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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

Employment, Vehicle sales, Factory orders, Headlines, US and Japan services, US and Euro area trade, Credit standards

11 days ago

Job openings now in full retreat:

The contraction continues:

Highlights
Unit vehicle sales, at a much lower-than-expected annual rate of 16.5 million, proved very soft in October and will lower expectations for next week’s retail sales report. October’s pace is the slowest since April reflecting sharp slowing in light truck sales. Vehicle sales have been soft this year, averaging a 16.9 million pace versus 17.2 million and 17.1 million in the two prior years. Despite this, 2019 has been a good year for overall consumer spending and is the fundamental reason why the Federal Reserve stepped back last week from signaling any further rate cuts.

Typical headlines:
Service sectors following manufacturing into contraction:

Global trade collapse- imports and exports going

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Factory orders, ISM NY, Euro area

13 days ago

Contraction:

Highlights
September factory orders fell 0.6 percent with durable goods orders falling 1.2 percent (revised from an initial 1.1 percent decline in last week’s advance data) and nondurable goods (the new data in today’s report) up 0.1 percent. Total unfilled orders have been flat this year and were unchanged in September while inventories rose 0.3 percent in contrast to shipments which fell 0.2 percent. Orders for commercial aircraft, pulled down by the grounding of the Boeing 737 Max, have been struggling this year and were down 11.8 percent in September.

Remains in contraction (below 50):

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Employment, Construction, ISM manufacturing, Chicago Fed

16 days ago

The slow motion train wreck continues unabated and when employment goes bad, it all goes bad:

Highlights
On the low side of expectations but not at increasing rates of contraction are the results of ISM’s manufacturing report for October. At 48.3, the index missed Econoday’s consensus by 1 point but gained a 1/2 point from September. New orders improved nearly 2 points in October but, at 49.1, are still under breakeven 50. New export orders, however, improved markedly, up more than 9 points and back over 50 at 50.4. Yet total backlogs are a major weakness for ISM’s sample, down another point and in deep contraction at 44.1.
Elsewhere contraction is roughly as deep as September, including production down nearly a point to 46.2 and employment up 1.4 points but still under

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Rails, Trade, Chicago Fed, Dallas Fed

20 days ago

Deep contraction:

Highlights
The good news is that the trade deficit in goods narrowed sharply in September to a much lower-than-expected $70.4 billion, but the bad news is both exports and imports, in an indication of economic slowing, fell sharply. Exports dropped 1.6 percent in the month for year-on-year contraction of 3.0 percent, showing an oversized 12.6 percent monthly decline in foods, feeds & beverages that will raise talk of issues with China. Exports of autos were also down sharply, down 7.2 on the month in what may be tied in part to the GM strike which began mid-month September. Imports fell 2.3 percent on the month with this year-on-year decline at a steep 4.6 percent, with consumer goods falling 5.0 percent in the month and with capital goods down 2.3

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Durables, Manufacturing employment, US composite PMI, Euro area manufacturing

24 days ago

The global collapse continues unabated:

Highlights
An emphatically weak set of durable goods headlines for September raises the alarm for the health of the manufacturing sector while unexpectedly substantial contraction in capital goods orders deepens specific questions on the outlook for business investment. Durable goods orders fell a monthly 1.1 percent in September, on its face significantly weak but roughly near expectations in contrast to ex-transportation orders which fell 0.3 percent to just make the bottom end of Econoday’s consensus range. Well below the bottom of expectations is a 0.5 percent drop in core capital goods orders (nondefense ex-aircraft), one intensified by a downward revision to August which now shows a 0.6 percent monthly decline that followed no

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France, Inventory cycle, Unemployment benefits, Architectural billings

25 days ago

Never seen so many charts that look pretty much like this:

Much harder to get this cycle means that unemployment and benefits as defined are lower than otherwise, and that the counter cyclical stabilizing effect has been disabled:

Most Unemployed People In 2018 Did Not Apply For Unemployment Insurance Benefits
from the Bureau of Labor Statistics
In 2018, 77 percent of the unemployed people who had worked in the previous 12 months had not applied for unemployment insurance benefits since their last job. Of the unemployed who had not applied, 3 out of 5 did not apply because they did not believe they were eligible to receive benefits.

Still below 50 which means contraction, and still trending lower:

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Existing home sales, UK, Euro area budget and exports

26 days ago

Rolling over:

Fiscal this tight means they are entirely dependent on exports for growth, and exports have been collapsing with US tariff policy:

From the ECB:

“Currently extra-euro area imports and exports of goods and services amount to around half of euro area GDP.”

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Housing starts, Industrial Production, Q3 GDP

October 17, 2019

Fell back this month after last month’s spike from the drop in rates and still looking to me like it’s going nowhere from historically depressed levels, and not population adjusted:

Highlights
Upward trajectory is the theme of housing starts and permits, in data where September’s headlines don’t always tell the fundamental story. Housing starts came in at a 1.256 million annual rate in September that falls not only well short of expectations but also August which is revised higher to 1.386 million. But behind the headline is a small gain, to 918,000, for single-family starts. These pack more GDP punch per unit than multi-family starts which dropped a very sharp 28.2 percent to 338,000. The three-month average for single-family starts is up very sharply, at 901,000 for the

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Retail sales, Business inventories

October 16, 2019

Weak income and employment growth tends to coincide with weak retail sales growth, as the global trade collapse continues:

Highlights
The consumer cooled but not enough to not knock back a still rising trend for retail sales which in September fell an unexpected 0.3 percent. All the breakdowns also came in well below expectations including a 0.1 percent dip when autos (one of September’s weaknesses) are excluded and no change when also excluding gasoline.
Perhaps the best gauge to this report is the control group, which is part of the GDP mix and which came in flat. Limiting the unwelcome message from September is a revision to the upside for August, up an additional 2 tents to 0.6 percent, and also a look at the total year-on-year rate which did ease 3 tenths in

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Bank loans, CEO confidence, India

October 12, 2019

Tariffs have caused a global economy (that has a pro cyclical bias) to turn south.
It’s always an unspent income story. When decisions to not spend income (decisions to ‘save’) are not sufficiently ‘offset’ by agents spending more than their incomes GDP (sales/income) decelerates until said deficit spending- private or public- expands to fill the gap.

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JOLTS, Wholesale trade

October 9, 2019

Heading south:

Sales in contraction year over year and inventories again elevated:

Highlights
Wholesale inventories rose 0.2 percent in August which is down from an initial estimate of 0.4 percent posted late last month. Inventories in July rose 0.2 percent.
Sales at the wholesale level are subdued, unchanged in August to keep the stock-to-sales ratio in the sector unchanged at 1.36. For GDP, wholesale inventories in the first two months of the third quarter rose roughly in line with the second-quarter build which would be neutral for the inventory component of third-quarter GDP.

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Small business, Japan, Rails

October 8, 2019

Highlights
Small business optimism continues to ease, down 1.3 points in September to a slightly lower-than-expected 101.8. No components rose in the month with six down and three unchanged. The report notes that uncertainty is up and respondents are more reluctant to make major spending commitments. Tariffs are cited by 30 percent of the sample as a negative for their business. Labor compensation continues to rise in contrast, however, to selling prices which are comparatively flat.

Global trade continuing to contract:

Japan’s current account surplus came in at JPY 2.16 trillion in August 2019, widening from last year’s JPY 1.82 trillion and above market expectations of JPY 2.07 trillion. The goods account switched to a JPY 0.05 trillion surplus from a JPY 0.26

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Employment, Vehicle sales

October 4, 2019

Weakness continues and new tariffs kicking in will only make it worse:

Highlights
Is there slack in the labor market or isn’t there? Judging by September’s 3.5 percent unemployment rate, a rate that falls below Econoday’s consensus range, there may not be much available capacity at all. Yet wage pressures, as measured by average hourly earnings, eased significantly in September for a 2.9 percent year-on-year growth rate that is the lowest since July last year.
Payroll growth itself is running a notch or two below last year and is well under 200,000, but it is still very solid as well as steady and would look to further test the labor market’s available capacity. Nonfarm payrolls rose 136,000 in September with August revised sharply higher, up an additional 38,000 to

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Employment, Vehicle sales, Consumer durables, NYC

October 2, 2019

Rapid deceleration:

BEA: September Vehicles Sales increased to 17.2 Million SAAR
“The job market has shown signs of a slowdown,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “The average monthly job growth for the past three months is 145,000, down from 214,000 for the same time period last year.”

Negative year over year:

BEA: September Vehicles Sales increased to 17.2 Million SAAR
BEA released their estimate of September vehicle sales this morning. The BEA estimated sales of 17.19 million SAAR in September 2019 (Seasonally Adjusted Annual Rate), up 1.1% from the August sales rate, and down 0.7% from September 2019.
Sales in 2019 are averaging 16.96 million (average of seasonally adjusted rate), down 1.1% compared to the same period in

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ISM Manufacturing, Construction, Trump Fed comments

October 1, 2019

The deceleration that’s been going on all year due to the tariffs seems to finally be getting some media attention after US manufacturing reports that it’s in contraction. Something like the 10th plague…

Highlights
Contraction in export orders is severe and is pulling composite activity for ISM manufacturing’s sample under water. September’s 47.8 headline is more than 1 point under Econoday’s consensus which is significant, since nearly all forecasters take a stab at this report. And bleeding at a troubled rate are new export orders which at 41.0 posted their the third straight month of contraction that echoes the very substantial contraction being suffered by the PMI manufacturing sample in Germany right now.
Total new orders in September’s report are at 47.3 and also

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UK, China, Philli Fed index, Flipper lending

September 30, 2019

Still contracting:
This indicator is flashing recession again. Last time this happened a few years ago the numbers were subsequently revised higher:

Not a good sign:

Lending to house flippers hits a 13-year high as prices and competition heat up

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Home prices, Richmond Fed, Consumer confidence

September 24, 2019

More deceleration:

US Home Price Growth Slows to New 7-Year Low
The S&P CoreLogic Case-Shiller 20-city home price index in the US rose 2% year-on-year in July, missing market expectations of 2.2%. It was the smallest annual gain in house prices since August 2012. Phoenix recorded the biggest increase in home prices, followed by Las Vegas and Charlotte, while the smallest gains were seen in San Francisco, New York and Los Angeles. Prices in Seattle continued to drop.

Highlights
The consumer confidence index had been showing exceptional strength but did fall back unexpectedly in September to 125.1 which is down sharply from a revised 134.2 in August and 135.8 in July. Nevertheless, this index has been trending higher this year in continued contrast to the rival consumer

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