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Monday political potpourri for a slow-starting Economic news week

Monday political potpourri for a slow-starting Economic news week

It’s a very slow most-of-the-week for economic data. Except for house prices, nothing much gets reported until Thursday, when a slew of data (personal income, spending, ISM manufacturing, construction, and jobless claims) all gets reported at once. And then Friday is the last jobs report before the election.

I’ll update the Coronavirus dashboard tomorrow or Wednesday. In the meantime, here are a few random notes for your Monday morning.

1. YouGov has now premiered their own election model, which gives Biden 351 Electoral votes as the median forecast. The model does not give probabilities.

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A macro view of how the 2020 Presidential election differs from 2016

A macro view of how the 2020 Presidential election differs from 2016

This is a light week for economic data, so don’t be surprised if I take a break for a day or two.

In the meantime, I wanted to post a few graphs that I think give a good “macro” view of the Presidential election this year, and how it is different from 2016.

Aside from the fact that Trump now has a nearly 4 year record, and Presidential elections are usually a referendum on the incumbent President or party, the simple overriding fact is that Biden is viewed much more favorably, or perhaps much less *un*favorably, than Hillary Clinton was in 2016.

To refresh your memory, here are a couple of graphs showing how (dis)liked both Trump and Hillary Clinton were in 2016:

Both were historically more disliked than any other previous candidate of either party. Almost 50% of likely voters *strongly* disliked her, and majority did dislike her:

NOTE IMPORTANTLY: I am not making a value judgment that Hillary Clinton was dislike*able*. I am simply reporting that she was in fact historically disliked. When right in the middle of ongoing early voting, Comey insinuated that she might be a crook, that’s all it took to give Trump his inside straight win in the Electoral College.

As a result of the fact that *both* candidates were historically disliked, there were wide swings in voter intentions throughout 2016, depending on which candidates problems were dominating the front page. Here’s the static-y day by day view:

Note that there were several brief periods where Trump actually led.

Here’s a smoothed out view of the year:

And here is the forecast probability of winning:

As I said above, there were wide swings in the race.

Before I go further, let me add into the mix this graph of the average deviation in polls depending on the time to the election:

 As I write this, we are 43 days from the election, meaning that there’s an average of about 2.3% error in polling compared with the actual result.

Now let’s compare that with 2020 so far. Here’s Nate Silver’s summary of national polling for the past 6 months:

This has been a remarkably steady race for months on end. Even when Trump got the most benefit from his brief “rally round the flag” moment in early April, he still trailed Biden by 3.5%, 44.1% to 47.6%. For the past month, Biden has polled very close to 50% in either direction consistently.

In short, there’s every reason to believe that the polling this year is closer to the ultimate result than has historically been the case. I’m not even sure the thermonuclear bomb of Justice Ginsburg’s death is going to have much of an effect on the polling; at most I suspect it will increase the population of likely voters.

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The 2020 Presidential and Senate polling nowcast: shift in the control of the Senate to democrats looks increasingly likely

The 2020 Presidential and Senate polling nowcast: shift in the control of the Senate to democrats looks increasingly likely

 

Here is my weekly update on the 2020 elections, based on State rather than national polling in the past 30 days, since that directly reflects what is likely to happen in the Electoral College. Remember that polls are really only nowcasts, not forecasts. They are snapshots of the present; there is no guarantee they will be identical or nearly identical in early November.

Let’s begin with Trump’s approval. After several weeks of improvement, last week Trump’s approval eroded very slightly, and this week was virtually unchanged – and remains right in its normal range for the past 3 1/2 years:

 

It is safe to say that Trump’s post-convention, “law and order” bounce has plateaued. There is no information yet as to how the passing of Justice Ruth Bader Ginsburg may impact the result.

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“The US is a white Christian country. Everyone else is here on sufferance:”

“The US is a white Christian country. Everyone else is here on sufferance:” Donald Trump, James II, and the Glorious Revolution – by New Deal democrat

For the past year +, I have been reading about the History of Republics -really, a History of the Rule of Law – that has taken me through Ancient Rome, Venice, Genoa, Florence, Switzerland, the Dutch Republic, and currently the Glorious Revolution of 1688 in the UK.

There are enough parallels between that event and the US in 2020 that it is worth some more detailed comparison.

Recently I came across a quote attributed to FDR that I think perfectly encapsulates the current GOP view of the United States:

“The United States is a white Christian country. Everyone else is here on sufferance.”

Now, FDR was a total political animal. He wasn’t necessarily stating his own deeply held view. Rather, more likely he was voicing his opinion of the most prevalent political ideology of the country.

I think that quote – variously reported as “Anglo-Dutch” or “white Protestant” is spot on. It encapsulates an idea that people of color and white non-Christians (including, arguably, Catholics, or at least those who aren’t “pro-life”) are second class citizens. They are de jure equal, but are only entitled to their voice so long as they don’t disturb the hegemony of the founding white Protestants. Hence why “real America” consists of the lily-white areas of the Midwest and West, and why Whites in the South are entitled to rule their States.

Both US political parties really agree with that divide. Think about it: are Blacks and Hispanics *relatively* worse off compared to Whites when the GOP is in control?  If that is true – and I certainly believe it is – then it necessarily also means that Whites are *relatively* worse off compared to  Blacks and Hispanics when Democrats are in control.  I actually think partisans of both parties agree with both of those statements. What they differ on is which outcome is “fair.” That certainly accords with dozens of quotes I have read from partisans and regular supporters on both side of the divide.

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2019: the year that the late economic expansion finally bore fruit for nearly all of society

2019: the year that the late economic expansion finally bore fruit for nearly all of society

Yesterday  (Sept. 16) the Census Bureau released its 2019 information concerning median household income and poverty rates. Unfortunately, this data is always released in September of the following year, so is already somewhat stale. Just for example, since the information is collected between February and April of the following year, we may not get complete information about the impact of the coronavirus until two years from now!

Also, since the information is across *all* households, not just wage- or salary-earning households, but includes, for example, retirees as well as the unemployed, it should not be used to infer information about wages.

That being said, in 2019 the economy was doing very well, and both un- and under-employment were reaching repeated new lows, and inflation remained subdued, real median household income rose significantly – up 6.8% over 2018:

As is obvious from the graph, this was a new all-time high.

 

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Real retail sales gains join industrial production in sharp deceleration

Real retail sales gains join industrial production in sharp deceleration

Two days ago we saw that gains in industrial production had decelerated sharply in August. This morning we saw the same thing with real retail sales, one of my favorite indicators.

Nominal retail sales were up +0.6% in August. Meanwhile, July’s reading was revised downward by -0.3%. Since in July and August consumer inflation was up +0.6% and +0.4%, respectively, that means revised *real* retail sales rose +0.3% in July and +0.2% in August. This means that the net result over two months was lower than previously thought for the month of July alone.

Nevertheless real retails sales did establish a new record high, above any reading from before the pandemic:

Historically consumption has led employment (/2) by several months (albeit with lots of noise), and has an even closer relationship with aggregate hours (all shown YoY below):

 

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Industrial production improves in August, but with sharp deceleration

Industrial production improves in August, but with sharp deceleration

If the jobs report is the Queen of Coincident Indicators, industrial production is the King. It, more than any other metric, is found at the turning points where recessions both begin and end.

This morning’s report of industrial production for August shows that the recovery from the bottom of the coronavirus recession has come close to stalling out.

Overall industrial production grew by 0.4%, while July was revised higher by 0.5%. Manufacturing production grew just under 1.0%.  July was likewise revised higher by 0.6%. Here are the overall totals:

The good news is that manufacturing production has gained back almost 70% of its decline from March. Overall production has gained a little over half of its decline.

 

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Coronavirus dashboard for September 14: cases in the Midwest surge; the Northeast still lags Canada

Coronavirus dashboard for September 14: cases in the Midwest surge; the Northeast still lags Canada

 

Total US cases: 6,519,573
Average cases last 7 days: 34,744
Total US deaths: 194,071
Average deaths last 7 days: 733

 Source: COVID Tracking Project

I continue to expect the pandemic to wax and wane in relative terms at least until next January 20, as the public reaction in various States varies between panic and complacency.

Let’s start by comparing the rates of cases and deaths in the US with the North American standard – Canada:

In contrast with the US, Canada averaged 18 cases per day per million people in the last 7 days (vs. 105 for the US), and 0.1 deaths (vs. 2.2 for the US). That is what we could have as well if there were competent Federal leadership.

 

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The 2020 Presidential and Senate nowcast: the races congeal

The 2020 Presidential and Senate nowcast: the races congeal

 

Here is my weekly update on the 2020 elections, based on State rather than national polling in the past 30 days, since that directly reflects what is likely to happen in the Electoral College. Remember that polls are really only nowcasts, not forecasts. They are snapshots of the present; there is no guarantee they will be identical or nearly identical in early November.

Let’s begin with Trump’s approval. After several weeks of improvement, this week Trump’s approval eroded very slightly – but remains right in its normal range for the past 3 1/2 years:

 

It is safe to say that Trump’s post-convention, “law and order” bounce has plateaued (note there have not been any big BLM demonstrations in the past week that have produced pictures of burned-out businesses).

In any event, here is the updated map through September 5. To refresh, here is how  it works:

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Consumer inflation continues to accelerate YoY, but so far no big problem

Consumer inflation continues to accelerate YoY, but so far no big problem

 

The consumer price index for August was reported up +0.4% this morning. This is the third straight big increase. Below I show this plus the more stable consumer prices minus gas (red):

Here’s what the monthly changes look like over the past 10 years:

 

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