest since the pandemic struck.  [NOTE: California has restarted reporting its claims, and has also reported for the past two weeks, and is the likely cause of the big revisions – generally downward, or positive.]
On a non-seasonally adjusted basis, new jobless claims declined by 73,125 to 756,617. This would be a new low, except two weeks ago was revised down to 731,249. After seasonal adjustment (which is far less important than usual at this time), claims declined by 55,000 to 787,000. This

The 2020 election nowcast: Biden widens national lead; Senate races likely to follow Presidential result in each State

Here is my weekly update on the 2020 elections, based on State rather than national polling in the past 30 days, since that directly reflects what is likely to happen in the Electoral College.At only 16 days from Election Day, the polls, while actually nowcasts rather than forecasts, are probably less than 2% off the final result. With the exception of the last Presidential debate and any *significant* “October surprise,” all of the fundamentals of the election are already “baked into the cake.” Because some GOP voters will likely still “come home” in the next two weeks, I expect the race to tighten a little bit.

There are two big

Two noteworthy tweets

It’s a slow economic news week. Housing starts and permits are reported tomorrow, and jobless claims and existing home sales on Thursday. I’ll update the Coronavirus Dashboard Wednesday.  So for today, two nuggets.
1. Nate Silver discovers behavioral psychology:

This has been my paradigm for months. Panic breeds compliance with mask-wearing and social distancing. Complacency breeds risk-taking. Over time both trends wane, breeding the conditions necessary for the opposite outcome. Not only has this been true in almost all US States, but we have now seen the same dynamic play out in Europe.

Nice to see that Nate Silver is learning about learning.

2. What is the solution to the Supreme Court?

Hoarse is right, although I

Real retail sales continue (inexplicably) strong, still bode well for employment

This morning we got two important monthly September reports: industrial production and retail sales.

I have more to say about industrial production, and some general economic analysis about retail sales, which are pending at Seeking Alpha. I will post a link once that article goes up. UPDATE: Here’s the link: Link

For this blog, let’s focus on how real retail sales are likely to affect employment.

Just to start, here is are CPI adjusted retail sales. You can see that they have actually jumped once the Congressional stimulus kicked in, and have remained well ahead of pre-pandemic levels:

Figure 1

As I have said many times in the past, consumption slightly leads

Jobless claims: only one week’s data, but cause for significant concern

Today marked the biggest increase in new jobless claims in two months, and one of the two biggest increases since May, while the slightly lagging continuing claims continued to decline.
On a non-seasonally adjusted basis, new jobless claims rose by 76,670 to 885,885. After seasonal adjustment (which is far less important than usual at this time), claims rose by 53,000 to 898,000. The 4-week moving average also increased by 8,000 to 866,250:

Here is a close-up of the last four months highlighting the overall glacial progress in initial claims since the beginning of August:

Continuing claims declined on a non-adjusted basis declined by -1,188,202 to 9,631,790. With seasonal

Coronavirus dashboard for October 14: winter is coming

Total US confirmed cases: 7,806,805*
Average cases last 7 days: 51,038
Total US deaths: 215,887
Average deaths last 7 days: 714*Actual cases probably more like 14 million, or over 4% of the US populationSource: COVID Tracking ProjectToday let’s take a look at the most recent upsurge in COVID not just in the US, but in the entire West.Here is the 7 day average of new cases per capita in the US, Canada, and the 5 most populous countries in Europe:

Every single country, even Germany, is experiencing an upsurge. France, Spain, and the UK are having an even worse outbreak than the US.