Wednesday , October 21 2020

Warren Mosler

Warren Mosler is an American economist and theorist, and one of the leading voices in the field of Modern Monetary Theory (MMT). Presently, Warren resides on St. Croix, in the US Virgin Islands, where he owns and operates Valance Co., Inc.

Articles by Warren Mosler

Vehicle sales, Retail sales, Industrial production

5 days ago

Monthly sales rates peaked in 2016 when oil capex collapsed, then leveled off, then started sliding again with the tariffs, then collapsed with the covid shock, and have nearly recovered to the lower levels:
As with vehicles, the rate of monthly sales has recovered to prior levels, but sales lost during the dip weren’t recovered:
Industrial production has had a much weaker recovery and has turned back down:
Recovered some but still down from pre covid levels:

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Vehicle sales, real estate loans

16 days ago

Still very weak:

Since April, sales have increased, but are still down 4.3% from last year.
The second graph shows light vehicle sales since the BEA started keeping data in 1967.
Note: dashed line is current estimated sales rate of 16.34 million SAAR.
Sales-to-date are down 18.8% in 2020 compared to the same period in 2019.
In 2019, there were 12.70 million light vehicle sales through September. In 2020, there have been 10.31 million sales.

Real estate loan growth is headed back towards 0 from already low levels, and note that with ultra low mortgage rates for the last 10 years or so lending growth hasn’t picked back up to where it was when rates were twice as high:

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Mtg apps, ADP payrolls

21 days ago

Private businesses in the US hired 749K workers in September of 2020, the most in three months and above market expectations of a 650K rise raising hopes the labour market recovery strengthened. Still, only half of the near 20 million jobs lost since March when the coronavirus crisis started have been recovered.

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Consumer sentiment, current account

September 20, 2020

The current account deficit in the US widened by $59 billion, or 52.9%, to $170.5 billion in Q2 2020, the biggest gap since Q3 2008. It is equivalent to 3.5% of the GDP, compared to 2.1% in Q1. It mostly reflects an expanded deficit on goods and reduced surpluses on primary income and on services. All major transactions declined in part due to COVID-19, as many businesses were operating at limited capacity or ceased operations, and the movement of travelers across borders was restricted. Exports went down mainly due to petroleum and products; civilian aircraft; parts and engines and passenger cars; and services of travel and air passenger transport. Receipts of primary income also went down mostly due to equity securities and primarily earnings. Receipts of secondary

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Loans, interest margins

September 5, 2020

Business precautionary draw downs of lines of credit caused the spike, followed by a contraction as operational needs contract:

Growth in real estate loans is slowing:

Consumer borrowing dropped with the stimulus checks and then has flattened:

Pause, recovery, and then a leveling off:

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Options buying, employment

September 4, 2020

The gap closed but at a slower rate indicating the extent to which the economy remains subdued 6 months into the crisis:

Interesting- never seem gov sharply procyclical like this:

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Personal consumption, personal spending, rig count

August 29, 2020

Settling down as fiscal transfers subside, but still elevated:

Income falling faster than consumption is growing:

Real Personal Income less Transfer Payments
Transfer payments decreased by $70 billion in July, but were still $1.7 trillion (on SAAR basis) above the February level. Most of the increase in transfer payments – compared to the level prior to the crisis – is now from unemployment insurance.
However, there will be sharp decline in unemployment insurance in August.

Oil investment down and still falling a bit:

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Jobless claims, corporate profits, Fed, COVID testing

August 27, 2020

Still over 1million new claims last week. This is seriously bad:

They had already leveled off well before the collapse:
As the carpenter said about his piece of wood:‘No matter how much I cut off it’s still too short.’They still have the interest rate thing backwards:
Testing is down as are new cases, just like the President said:

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Job postings, Bank loans

August 22, 2020

Falling off again:
After a typical precautionary draw down of credit lines, business loan growth turned and remains negative:

Total bank credit has gone flat:
Consumer borrowing is down, partly because of fiscal policy, and partly due to reduced spending:

Real estate lending has slowed, but not by a whole lot:

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Housing starts, Japan, consumer spending, Europe, house prices

August 18, 2020

Looks like at best it’s going sideways:


The Japanese economy shrank 7.8 percent on quarter in the three months to June 2020, compared with market forecasts of a 7.6 percent decline, and after a 0.6 percent fall in the previous period, a preliminary estimate showed. This was the third straight quarter of contraction and the steepest on record, amid the severe impact of the COVID-19 crisis. Private consumption (-8.2 percent vs -0.8 percent in Q1), capital expenditure (-1.5 percent vs 1.7 percent), and government spending (-0.3 percent vs flat reading) all declined. In addition, net external demand subtracted 3.0 percentage points off growth, with exports falling the most since Q1 2009 (-18.5 percent vs -5.4 percent) while imports dropped for the third straight

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August 9, 2020

Some are going back to work, but employment is still dramatically low:

Hiring of lower paid workers drives the average wage lower:
Note the unprecedented drop in the labor force:

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Consumer spending, trade, layoffs, jobless claims, political comments

August 6, 2020

Still very weak- gone from increasing to decreasing:

Slowdown plus fiscal adjustment supporting income increased imports vs exports, and oil production going from positive to negative is still in progress:
Layoffs continue at a very high level as firms who kept employees with gov assistance are now letting them go:
New jobless claims continue at over 1 million per week for the 20th week:
Continuing claims remain above 16 million:


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Durable goods orders, private payrolls

August 5, 2020

Familiar pattern, up a bit but still depressedWhat the President has been doing is expressing thesemoves up from the collapse in percentage terms, thenstating the percentage gains are the largest ever, as indicationsthat the economy is booming, etc.It’s either shameless spinning, or, worse, he actually believesit…

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Personal income and consumption

August 3, 2020

This shows the dependence on federal deficit spending to sustain incomes;

Real personal consumption has collapsed-and particularly for services- far more than in 2008/09 even with the increasein personal income from the stimulus checks and enhanced unemployment compensation. A large part of the reasonis that it isn’t safe to go to work and those services simply aren’t available. A financial crisis has been averted, butnot an economic collapse:

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Income, Consumption, Savings, Consumer loans, Real estate loans

July 31, 2020

So jobs and paychecks and profits were lost, but gov deficit spending morethan made up for the lost personal income, but spending went down anyway,as personal savings went up. Then personal income fell back some, consumptionincreased some, and savings went down some.The $1,200 distribution was a one time event, and the new deficit spendingon unemployment benefits of $600/week just expired, making it all dependenton what Congress does next…

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