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

American plutocracy in two simple graphs; plus, when will wage growth bottom?

American plutocracy in two simple graphs; plus, when will wage growth bottom?

The JOLTS report for February comes out later this morning; I may post on it later or tomorrow.


In the meantime, here are updates on several graphs I used to run during the last expansion in order to examine how shared out (or not) economic growth was.


First, here is a graph comparing corporate profits adjusted for inflation, and total nonsupervisory wages, also adjusted for inflation. Both are also adjusted for population growth, so that we can see how much each has grown (or not) per person:

Blockbuster March jobs report, but still a long way to go

Blockbuster March jobs report, but still a long way to go

 HEADLINES:

  • +916,000 million jobs added. The alternate, and more volatile measure in the household report indicated a gain of 609,000 jobs, which factors into the unemployment and underemployment rates below.
  • U3 unemployment rate declined 0.2% to 6.0%, compared with the January 2020 low of 3.5%, and the April 2020 high of 14.8%.
  • U6 underemployment rate declined 0.4 to 10.7%, compared with the January 2020 low of 6.9%, and the April 2020 high of 22.9%
  • Those on temporary layoff decreased -203,000 to 2,026,000.
  • Permanent job losers decreased -65,000 to 3,432,000.
  • January was revised upward by 67,000, and February was also revised upward by 89,000, for a net gain of 156,000 jobs compared with previous reports.

New jobless claims rise slightly, expect a big payrolls gain tomorrow

New jobless claims rise slightly, expect a big payrolls gain tomorrow

New jobless claims are likely to the most important weekly economic data for the next 3 to 6 months. They are going to tell us whether, as the number of those vaccinated continues to increase, there will be a veritable surge in renewed commercial and social activities and attendant consumer spending, leading in turn to a strong rebound in monthly employment gains.Three weeks ago I set a few objective targets: I am looking for new claims to be under 500,000 by Memorial Day, and below 400,000 by Labor Day. 
This week initial jobless claims increased from last week’s pandemic lows. On a unadjusted basis, new jobless claims rose by 63,282 to 714,433. Seasonally adjusted claims rose by 61,000 from last week’s downwardly revised 658,000 to 719,000. The 4 week average of claims declined by 10,500 to 719,000, a new pandemic low. 

This may be the most important housing chart of springtime 2021

This may be the most important housing chart of springtime 2021

My longform housing market analysis is almost complete, and will probably get posted later today or tomorrow at Seeking Alpha. I’ll post a link here once that is done.

In the meantime, consider the following. The Case Shiller national house price index had another sharp increase in February, and is now up 11.2% YoY, the highest rate since the days of the housing bubble in 2002 (green in the graph below):

Meanwhile, look at inventory (gold). In absolute terms, the seasonally adjusted inventory of new homes for sale bottomed last August and October. Last August inventory was down -12.3% YoY. As of last month, it was only down -4.6% YoY. At this rate of change, it will be *up* YoY by about May.

Coronavirus dashboard for March 28: good news … < sigh > … and bad news

Coronavirus dashboard for March 28: good news … < sigh > … and bad news

According to the CDC, there have been 30.3 Million *confirmed* cases of COVID-19 in the US, and 550,000 deaths.The true number of actual infections is probably much higher.


On the good news front, the CDC says that 36.2% of the entire US adult population has received at least one shot; a full 20%, or 1 in every 5 adults, has been fully vaccinated. Among those 65 years of age or higher, the news is even better: just shy of 3/4’s (72.4%) have received at least one dose, and just shy of 50% (48.4%) are fully vaccinated.


As a result, as of one week ago, both cases and deaths among senior citizens have declined by nearly 90% since their December peak. Here are cases: 



And deaths among senior citizens have all but disappeared:

Weekly Indicators for March 22 – 26 at Seeking Alpha

 – by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

For the first time since I started tracking this data, literally every single one of the coincident indicators is positive. We are starting to experience a boom in economic growth that I expect to continue throughout most if not all of this year.

As usual, clicking over and reading will bring you up to the virtual moment as to what is happening in the economy, and reward me with a penny or two for the time and effort I put in to creating this weekly portrait.

February personal income and spending decline

February personal income and spending decline: the back end of January stimulus payments

Last month I wrote that the:

“report on January personal income and spending shows just how important the stimulus packages enacted by the federal government both last spring and last month have been to sustaining the economy.”

The truth of that was confirmed on the back end in this morning’s report for February, in which January’s 10% increase in income was followed by a -7.1% decrease (red). January’s increase of 3.4% in spending was also partially reversed by a -1.0% decrease in February (blue):


In its release, the Census Bureau confirmed this analysis, writing:

Income and spending decline: the back end of January stimulus payments

February personal income and spending decline: the back end of January stimulus payments

by New Deal democrat

Last month I wrote that the:

“report on January personal income and spending shows just how important the stimulus packages enacted by the federal government both last spring and last month have been to sustaining the economy.”

The truth of that was confirmed on the back end in this morning’s report for February, in which January’s 10% increase in income was followed by a -7.1% decrease (red). January’s increase of 3.4% in spending was also partially reversed by a -1.0% decrease in February (blue):


In its release, the Census Bureau confirmed this analysis, writing:

“The decrease in personal income in February was more than accounted for by a decrease in government social benefits to persons. Within government social benefits, ‘other’ social benefits, specifically the economic impact payments to households, decreased. The CRRSA Act authorized a round of direct economic impact payments that were mostly distributed in January.”

The importance of the stimulus is further shown dramatically when we subtract government transfer receipts from the equation, shown in red in the graph below:


Real personal income excluding government transfer receipts *rose* slightly in February.

Since this last metric is the last of the four coincident metrics to be reported for February, we can now plot the general outline of the economy through last month, including production (blue), jobs (red), real retail sales (green), and real income (purple):

 
Employment is down over 5% since last February, while production is down 4%. Meanwhile income is down only 2.5%, and real sales have actually increased by nearly 5%!  Most recently, in the combined two month period since December, two of the series – payrolls and real sales – have increased, while the other two – industrial production and income less government payments – have declined. Since the Big Texas Freeze impacted probably substantially impacted all of these, the underlying situation is presumably better.

Government aid has kept the pandemic from turning into a true economic disaster. Going forward, I expect improvement throughout spring into summer in all of this data.

Jobless claims make new pandemic lows at last

Jobless claims make new pandemic lows at last

New jobless claims are likely to the most important weekly economic data for the next 3 to 6 months. They are going to tell us whether, as the number of those vaccinated continues to increase, there will be a veritable surge in renewed commercial and social activities and attendant consumer spending, leading in turn to a strong rebound in monthly employment gains. Two weeks ago I set a few objective targets: I am looking for new claims to be under 500,000 by Memorial Day, and below 400,000 by Labor Day. 

This morning was (relatively!) good news, as we finally made new pandemic lows for initial claims. On a unadjusted basis, new jobless claims fell by 100,412 to 656,789. Seasonally adjusted claims also declined by 97,000 to 684,000. The 4 week average of claims declined as well by 13,000 to 736,000. Seasonally adjusted claims also declined All of these were new pandemic lows.  

Seconding Paul Krugman: inflationary pressures will be a transient phenomenon in 2021 (will they cause a recession in 2022?)

Seconding Paul Krugman: inflationary pressures will be a transient phenomenon in 2021 (but will they cause a recession in 2022?)

 – by New Deal democrat

Paul Krugman argues once’s again this morning that any increase in inflation this year as part of a post-pandemic boom will be transitory:



I agree. I want to elaborate on one point he hasn’t emphasized; namely, you can’t have a wage-price inflationary spiral if wages don’t participate!
To make my point, let me show you three graphs below, covering wages and prices in three different periods: (1) the inflationary 1960s and ‘70’s, (2) the disinflationary Reagan-era 1980s and early ‘90’s, and (3) the low inflation period of the late 1990s to the present.