Relevant and even prescient commentary on news, politics and the economy.

Weekly Indicators for May 10 – 14 at Seeking Alpha

Weekly Indicators for May 10 – 14 at Seeking Alpha

 by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

The big news in this past week, even though it has been expected for several months, was on the inflation front. That doesn’t affect the nowcast, and hasn’t affected the short term forecast yet. The long term forecast continues to be buffetted by increased interest rates.

In my commentary this week, I make reference to supply constraints. I bring this up here because I read a tweet today by someone whose political analysis I respect, showing a graph of the spike in lumber prices, and stating that lumber was “in a bubble.”

No it’s not. The defining feature of a bubble is speculation on the continuing increase in prices. Fifteen+ years ago it was “everyone knows real estate only goes up!” In 1999 it was “everyone knows these internet companies are going to completely take over commerce!” In 1929 it was “stock prices have reached a permanently high level!” In the 1700s it was “the price of land in the Mississippi Valley is going to explode!” – which was sort of correct, but it took 200 years to happen. As they say, “being early” is a synonym for “being wrong.”

What is happening with lumber, and computer chips, is similar to what happened during the Oil Embargo of the 1970s. This is a supply constraint. Product cannot (in the 1970s, would not) be supplied fast enough to meet the demand. So the way the product gets rationed is to raise prices until enough buyers stop buying.Whether it is a significant problem or not depends upon how quickly the pace of supply can be increased, a question that I do not pretend to know the answer to.

In any event, as usual, clicking over and reading will bring you up to the virtual moment, and bring me my lunch money.

April Industrial Production slightly disappoints – but only due to supply chain bottlenecks

April Industrial Production slightly disappoints – but only due to supply chain bottlenecks


Industrial production is the King of Coincident Indicators, and is the one whose peaks and troughs most frequently mark the beginning and end of recessions. It had been bouncing back strongly, but in the last several months, has hit something of a snag.

In April, total production increased 0.7%, while manufacturing production increased 0.4%:

Both of these, however, remain slightly below January’s levels, and -2.7% and -1.4% respectively below their February 2020 peak just before the pandemic hit.

Record High Trade Deficit

Trade Deficit Increases 5.6% to Record High in March on Rising Imports of Consumer Goods, MarketWatch666, Commenter RJS

Our trade deficit was at another record high in March, 5.6% higher than in February, as both our imports and exports increased, but our imports increased by more. The Commerce Department’s report on our international trade in goods and services for March indicated that our seasonally adjusted goods and services trade deficit rose by $3.9 billion to $74.4 billion in March, from a February deficit that was revised from the originally reported record $71.1 billion to $70.5 billion. In rounded totals, the value of our March exports rose by $12.4 billion to $200.0 billion on a $11.7 billion increase to $142.9 billion in our exports of goods and a $0.8 billion increase to $57.1 billion in our exports of services, while our imports rose by $16.4 billion to $274.5 billion on a $15.3 billion increase to $234.4 billion in our imports of goods and a $1.1 billion increase to $40.0 billion in our imports of services. Export prices averaged 2.1% higher in March, which means the change in our real exports was less than than the nominal increase by that percentage, while import prices were 1.2% higher, meaning that our real imports were likewise smaller than than their nominal value by that percentage…

“Ambivalence” has dropped!

Ambivalence” has dropped!

The Ambivalence of Disposable Time: The Source and Remedy of the
National Difficulties at Two Hundred
,” Tom Walker,
Simon Fraser University

 Two things I am especially pleased about that were sort of incidental at the time:

1. The prominence in the title of “Ambivalence” — the future is ambivalent — and

2. The ending quote by Benjamin of a quote about stereoscopic vision. 

The “author’s original version” can be downloaded from his drop box .

Cuba’s Covid Vaccines Proceed even with US Sanctions

Hit by “renewed” US sanctions (The Guardian) under trump and a Covid pandemic, Cuba is enduring an economic crisis. Pharmacy shelves are empty, people stand in line for hours to buy chicken, and bread is scarce and hard to find. May 6th Cuba reported 1,060 cases totaling 112,714. Another seven deaths occurred bringing the total to 701.

Even as the island nation is under a political siege and suffering from Covid, Cuba is the smallest country in the world to successfully develop its own coronavirus vaccines. Of the 27 coronavirus vaccines in final phase 3 clinical trials around the world, two are of Cuban (NYT) origin.


Cuba’s Finlay Vaccine Institute developed a vaccine known as Soberana 2.

Soberana which means “Sovereign” in Spanish is a Conjugate vaccine. It is the second version of the Soberana vaccines. To make the vaccine, a weak antigen is combined with a stronger antigen as the carrier. The immune system has a stronger response to the weak antigen containing a part of the coronavirus spike protein fused to a standard tetanus vaccine to make it stable and aluminum hydroxide as an adjuvant to boost the immune system.

March JOLTS report confirms that month’s strong jobs report

March JOLTS report confirms that month’s strong jobs report

This morning’s JOLTS report for March confirmed that month’s stellar jobs report. Job openings made a new series high, while layoffs and discharges made a new series low. Hires, quits, and total separations all also moved in the right direction.
This report has only a 20 year history, and so includes only two prior recoveries. In those recoveries: 

  • first, layoffs declined
  • second, hiring rose
  • third, job openings rose and voluntary quits increased, close to simultaneously

The recovery from the worst of the pandemic almost one year ago at first followed this script, but the winter surge, which led to a few month of flat, or worse, jobs reports, disrupted that trend. We now appear to have reverted to that prior trend.

Let’s start out with layoffs and discharges (red) and total separations (blue), showing that these have followed their past patterns, as layoffs rapidly declined to a normal rate after last March and April. As noted above, this month’s report made a new series low:

We all expected inflation to arrive: now it’s here

We all expected inflation to arrive: now it’s here

This morning’s report on April inflation confirmed what we already knew: inflation, both from the demand and the supply side, was coming. Now it’s here.

First of all, take the YoY numbers with a grain of salt. Last April saw actual price declines in the teeth of the worst of the pandemic deaths and lockdowns. Here’s the monthly %change since the beginning of 2020 in total inflation (blue), core, i.e., less food and energy (red), and less energy only (gold):

So let’s delete last April, and look at the price increases in the 11 months since last May:

Once more on vaccine hesitancy

Let me follow up briefly on my post from yesterday on vaccine hesitancy.

Demeaning people is the first step towards ignoring their interests or even persecuting them.  Jason Brennan urges us to ignore the welfare of the unvaxxed by painting a picture of them as moral terrorists or extortionists.  He holds them responsible for their confusion and fears.  He pretends that everyone is well-informed and knows how to evaluate scientific evidence, and that everyone has loads of time to keep up on the latest covid news.  Then he blames people who fail to get vaccinated for their poor choices. 

These are the key facts, as I see the matter:

  • Many people are not vaccinated, vaccination rates are slowing, rates of hesitancy are high.
  • Most unvaccinated people are not hard-core anti-vaxxers.  Many are busy or have difficulty figuring out how or where to get vaccinated.  Some are scared of needles.  Some just worry about the safety of the vaccines.  Young people are likely to prove difficult to vaccinate, because they are at very low risk of dying from covid.
  • Unvaccinated people are a threat to themselves, to people who for medical reasons cannot be vaccinated (a small group, apparently), and to people who are vaccinated but have compromised immune systems.  They are also (presumably) a very, very small risk to people who are relatively healthy and vaccinated.

I got covid in December during a visit to the hospital.  While I was in the hospital – with an active diagnosis of covid, being cared for by doctors and nurses whose job it was to care for people with active covid – I had several nurses who said they would not get vaccinated, at least not right away.  My sense is they were worried about possible side-effects.  They were not malevolent, they were (relatively) well-informed about the risks of covid and of the vaccines, and they were not as far as I could tell making a political statement.  Their worries were understandable, but their planned choices were (arguably) terribly misguided given their high exposure at work. 


The former actor campaigning for President said,

“The government is the problem.”

Who needs government? We need it, that’s who. In 1980, any damned fool could look around and see that nations with strong governments succeeded while those with weak governments failed. Yet most of the people believed the damned fool when he told them that government was the problem. There’s little reason to doubt that he believed it. Question is, who paid him enough?

When a nation turns one way when it should have turned the other, each day spent going the wrong direction doubles the error, doubles the cost, of the choice. In the 1960s and 70s, the understanding of what was happening escaped most everyone. Now, at anytime, is an elusive, hard to grasp, thing. Then, muddling on would have been better than trying to turn back, but it was backward we chose. Since 1980, we have not been able to bring the nation-ship about, to head her into the winds of change. Oh, a few attempts have been made, but, every time, some right winger gets the wheel and sets the ship’s course, again, on going back to those good old days.

In 1980, our CDC was the gold standard, the very best in the world. Our OSHA, EPA, FDA, Supreme Court, role in the United Nations, …, were the envy of the world. Grover said if they couldn’t wean it, then they should drown it; it being the government. These were all a part of the government, things that the people wanted, things that had been enacted into law. The people may have, but the General Electrics, Kochs, Armand Hammers, coal industry, …, didn’t. The Lockheeds, Boeings, and Douglases said the only good spending was defense spending. And so began the cutting of all budgets except defense, and the appointment of those opposed to the very ideas to head OSHA, EPA, FDA, … Yes, the court, too, began to get ideologues. Competency was only a requirement for business hirelings, ideologues were for government. One hundred banana republics can’t be wrong.