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

Did July’s headline jobs number miss business closures, and so overcount job gains?

Did July’s headline jobs number miss business closures, and so overcount job gains?

A few issues arose with regard to last Friday’s jobs number; in particular, the effect of government jobs in the form of Census and teaching jobs, whether seasonal adjustments are unhelpful at this time; and whether the birth/death model used by the BLS has undercounted job losses (due to increased non-reporting by closed businesses). I’m going to examine this in two posts. Tomorrow (hopefully!) I’ll go into detail as to what withholding taxes can tell us about the employment numbers. Today I want to compare the BLS payrolls data with the Census’s household survey.

Let’s start with the issue of government employment. Since there were lots of layoffs in schools earlier, the lack of new layoffs in July meant that “seasonally” over 200,000 gains  of the 1.763 million jobs reported in July were included in the nonfarm payrolls number (Blue in the graph below). When they are taken out, however, you still get a gain of 1.462 million (red):

 

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“Executive Order” Versus “Executive Action” Such As A Memorandum

“Executive Order” Versus “Executive Action” Such As A Memorandum

 Most of the news media has reported that President Donald J. Trump has signed four “executive orders” involving extending unemployment benefits at a $400 rate, deferring (or ending?) payroll taxes for Social Security (opposed by both parties in Congress), extending a ban on evicting renters, and extending student loan deferments.  An important detail not mentioned in most reports that of these three of them are not actual orders but rather memoranda, which can count as “actions,” that essentially implore others to do something that requires Congressional action in order to be done, basically the first two of these, or is already happening (deferment of student loans, although this is complicated).  Only one of them is an actual order that must be followed, the one regarding evicting renters, although all this order does is to make HUD “consider” extending the ban on evicting renters.  The order itself does not actually do it.  In short, these orders amount to a campaign list of wannabe actions, no actual real actions.

This is all obviously the brainchild of the incompetent and brainless Chief of Staff, Mark Meadows, who is apparently incapable of making any deals and totally focused on the reelection campaign.  So he “blew up” the two-week negotiations with Congressional leaders by most accounts by making rigid demands.  I am not going into details, but there were obvious compromises available, just to pick one on the total size of the relief package.  The Dems were proposing $3 trillion based on what the House passed months ago while the White House and some GOPs held to $1 trillion. Reportedly the Dems offered the obvious compromise of $2 trillion, but that was blocked by Meadows who simply made demands and warned if they were not accepted, Trump would issue “executive orders” to do what he wants.  But, as careful analysis shows, only one of these is ab actual order and even the one that is an order that only orders a department to consider doing something.

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Topical thread

by rjs
Once again, here are the links to this week’s coronavirus news collections, as posted overnight at Econintersect:
New coronavirus cases in the US were down another 10% this week, and the week’s virus death toll was down by about the same percentage, so my projection that deaths would continue rising another two or three weeks was clearly off the mark….if deaths don’t spike back up, the current wave of the virus will mean a US virus death rate of about 2% of those who test positive…that a big improvement from the 8% to 10% of those who tested positive who were dying early on…it’s hard to say how much of that is due to better care, or simply the big increase in the number who are now being tested and being confirmed positive…it could also be demographics; as more young people have been catching the disease in this recent wave, and their cases tend to be less severe..
The “economic’ news here includes a thread of articles on the failed virus relief negotiations in Congress and Trump’s subsequent executive orders to enact parts of the package anyhow, several articles on Friday’s jobs report, and another batch of articles on school’s plans for this fall, which barely scratches the surface because they’re probably discussing what to do in every school district in America…

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An Idea Whose Time Has Come: Make Election Mail Free

Mark Jamison’s commentary on USPO matters have been featured at Angry Bear Blog a number of times over the years. A retired postmaster, Mark Jamison serves as an advisor, resident guru, and a regular contributor to Save the Post Office. Mark’s previous posts concerning the USPO can be found here at “Save The Post Office” or by doing the search function at Angry Bear.  Mark can also be contacted on USPO matters markijamison01@gmail.com

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A common thread that runs throughout the history of the United States is the expansion of the franchise.

Early in our history the right to vote was limited to white males, often with strict property qualifications. By the time of Andrew Jackson, the franchise had extended to white males generally. While the primary reason for the Civil War was the elimination of slavery, the logical conclusion of that conflict was the Fifteenth Amendment, which prohibited denial of the franchise based on “race, color, or previous condition of servitude.” The Nineteenth Amendment extended the franchise to women, and the Snyder Act of 1924 extended the vote to Native Americans by granting them full citizenship rights. The Twenty-sixth Amendment extended the voting age to eighteen-year-olds, acknowledging that if one was old enough to fight and die for their country they were old enough to exercise the franchise.

The fundamental premise of our Constitution is that sovereignty lies within the entity known as We the People. Voting, the exercise of our basic right to choose our leaders, should be our most cherished right because it enshrines voice and participation granting the dignity of self-government.

And yet for all its acknowledged value and importance there have still been reactionary and revanchist powers that sought to limit and confine the franchise. The powerful and elite rarely willingly share their wealth and power.  Each step in extending the franchise was met with resistance.

Ninety-five years after passage of the Fifteenth Amendment, the 1965 Voting Rights Act finally enshrined mechanisms to fulfill the vision of participation that is the cornerstone of American Democracy. The VRA was renewed by Congress several times, most recently in 2006 when it passed in the House by a vote of 390 – 33 and in the Senate unanimously. And yet elements, small recalcitrant elements of our society, still begrudge this most fundamental and basic of rights. In an infamous decision that stands with Dred Scott as among the most unjust acts of the Supreme Court the 2013 Shelby County v. Holder decision eviscerated key parts of the VRA. Predictably the same bad actors who have fought voting rights took the opportunity to find new and effective ways to suppress voting, especially among minority communities.

Now we have a president who, fearing he will lose an honest and fair election, takes every opportunity to call into question the integrity of our elections and voting practices. While we struggle as a nation with a deadly pandemic, this president has done everything in his power to call into question an obvious solution that will make voting safer, easier, and more accessible. That solution is voting by mail.

Several states already vote exclusively by mail and every state has some provision for mail voting even if limited to excuse-required absentee ballots. In this time of pandemic, voting by mail makes sense and we should make every effort to assist states in providing vote by mail.

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Initial and continuing jobless claims: back to being “less awful”

Initial and continuing jobless claims: back to being “less awful”

This morning’s initial and continued jobless claims resume the trend of “less awful” numbers.

New jobless claims fell to under 1,000,000 for the first time on an un-adjusted basis – 984,192, to be specific (gold in the graph below). After seasonal adjustment, they declined 249,000 to a new pandemic low of 1,186,000 (blue), also a new pandemic low:

Continuing claims (red, right scale), reported for the prior week, also made a new pandemic low of 16,107,000.

All of these remain at far worse levels than even at their worst during the Great Recession. Further, that there are still 1 million *new* layoffs a week almost 5 months into the pandemic indicates that longer-term damage is being done to the economy, I.e., if there were a vaccine tomorrow, there would be no “V-shaped” immediate recovery back to pre-pandemic levels. Almost all of which has been totally unnecessary, and has been caused by incompetent leadership at the very top.

But after about a month of stalling, on a very very very relative basis, I will take this “good” news.

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July jobs report: a very good *relative* gain – perhaps the last

July jobs report: a very good *relative* gain – perhaps the last

HEADLINES:

  • 1,763,000 million jobs gained. Together with the gains of May and June, this makes up about 42% of the 22.1 million job losses in March and April.
  • U3 unemployment rate declined -0.9% from 11.1% to 10.2%, compared with the January low of 3.5%.
  • U6 underemployment rate declined -1.5% from 18.0% to 16.5%, compared with the January low of 6.9%.
  • Those on temporary layoff decreased -1,300,000 to 9.225 million.
  • Permanent job losers decreased by -6,000 to 2.877 million.
  • May was revised upward by 26,000. June was revised downward by -9,000 respectively, for a net of 17,000 more jobs gained compared with previous reports.

Leading employment indicators of a slowdown or recession

 

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Necessity of America

If not the US, who?

In order to get it right, it is so important that we know what is going on now. In the midst of a pandemic, overpopulated, ever more marginalized by Global Warming, beggared with inequality, and sorely lacking leadership; the world is indeed going to hell in a handbasket.

Take a look:

An index of Fragile States:

Less than 10 States are shown as being Sustainable. A comparable number are shown not Sustainable but Stable. Together these groups, Sustainable and Stable, constitute about a third of the States. Below Stable, another one-third of the States are shown as being at Warning. The last one-third are shown to be at the Alert level. The US is barely in the top 20% on the index.

An index of Inequality:

In 2019, we were 28th out of 150 on the index.

We used to be the leader of the ‘Free World’. Is this current state of the world, in part, due to our abdication? What if some other nation takes that role? As the leader, we just may have gotten some things right. We made alliances, provided assistance, served as a role model. Today, the Greatest Nation on earth isn’t really. If not the US, then who?

After us, who else will give so freely of their capital? —

We hear that we are not a policeman to the world, or, that at least shouldn’t be. Then who else is going to restrain Xi? Erdoğan? Putin? Who else will keep India and Pakistan from annihilating one another?

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How To Measure Quarterly Changes In GDP Can Make A Big Difference

How To Measure Quarterly Changes In GDP Can Make A Big Difference

We have had dramatic headlines and commentary in recent days since the BEA issued its initial estimate of quarterly changes in GDP, which they do not officially measure on an shorter time period. This is a measure of the average GDP in one quarter compared to the average GDP in the next quarter.  Looking at Q1 of this year and Q2 of this year, they reported the largest quarterly decline ever recorded, -32.9% on an annualized rate, about -9.5% on a quarterly rate. This is a sharper decline than seen either for any pair of quarters in the Great Depression or the immediate post-WW II demobilization, much less such later events as the Great Recession of 2007-09.  Of course this generated big headlines and much breathless commentary, including quite a few commentators who did not get it that the -32.9% number was the annualized rate rather than the quarterly rate, so we had quite a few of them foolishly talking about how the economy had “fallen by a third.”  Yikes.

As I have noted in previous posts here, the economy has been doing a lot better than a lot of reporting and forecasts have let on, even as it is certainly slowing down now.  But if rather than looking at quarterly averages, which are heavily influenced by the fact that the economy did not “fall off a cliff” until mid-March, about 5/6 of the way through Q1 so that most of Q1 was at the high pre-fall level, one looks at where the economy was at the end of Q1 and compare it to where it was at the end of Q2, one gets a dramatically different story.  Over on Econbrowser Menzie Chinn has produced a figure from IHS Markit that estimates these shorter period changes. According to them the US GDP at the end of March (end of Q1) was at about $17.6 trillion annual amount while at the end of June it was at about $18.0 trillion, about 2.2% higher on a quarterly rate, which is about 9% higher on an annualized rate.  Needless to say, there is a dramatic contrast between -32.9% and +9.0%, but I have seen zero media commentary on this.

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From the archives: The Source and Remedy of the National Difficulties

 With a minimum of editing or preface, I am reposting this one from February 2009. Next year will be the bicentennial of the publication this astonishing but undeservedly obscure pamphlet. One “event” that I am conducting to celebrate the anniversary is posting of around 65 questions that I have mined from the text. I hope that there will be others but that sort of depends on gathering a critical mass of audience.

How is it that notwithstanding the unbounded extent of our capital, the progressive improvement and wonderful perfection of our machinery, our canals, roads, and of all other things that can, either facilitate labour, or increase its produce; our labourer, instead of having his labours abridged, toils infinitely more, more hours, more laboriously…?

Published anonymously in 1821, The Source and Remedy of the National Difficulties, Deduced from Principles of Political Economy in a Letter to Lord John Russell was, according to Frederick Engels, “saved from falling into oblivion,” by Karl Marx, who, in published writings up to the time of Engel’s remark, had scarcely mentioned the pamphlet in a cryptic footnote in Volume I of Capital. Engels acclaimed the pamphlet as “but the farthest outpost of an entire literature which in the twenties turned the Ricardian theory of value and surplus value against capitalist production in the interest of the proletariat.”

For his part, Marx declared in his unpublished notebooks that the pamphlet was an advance beyond Adam Smith and David Ricardo in its conscious and consistent distinction between the general form of surplus value or surplus labour and its particular manifestations in the form of land rent, interest of money or profit of enterprise. In commenting on the pamphlet, Marx returned several times to what he upheld as the “fine statement”: “a nation is really rich if no interest is paid for the use of capital, if the working day is only 6 hours rather than 12. WEALTH IS DISPOSABLE TIME, AND NOTHING MORE.” Marx noted that Ricardo had also identified disposable time as the true wealth with the difference for Ricardo, however, that it was disposable time for the capitalist that constituted such wealth, thus the ideal should be to maximize surplus value relative to total output.

One of those citations occurs in Marx’s Grundrisse, immediately after the following characteristically revolutionary proposition: “Forces of production and social relations — two different sides of the development of the social individual — appear to capital as mere means for it to produce on its limited foundation. In fact, however, they are the material condition to blow this foundation sky-high.” Indeed, in his reinterpretation of Marx’s critical theory, Time, Labor and Social Domination, Moishe Postone placed the issue of disposable time at the “essential core” of Marx’s analysis in Capital. Although Postone didn’t emphasize the pamphlet itself, he highlighted a passage from the same paragraph in the Grundrisse that concludes with the pamphlet’s “fine statement.”
Just how successful Marx was in saving the 1821 pamphlet from oblivion remains to be seen. Obviously, the pamphlet was spared from total oblivion or I wouldn’t be writing this. A copy of it was included in the microfilm Goldsmiths-Kress Library of Economic Literature. Routledge republished it in 2005 as part of a ten-volume collection of Owenite Socialism : Pamphlets and Correspondence edited by Gregory Claeys. Aside from the few references by Marx and Engels, there have been scattered mentions of the pamphlet but, to my knowledge, no sustained consideration, which seems odd considering the importance that Engels — and in his manuscripts, Marx — assigned to it.

Perhaps one of the difficulties has been the anonymity of its authorship. That problem would appear to have been resolved by a disclosure in the biography of the 19th century editor and literary critic, Charles Wentworth Dilke, Papers of a Critic, written by his grandson, Sir Charles Wentworth Dilke. The younger Dilke reported having found an annotated copy of the pamphlet, acknowledging authorship, among his grandfather’s papers. Subsequent authorities on Dilke and on the literary journal he edited for [30?] years, The Athaeneum, appear satisfied with the plausibility of this attribution, given Dilke’s writing style, his proclivity for anonymous and pseudonymous publication, his political inclinations and his subsequent career. There doesn’t appear to have been any concerted effort to either definitively establish or to refute Dilke’s authorship. So Dilke qualifies as the leading and, so far, only candidate for authorship.

If Dilke was indeed the author, this presents at least two rather significant bits of context to the pamphlet as well as several minor but intriguing ones. First, Dilke was an ardent disciple of William Godwin. The poet, John Keats, who was a close friend and next-door neighbor referred to him as a “Godwin perfectability man”. He was said to have retained this political inclination throughout his life. Second, in his career as editor of the Athaeneum, Dilke campaigned famously against journalistic “puffery” — the practice of publishers placing in literary journals, for a fee, promotional material for their books under the guise of independent reviews.

Both of these contextual items could be significant for an interpretation of The Source and Remedy precisely because the pamphlet lends itself comfortably to a reading as a Godwinist tract (rather than a pre-Marxist one) but also to a reading as a polemic against yet another brand of puffery — political economic puffery. As for “turning the Ricardian theory of value against capitalist production,” such an intention would hardly seem to fit an essay that on its closing page counts among the great advantages of the measures proposed therein that “their adoption would leave the country at liberty to pursue such a wise and politic system of financial legislation as would leave trade and commerce unrestricted [emphasis in original].”

The Source and Remedy of the National Difficulties appears to have had something to say somewhat distinct from the message Marx took away from it. In his various notes on the pamphlet, Marx seems to have paid closest attention to the first six pages of the 40-page pamphlet and to have glossed over the rest somewhat disparagingly or with an eye to the arresting quote. In his discussion of the pamphlet in Theories of Surplus Value, for example, the reader may wonder if Marx is actually still talking about the pamphlet after a few pages or has gone off on a tangent inspired by the pamphleteer having overlooked the impact of unemployment on wages. It has to be cautioned, though, that Marx’s extended comments on the pamphlet appeared in manuscript notes that were published posthumously. They are not polished, fully thought out positions directly intended for publication.

Although the first six pages are indeed interesting, in the context of the pamphlet as a whole their function is to set the stage for the crucial pair of questions that appear on page seven. That is, after deducing from principles of political economy that capital, left to its natural course, would soon do away with further accumulation, the author asks why that seemingly inevitable result has never happened and how it is that with all the presumably labor-saving wonders of modern industry, workers work longer hours and more laboriously than ever before.

Dilke’s answer was that government and legislation act ceaselessly to destroy the produce of labor and interfere with the natural development of capital. They do this indirectly by, on the one hand, maintaining “unproductive classes” at a constant proportion to productive laborers and on the other by enabling the immense expansion of “fictitious capital,” based ultimately on protectionism and government finance. Government does these things so that it may raise an enormous level of revenues that it couldn’t through direct taxation of the laboring population, because “it would have been gross, open, shameless, and consequently impossible.” Instead, it makes the holders of this fictitious capital “particeps criminis” in a stratagem to exact a much-enlarged revenue. As partner in crime, the capitalist lays claim to a generous portion of the booty. Not surprisingly, war is a “powerful cooperator” in this relentless process of destroying the produce of labor and expanding the claims of fictitious capital.

As for the “natural” claims of surplus value exacted by the capitalist, Dilke viewed it as causing the laborer “no real grievance to complain of,” a position at least apparently at odds with Marx’s views of exploitation and almost certainly incompatible with Engels’ assertion that the pamphlet turned Ricardian theory “against capitalist production.” Not only was Dilke not opposed to capitalist production, he described it as leading to a Utopian condition of freedom if only it was left to unfold according to its nature. In his note, Marx objected that the pamphleteer had overlooked two things in coming to such a sanguine conclusion about the trajectory of capitalist accumulation. One was unemployment; the other Marx never got around to specifying.

Dilke’s reasoning, although thought provoking, is far from airtight. He confesses in his closing pages that his argument “is not so consecutive, that the proofs do not follow the principles laid down so immediately as I could have wished. The reasoning is too desultory, too loose in its texture.” Whether such regrets are heartfelt or simply an obligatory rhetorical gesture of modesty is hard to say. The subject matter itself is elusive and no treatment of it could be exempt some flaws. But, nevertheless, the case he presents is an original and important one that has as far as I know been overlooked by Marx and his intellectual heirs.

The part of the argument that Marx appropriated to his own analysis — the author’s consistent reference to surplus value as the general form underlying profit, rent and interest was ultimately incidental to Dilke’s main points that nature places a limit on accumulation and that the surpassing of those natural limits occurs only as a result of government intervention, which, in effect mandates excess exploitation of labor.

There is a problem that arises from Marx appropriating the (for Marx) correct premise of the pamphlet without first having systematically refuted the author’s own deductions from it. What if Dilke’s deductions were either equally or more plausible than Marx’s? Rather than being a focal point of class struggle, might not surplus value then be “no real grievance to complain of?” Rather than underpinning a contradiction fated to blow the foundation of capital sky-high, might not the tension between “things superfluous” and disposable time have the potential to be adjusted like wing flaps to help bring capital in for a soft landing?

By things superfluous, I refer, first, to the unholy trinity of fictitious capital, unproductive labor and inconvertible paper money and second, to their commodified expression as luxury goods. What I am suggesting is that for Dilke it seems that the primary contradictions of capitalism (to use Marx’s expression) lay not so much between capital and labor as between real and fictitious capital, productive and unproductive labor, convertible and inconvertible money, necessities and luxury goods. This internalizing of the contradictions recalls Solzhenitsyn’s observation in the Gulag Archipelago that, “the line separating good and evil passes not through states, nor between classes, nor between political parties either, but right through every human heart, and through all human hearts.” Might we not ask if it’s not only the line between good and evil that passes through every human heart but also the line between labor and capital, proletariat and bourgeoisie?

From the standpoint of the arguments presented in The Source and Remedy, a proletarian revolution would be entirely unnecessary. Ironically, the non-necessity of the revolution would arrive precisely at the moment in which such a revolution would have become possible.

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Weekly Indicators for July 27 – 31 at Seeking Alpha

 by New Deal democrat

Weekly Indicators for July 27 – 31 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

The two most noteworthy short leading indicators, stock prices and initial jobless claims, have started to go in two different directions in the past several weeks.

As always, clicking over and reading should bring you right up to the moment, and put a little coin in my pocket as thanks.

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