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WARREN MOSLER

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

Lending, Weather adjusted employment, Japan

22 days ago

The mini spike in real estate lending from the drop in rates is already fading:

The Japanese economy shrank 7.1 percent on an annualized basis in the fourth quarter of 2019, worse than an initial estimate of a 6.6 percent contraction and following a downwardly revised 0.1 percent growth in the previous three-month period. That was the biggest slump in GDP since the second quarter of 2014 as private consumption dropped 10.6 percent as a sales tax hike in October weighed on spending. Also, business spending declined by 17.3 percent, the most since the first quarter of 2009. Japan GDP Growth Annualized – data, historical chart, forecasts and calendar of releases – was last updated on March of 2020.

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Employment, Trade, Rails, Earnings

24 days ago

I suspect these numbers will be subject to large downward revisions, particularly today’s release, and the downtrend will continue. This is much like the other indicators that had recently blipped up and then reversed:

Wage growth, for example, has been decelerating, while the narrative is that everyone is working and there are no people left to employ:

The number of persons working part time for economic reasons increased in February to 4.318 million from 4.182 million in January.The number of persons working part time for economic reason has been generally trending down.
Not good when imports and exports are both working their way lower:

Expectations down further with the virus:

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ISM, Construction spending, Bank loans, HK chart, Headlines, CEO departures

28 days ago

Another one of those brief moves up after the long slide seems to be reversing:

The ISM Manufacturing PMI for the US declined to 50.1 in February of 2020 from 50.9 in January and below market expectations of 50.5. New orders contracted (49.8 from 52), production slowed (50.3 from 54.3) and both employment (46.9 from 46.6) and inventories (46.5 from 48.8) continued to fall. Also, price pressures declined (45.9 from 53.3). Global supply chains are impacting most, if not all, of the manufacturing industry sectors.

Construction spending mover up a bit, but that was January with its warmer than average weather immediately after rates fell and pre virus. And note similar moves up in prior cycles:
Commercial and industrial loan growth remains depressed at near 0:
Glimpse into

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10 year Tsy, Oil, Nat gas, Copper

February 28, 2020

Just hit an all time low yield as markets anticipate a weakening economy will lead to lower rates from the Fed:

Crude oil demand is falling with the weakening global economy. While oil producers in general sell their entire output at market prices, the Saudis are the ‘swing producer’, setting price and letting the quantity they sell to their clients vary with demand. Therefore, a drop in global demand results in reduced Saudi production and sales, while prices remain at levels fixed by the Saudis.
Most recently, the Saudis have been cutting prices, presumably hoping to either increase global demand, or to reduce global supply by forcing higher cost producers to stop producing.
If, however, there is some minimum level of Saudi production- perhaps 5 million bpd – where

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Income, Consumption Chicago PMI, Trade, GDP forecasts, France, Canada, India

February 28, 2020

Continues to decelerate from the tariffs, and this is before the virus:

Also decelerating before the virus:

Before the virus, the downtrend is obvious as it remains below 50:

Exports and imports both slowing as global trade continues to wind down:
GDP forecast to decelerate, before the virus:
Unsold inventory piling up:
Gone negative well before the virus:

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Durable goods, Air freight, Macro economic comment

February 27, 2020

The decline continues, and this was well before the coronavirus:
Rolling over:

The charts show the economy has been continuously decelerating from the time the tariffs took effect, and now with the coronavirus it’s likely to decelerate that much more quickly into negative growth.
The private sector tends to be pro cyclical, which is why back in 2009 it took a federal deficit of maybe 10% of GDP to turn things around, and why it is likely it will take same to turn things around if they continue to decelerate, which means an annual federal deficit approaching $2.5 trillion.
The only question is how the federal deficit will get that high- the ‘nice’ way via proactive fiscal adjustment, or the ‘ugly’ way via falling tax revenues and rising transfer paymentsduring the

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New home sales, Mtg purchase apps, HK, Chemicals,

February 26, 2020

New home sales continue to grow at a slower pace than prior cycles, with absolute levels remaining historically depressed. The chart is not population adjusted:

Can also be a reflection of what’s going on in China:
Another one of those recent moves up that is now likely to reverse:

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Capital expenditures, Philly Fed, Tariffs

February 20, 2020

The Philadelphia Fed’s survey just gapped up, much like some of the others. Could be that manufacturing has stabilized at current levels, but too soon to say:

White House Admits That Trump Trade Stance Did Depress Economy

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Housing starts, Stock buybacks

February 19, 2020

Reversed some but still higher than expected, and still historically depressed:
However, the weather was very nice again in January (just like in December), and the weather probably had a significant impact on the seasonally adjusted housing starts number. The winter months of December and January have the largest seasonal factors, so nice weather can really have an impact.

A huge driver of stock prices got off to its worst start in 7 years, but that could change
Share buybacks got off to a slow start in 2020, with the $13.7 billion total in January the lowest since 2013.

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NY PMI, Walmart, Japan, Oil

February 18, 2020

Another move up that may or may not reverse:

Walmart earnings and outlook fall short as holiday season disappoints

This price drop will negatively effect capital expenditures as well as the value of oil being produced, both negatives for GDP:

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Bank loans, Containers, Bloomberg

February 18, 2020

Largely unchanged for over a year now:

Historically depressed, and adjusted for inflation and population growth real estate lending growth isn’t much above 0:
This much credit tightening has historically been followed by recession:

Still no candidates showing an understanding of monetary operations, so it’s not a distinction 🙁

Bloomberg unveils plans for Americans’ Social Security, retirement savings

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JOLTS, Small business index, Household debt, Wholesale inventories and sales, Germany

February 11, 2020

Https://tradingeconomics.com/united-states/job-offers
The number of job openings in the US fell by 364,000 to 6.423 million in December 2019 from a revised 6.787 million in November and well below market expectations of 7.0 million. It was the lowest level since December 2017, as openings slumped by 332 thousand in the private sector and were down by 32 thousand in government. Over the year, the job openings level declined by 14.9 percent.

Still with the trumped up expectations, but working its way lower:
Growth seems to be moderating as the economy has moderated:
Elevated!

Sales have gone flat at best:

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Employment, Mtg purchase apps, Rails, Germany

February 7, 2020

Year over year growth declined, at least for now reversing a small move up in the context of a larger move lower. Decelerating employment growth generally coincides with decelerating GDP, as has been the case:

Another indicator that’s been perking up. May be weather related:

Intermodal traffic’s prolonged contraction shifted to expansion last month:

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Employment

February 6, 2020

Jan 2019 printed 312,000 net hires, so anything less in tomorrow’s report means the year over year growth was lower. The average for the rest of the year was about 200,000, well below prior years:

This is how it stands before tomorrow’s release:

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Vehicle sales, ISM services, ADP employment

February 5, 2020

Typical collapse prior to recessions:

Still working its way lower:

Another example of a small move up after a long downtrend that are touted to be a ‘reversal’:

Another somewhat misleading headline, as per the year over year chart:

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Durable good orders, ISM NY, Mexico PMI

February 4, 2020

Up a bit this month but still trending lower. And on an inflation adjusted basis well below prior highs. The chart is not inflation adjusted:
A blip up this month, but remains in contraction (below 50):

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Manufacturing indexes, Construction spending

February 3, 2020

Another one of those small blip ups we’ve been seeing;

US Factory Activity Posts 1st Growth in 6 Months
The ISM Manufacturing PMI for the US jumped to 50.9 in January from 47.8 in December, beating market forecasts of 48.5. The reading pointed to the first increase in factory activity in six months. A recovery was seen for new orders, export orders and production and employment fell at a slower pace. In contrast, inventories dropped more and price pressures intensified. Moreover, sentiment regarding near-term growth was moderately positive.

Markit survey:
This one went a bit lower and isn’t adjusted for inflation:

US Construction Spending Posts First Fall in 6 Months
US construction spending fell 0.2 percent from a month earlier in December 2019, following an upwardly

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