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Economic data and coronavirus quick hits

Economic data and coronavirus quick hits

I really need to rouse myself to write a long-form piece on interest rates, housing, and the economy to post over at Seeking Alpha. Ugh! In the meantime, here are a few quick hits on some important or noteworthy new data.

1. New home sales – interest rates bite, but don’t panic

New home sales are the most leading, but most noisy, of housing data. Yesterday they were reported as having declined -18.3% to 775,000 annualized, a 9 month low, and 204,000 below their July peak (blue in the graph below):

For comparison, the much less volatile single family permits declined -9.8%, and remains above every other month in the past 10 years except for December and January.

Crossing an important threshold, to the *good* side

Coronavirus dashboard for March 22: crossing an important threshold, to the *good* side

The US is on the verge of crossing an important threshold: as of today, the 7 day average of COVID 19 deaths in the US has declined to exactly 1000:


The last time the US averaged less than 1000 deaths a week from the virus was the beginning of November, almost 5 months ago. Since the January peak, deaths have declined by 70%.

Democrats: legislate the society you want to live in first; worry about how to pay for it afterward

Democrats: legislate the society you want to live in first; worry about how to pay for it afterward

I want to add my voice to and amplify several themes I have read elsewhere in recent weeks. To summarize:

1. If there is no majority to kill the Senate filibuster, reforming it into an actual talking filibuster is almost as good, and maybe even better.

2. Each element of the democratic constituency should have at least one tangible and visible priority of theirs enacted during the Congress, and all other democratic constituencies should support that enactment, so that at midterm election time, Democrats have something to tout to their voters.

3. In contrast to how democrats governed when they had both the Presidency and Congressional majorities in 1993-94 and 2009-10, when they adopted “pay-go,” meaning they had to come up with revenue sources before passing their actual priorities, they should reverse the order now: enact the programs they think are important, and worry about paying for them later.

Let me discuss each of the above in a little more detail in turn.

Disappointing weekly increase in new jobless claims, but monthly trend improves

Disappointing weekly increase in new jobless claims, but monthly trend improves; expect a 200,000+ number of new jobs in next Employment Report

 – by New Deal democrat

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 my suspicion is correct that, as a critical mass of those vaccinated is reached, 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. More specifically, now that further COVID relief has also been passed by Congress, last week 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’s data didn’t help. On an unadjusted basis, new jobless claims rose by 424,318 to 746,796. Seasonally adjusted claims rose by 45,000 to 770,000, the highest level in 4 weeks. The 4 weeks moving average, however, declined by 16,000 to 746,250.  

Here is the close up since the end of July (these numbers were in the range of 5 to 7 million at their worst in early April): 

Coronavirus dashboard for March 19: yes, vaccinations are working

Coronavirus dashboard for March 19: yes, vaccinations are working

The three big Western standouts for vaccination progress have been Israel, the UK, and the US, respectively. And in all three, there have been dramatic declines in both cases and deaths.


Let’s look at them in order. First, Israel:



56% of all Israelis have had at least one dose of the Pfizer vaccine. 50% have been fully vaccinated.

Big (weather related) declines in February production and sales

Big (weather related) declines in February production and sales

This morning (Tuesday) we got the most important single metrics for both the consumer and producer side of the economy for February, respectively, retail sales and industrial production. Both were big misses, one explicitly and the other likely due to the big freeze in Texas and neighboring States.
Let’s turn to production first.

Total industrial production declined by -2.2% in February, while manufacturing production declined -3.1%. Both of these were the first declines of any significance since last April:



Before the DOOOMERS go screaming, “Double-dip!” however, here is what the Fed itself had to say about this report:

Coronavirus dashboard for March 15: good news, and cause for concern

Coronavirus dashboard for March 15: good news, and cause for concern

A year ago today I wrote about the accuracy of Jim Bianco’s forecast of exponential spread of COVID-19. At that time there were exactly 2952 cases, but increasing at 30% each day, and I wrote, “I have not seen any government action significant enough to stop this exponential projection being correct.” 

As of yesterday, there have been 29,438,775 *confirmed* cases – 9% of the total US population. There have certainly been many more cases which have never been confirmed by testing, primarily but not always because they were mild or asymptomatic.


The good news is that vaccinations in the US are making better and better progress. In the past week, about 2.5 million doses were administered each day. At this rate, the entire adult population could be vaccinated by the end of June.   

New jobless claims continue to decline

New jobless claims continue to decline, just above the pandemic low

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 my suspicion that, as a critical mass of those vaccinated is reached, 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 considerably greater than the roughly 250,000 we saw in February, is correct.

This week, the *relatively* good news continued. On an unadjusted basis, new jobless claims declined by 47,170 to 709,548. Seasonally adjusted claims declined by 42,000 to 712,000, only 1,000 above November’s pandemic low. The 4-week moving average declined by 34,000 to 759,000. 

February consumer inflation begins to heat up a little

February consumer inflation begins to heat up a little

Seasonally adjusted consumer prices rose 0.4% in February. As a result, over the past several months there has been a significant uptick in YoY inflation to 1.7% from 1.1% in November. 


Aside from the pandemic, for the past 40 years, recessions had happened when CPI less energy costs (red) had risen to close to or over 3%/year, usually driven by increases in the price of oil by more than 40% YoY:



Despite recent increases in the price of oil, now up 30% YoY as shown in the graph below, as of this month CPI less energy is only 1.6%, showing no real price pressure at all: 

During the wintertime pandemic surge, hiring hit a brick wall

January JOLTS report: during the wintertime pandemic surge, hiring hit a brick wall

Yesterday morning’s JOLTS report for January was confirmatory of the weak jobs report for that month, showing a largely paused recovery. Further, for the second month in a row, hires were down sharply. Let’s examine this in accord with the data from the prior two recoveries covered by this report, which has only a 20-year history.

In the two past recoveries:

–  first, layoffs declined

– second, hiring rose

– third, job openings rose and voluntary quits increased, close to simultaneously

What we will see below is that the big decline in hiring in December and January is a big outlier compared with the prior two recoveries. The remaining data is largely in accord with the pattern from the last two early recoveries: the first two data series to turn – layoffs and hires – did indeed turn, while the last two – job openings and voluntary quits –  bottomed more gradually and have since risen less dramatically.