Fox News and white grievance

In his recent book “Kill Switch,” Adam Jentleson, a former aide to the late Senator Harry Reid, persuasively argues that the Senate filibuster arose by accident when a rule revision in 1805 failed to include the “previous question” resolution, which would require a vote on the issue pending because it was thought superfluous. He also shows by overwhelming evidence that for the past 200 years, by far the single most common use of the filibuster was to defeat civil rights legislation benefiting Blacks.

And in the past week, it has become apparent that Senators Manchin and Sinema would join GOPers to uphold a filibuster against voting rights legislation once again. 

This brings me to a couple of recent graphs

Housing ends 2021 with a bang

Housing ended 2021 with a bang, as housing starts (blue in the graph below, left scale) increased to 1.702 million annualized, and permits (gold) to 1.873 million annualized, in both cases the highest level since 2006 with the sole exception of last March / January, respectively. Single family permits (red, right scale), which are the least noisy, increased to 1.128 million annualized, the highest reading since May, but well below the 8 months previous to that:

Because this is December data, even though it is seasonally adjusted, it may still be affected by Christmas seasonality, as exacerbated by the pandemic (right scale below). To some extent it may also be a reaction to the recent increase in mortgage rates

By New Deal democrat

Short term economic forecast through mid year 2022

My short-term forecast for the first half of this year is up at Seeking Alpha.

This forecast is based on the same system I have successfully used since before the Great Recession. Most forecasters, deliberately or not, cherry pick data points to fit a previously arrived at an intellectual point of view, and simply project the current trend ahead (or else default to the inevitable “We’re DOOOMED!). The short leading indicators, in contrast, forecast a change in the trend before the lion’s share of the data is affected.

Clicking through and reading will give you a good idea of what is ahead from now till the 4th of July and will pay for some bourbon and firewood to

Weekly Indicators for January 10 – 14 at Seeking Alpha

 – by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

In addition to Omicron, commodity prices and interest rates are having an impact across the board on the long and short term forecasts and the nowcast. (Just for spite, two weeks ago some RW nut jobs had a fit about my including a meteor as the image for the article, so this week I including an even more graphic representation of the Giant Flaming Meteor of Death).

As usual, clicking over and reading will not only bring you fully up to date, but will pay my pizza tab for the week.

Tags: Bonddad Blog, New Deal Democrat

December real retail sales tank; industrial production also declines; consumer slowdown seems nearly certain  

– by New Deal democrat

Two days ago, in connection with consumer inflation, I reiterated that:

“we certainly are at a point where a sharp deceleration beginning with the consumer sector of the economy is more likely than not.”

I didn’t expect to have it show up so soon! Retail sales, one of my favorite “real” economic indicators, took a nosedive in the month of December, declining -1.9% for the month even before inflation. After inflation, “real” retail sales declined -2.4%.

Ouch! 

Thus real retail sales are down -5.1% from their April peak: 

Recall that real retail sales rose 1.8% in October. So I suspect a large

Continuing unemployment claims make new 45+ year low – by New Deal democrat

New claims increased 23,000 last week to 230,000. The 4 week average of new claims increased 6,250 to 210,750:

The big increase is likely affected by seasonality. It’ll be another week or two before we can tell if there is any real change in trend. If there is, it is likely to be a flattening in new claims rather than any significant increase. 

Continuing claims for jobless benefits, meanwhile, declined by 194,000, to 1,559,000:

This is a new 45+ year record low. There haven’t been continuing claims this low since 1974, when the US population was half of what it is now, as shown in the graph below that subtracts 1,559,000 from the actual number:

Last

Consumer inflation lessens in December; real wages increase, but a consumer slowdown remains likely

Consumer prices increased 0.5% in December, a deceleration from the past several months. But this is still well above the typical monthly increase in prices pre-pandemic: 

On a YoY basis, at 7.1% consumer inflation is the highest since the big Reagan recession of 1981-82. My favorite measure, CPI ex energy, is also up 5.6% YoY, and tied for the worst since the 1981-82 recession as well:

Inflation in new and used vehicle prices has risen again to over 20% YoY; and gas prices YoY are still up at levels that in the past have been associated with economic slowdowns or recessions:

As I have been forecasting for months, house price increases

Coronavirus dashboard for January 11: good news and bad news

With no new economic releases today, let me give you a brief update on the fast-moving Omicron wave.First, the good news: as I pointed out yesterday, several States that were hit hardest first by Omicron look like they are hitting or have already hit peak:

This is an increase from just several days ago. In fact, right now the only early hit State that has not peaked is Hawaii (not shown).

Several other countries that were hit hard early by Omicron also appear to have peaked: the UK and Portugal, in addition to South Africa, where the strain was identified first:”

If the Omicron wave peaks in 30 to 45 days after onset, then the US as a whole is likely to peak between

Coronavirus dashboard for January 10: how “mild” Omicron is depends upon how much you lag the data

So, how “mild” or not, is Omicron? It depends on whether you lag the data on hospitalizations and deaths or not.The original story out of South Africa was that Omicron was extremely mild. Despite a huge spike in infections, deaths barely budged. As Omicron took hold in Europe and the US, South Africa disappeared from the picture.  Which is too bad, because here is what has been happening with deaths: 

In the past week, deaths in South Africa tripled. Mind you, deaths – so far, anyway – at 13x their pre-Omicron low, are nowhere near the 80x+ increase in cases. But the point is, deaths lag cases, and until you wait about a month to see how

December jobs report: more signs of real tightness, while new jobs added are (seasonally?) disappointing

There were three big questions I had going into this jobs report: 

1. whether the big decrease in new jobless claims to a half century low would translate to another big top line number in the jobs report

2. is wage growth holding up? Is it accelerating?

3. Would last month’s “poor” 210,000 number of new jobs be revised higher? 

The answers were:

1. The 6 month average of monthly gains has declined significantly, from about 600,000 to 500,000 – still very good, but a significant deceleration in the past 2 months. We still have 3.6 million jobs to go to equal the number of employees in February 2020 just before the pandemic hit. At

December jobs report: more signs of real tightness, while new jobs added are (seasonally?) disappointing

There were three big questions I had going into this jobs report: 1. whether the big decrease in new jobless claims to a half-century low would translate to another big top-line number in the jobs report2. is wage growth holding up? Is it accelerating?3. Would last month’s “poor” 210,000 number of new jobs be revised higher? 

The answers were:1. The 6 month average of monthly gains has declined significantly, from about 600,000 to 500,000 – still very good, but a significant deceleration in the past 2 months. We still have 3.6 million jobs to go to equal the number of employees in February 2020 just before the pandemic hit. At the current

Initial and continuing jobless claims: 2022 starts out where 2021 left off

The labor market in 2022 started out where it left off in 2021, as new claims increased slightly, by 7,000, to 207,000. The 4 week average of new claims increased 4.750 to 204,500:

Readings this low haven’t been seen in half a century.

Continuing claims for jobless benefits also rose slightly, by 36,000, to 1,754,000:

Except for 2018-19, we haven’t seen continuing claims this low since 1974:

We can expect this situation to continue so long as the pandemic keeps many potential workers (on the order of 4,000,000 or so) on the sidelines. As I wrote yesterday concerning the JOLTS report, it’s like a game of reverse musical chairs where the holders of the chairs can’t

November JOLTS report: imagine, if you will, a game of musical chairs, New Deal democrat

Imagine a game like musical chairs, except that some players are the chairs (employers) as well as people who want to sit in the chairs (potential employees), and players, both sitters and chairs, are continually entering and exiting the game.

The game would be in equilibrium if the number of sitters and chairs are always equal. If there are more sitters than chairs, sitters will be unsuccessful (unemployed). If there are more chairs than sitters, the chairs will be empty (unfilled job openings). In the former case, we would expect wages to go down (or at least increase more slowly vs. inflation); in the latter, we would expect wages to increase more

First data releases of 2022 confirm manufacturing strength, construction slowdown

The first December data, the forward-looking ISM manufacturing report, has been released. Yesterday construction spending for November was also released. Let’s take a look at both.

The ISM index, especially its new orders subindex, is an important short leading indicator for the production sector. In December the index declined from 61.1 to 58.7, as did the more leading new orders subindex, which declined from 61.5 to 60.4 (note the breakeven point between expansion and contraction is 50):

Both the total index and the new orders subindex ran extremely hot throughout 2021, and the moderate decrease in December remains consistent with a “hot” manufacturing

Grading my 2021 forecasts

Critical self-examination is, or at least ought to be, part of the process of making forecasts. After all, how can you learn if you don’t see how earlier hypotheses panned out? As I have usually done, let’s take a look back at how I forecast 2021 was going to look, to see how well I did.

To make a long story short, according to the long and short leading indicators I track, there was never any real doubt that the economy was going to continue to expand. The only issue was how strong or weak the expansion might be.

Last January, the  short term indicators suggested that the expansion would slow down in the first half of 2021: 

“the pandemic is still in control. The LEI has been consistently positive, but at a

Hopeful New Year, New Deal democrat

In view of the continued conflagration of the COVID pandemic, I am eschewing the traditional “Happy New Year!” salutation as we end 2021 and begin 2022 in favor of the above “Hopeful New Year.” I always try to stick with the data – one of the favorite things anyone has ever said about my writing is that I appear to be “praeternaturally detached” – and that almost always staying away from the “We’re DOOOMED!!!” references, because there is always some sort of reason for hope out there, even in the darkest times.

Pandemics do not go on forever. Even before vaccinations, eventually sicknesses got around to infecting everybody who was susceptible, and ran out of quick kills. This one will be no different. As I

Coronavirus dashboard for year-end 2021: the Graph of the Year, where we are now, and where we are probably going

At the end of the 2nd year of the pandemic, a little self-assessment of what I got right and wrong, where we are and where we are probably going.

The one thing I got wrong in a big way is explained by this Coronavirus Graph of the Year:

I thought sure that once the effectiveness of the vaccines was widely known, opposition and reluctance to taking them would sharply decline. I did not expect the volume and intensity and orchestration of the anti-science, anti-vax campaign by Fox News and RW nutjobs. As a result, since mid-April the number of people getting vaccinated steadily declined from 2 million per day in early April

The labor market closes out 2021 on the best note yet

The final economic data in 2021 was this morning’s report on initial and continued jobless claims. And the good news for workers continued.

New claims declined back under 200,000 to 198,000, the best pandemic showing except for November 20’s 194,000, and December 4’s 188,000. The 4 week average of new claims declined to 199,250:

This is the best showing for the 4 week average in over 50 years, since the end of 1969:

Continuing claims for jobless benefits also declined to a new pandemic low of 1,716,000:

Except for 2018-19, this is also the lowest showing since 1974:

This is essentially the tightest market for employees in nearly 50 years. It is no surprise that wages have been

House price increases continue to show strong market at the end

The last housing market data for 2021, the FHFA and Case Shiller house price indexes, were reported this morning. Both showed a very slight deceleration in the soaring prices that have marked this year.

The FHFA purchase-only index rose 1.1% for October. The YoY% increase was 17.4%, down from the 19.3% YoY peak in July. Meanwhile the Case Shiller national index rose 0.8% m/m, and is up 19.1% YoY, vs. its peak of 19.8% in August. This is similar to what we have already seen with the median prices of new houses for sale (gold):

As I always note, prices follow sales. Below are new home sales and single-family housing permits (red, /2 for scale) vs. the FHFA index as above:

As

Income, spending, layoffs, and new home sales all point to a continuing expansion in 2022

We got our last batch of data before Christmas this morning. Almost all of the news was positive. I will be very brief.In the “coincident indicators” department, real personal income declined -0.2%, while real personal consumption expenditures increased less than 0.1%, although both remain well above their pre-pandemic levels: 

Comparing real personal consumption expenditures with real retail sales for November (essentially, both sides of the consumption coin) reveals both faltered, but not in any way worth being worried about:

In the “short leading indicators” department, nobody continues to get laid off. Initial claims were unchanged for the week

Final existing home sales report of 2021 is positive

 As we wind down the year, most of the remaining data will be from the housing sector. Tomorrow we get new home sales, then next week one final round of house price indexes.

 Two months ago I wrote that “I suspect new home sales will increase, since interest rates stabilized at very low rates earlier this year, and the increase in existing home sales is some confirmatory evidence.” Since then, sales increased in October by 0.8%, and today existing home sales for November were reported, and the news continued positive, as sales increased another 1.9%, from 6,340,000 annualized to 6,460,000. This is the highest number since January of this year, and aside from the period from September last year

Coronavirus dashboard for December 21: exponential spread is here

 As I warned you on Saturday, there might be some hooky-playing this week; and as I also said, that was “Omicron permitting.”

Well, Omicron warrants an update today. Because exponential spread is underway especially in those parts of the country most exposed to international visitors.

But first, in the spirit of leading indicators, let’s take a look at South Africa, where Omicron was first reported, and which has an excellent reporting system.

Here are deaths (solid line) vs. cases (dotted line) per capita for the whole country (note differences in scale) for the past year. In all previous waves of infection, including a previous wave during summer 2020 not shown, deaths

Real retail sales declined in November, but continue to auger well for strong jobs growth, New Deal Democrat

Retail sales, one of my favorite “real” economic indicators, were reported this morning for November. They increased 0.3% for the month, and October’s blockbuster report was revised 0.1% higher, to +1.8%. After inflation, though, “real” retail sales declined  -0.5%. 

Although real retail sales are down -2.6% from their April peak, they are +12.9% higher than they were just before the pandemic hit, and are also 4.4%  higher than January of this year: 

They are also up 10.6% YoY. 

How extreme is that? The below graph subtracts 10.6% YoY growth from retail sales from 1948 through 2019:

In the past 70+ years before the

Production, layoffs, housing hit the positive trifecta in November, New Deal democrat

We got a blizzard of November and December data this morning across all three – coincident, short leading, and long leading – timeframes: industrial production, jobless claims, and housing permits and starts. All three were positive.

Let’s start with the King of Coincident Indicators, industrial production, which rose 0.5% in November. Manufacturing production rose 0.7%. They are 2.3% and 0.6% above where they were before the pandemic:

Both also are at 2.5 year highs, although below their peak levels during the last expansion. At this point the *only* important metric which has not exceeded its pre-pandemic level is employment, which as I explained last

How to track the Omicron variant in close to real time

No economic data today, and Covid information is pretty useless because of lack of reporting over the weekend. I drafted a long piece about the state of the American consumer, which I’ve decided to put up at Seeking Alpha, since, hey!, why shouldn’t I earn some lunch money for it? I’ll post a link when one is available.

But in the meantime let me drop this link by Dr. Trevor Bedford, an expert in the genetic evolution of viruses. He is tracking the number and percentage of all cases that are the Omicron variant in several countries, including the US, from daily reporting. Here is what today’s graph for the US shows:

Note that this is in log scale, and the data lags by 10 to 14

Real average and aggregate wages continue decline in November; a sharp deceleration in the consumer sector now appears likely

As you may already know, consumer prices increased 0.8% in November. In the past two months, there has been a re-acceleration in CPI, with the monthly numbers equal to earlier this year and the worst since the Great Recession: 

On a YoY basis, consumer inflation is now the highest since the big Reagan recession of 1981-82. My favorite measure, CPI ex energy, is also up 5.1% YoY, the worst in 30 years:

Inflation has shown up in all the wrong places: houses, cars, and gasoline. And remember that house prices are only indirectly reflected via owners’ equivalent rent, which has also started to increase:

The Great Resignation and jobless claims

Initial and continuing jobless claims continue at or near their best levels in the past half-century.

Initial claims declined 43,000 to 184,000, a new 50 year low, while the 4 week average declined 21,250 to 218,750, also a new pandemic low, and in the past 50 years only bettered by the period from late 2018 until February 2020:

For all intents and purposes, nobody is getting laid off.

Continuing claims rose 38,000 to 1,992,000 from last week’s pandemic low:

Still, since 1974, aside from last week, only two weeks in the late 1980s, and the last 3 years of the last expansion were below this number:

This is further confirmation of what was reported yesterday in the JOLTS report for

October JOLTS report: at least the jobs market isn’t getting any worse in disequilibrium

The JOLTS report for October was released this morning. While it did not indicate any significant progress towards a new labor equilibrium, at least the trends did not get any more destabilized.

Job openings (blue in the graph below) increased to 11.033 million, which remains below the July peak of 11.098 million. Voluntary quits (the “great resignation,” gold, right scale) decreased to 4.157 million, a decline of over 200,000 from last month’s peak. Actual hires (red) decreased slightly to 6.464 million, in line with the past few months, and better than the early part of this year:

Layoffs and discharges (violet, right scale in the graph below) decreased

Coronavirus dashboard for December 7: since further mass vaccination could only happen at gunpoint, the Biden Administration had better come up with a ‘Plan B, New Deal democrat

No significant economic news today, so let’s catch up a little bit with Covid.

There are still distortions in the 7 day average data, as States did data dumps of deaths and new cases throughout last week, after not reporting over the long Thanksgiving holiday. That should finally disappear over the next few days.

But since the same sort of Thanksgiving distortions occurred one year ago, it’s useful to take a YoY look at the data, which the below graph shows by US Census Region plus nationwide:

The South and West regions have less than half as many cases as they did

November jobs report: the only thing keeping the jobs market completely recovering to pre-pandemic levels, is the pandemic itself

One month ago, we got very large upward revisions to previous data. This month the big questions I had were whether that would continue and whether the bulge decrease in new jobless claims to a half-century low would translate to another big top line number in the jobs report. Additionally, in view of the recent inflation numbers, I wanted to see if wage growth would hold up. 

The 6 month average of monthly gains as of now is 612,000: less than one month ago, but still very goodnot bad. But we still have 3.9 million jobs to go to equal the number of employees in February 2020 just before the pandemic hit. The largest