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October personal income declines, but still well above pre-pandemic peak; increased likelihood of negative pandemic reversal in jobless claims

October personal income declines, but still well above pre-pandemic peak; increased likelihood of negative pandemic reversal in jobless claims

Before I turn to this week’s report on jobless claims, a brief word first about October’s personal income and spending.

Although personal income declined in October compared with September, more importantly depending on how you measure it, real personal income is still 2.6% to 3.4% *higher* than it was at its peak in February just before the onset of the pandemic:

Much of that is the emergency pandemic aid passed by Congress. When you take out such “government transfer receipts,” personal income actually continued to improve in October, but is still -0.8% below its February peak.

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Is Bitcoin A Bubble?

Is Bitcoin A Bubble?

 We have all thought so, with no income and nothing backing it, and it went zooming from nearly nothing to over $19,000, only to fall back hard down to around $3000, where it more or less hung out for a couple of years with the occasional up  to $6000 or so.  But recently it has moved up to over $18,000, near its previous peak, and some other cryptocurrencies have also moved up sharply, with #2 Ethereum essentially doubling in price in the last month or so.  So, is this another round of bubble speculation that will be followed by another crash?

I note that some other non-monetary assets have been moving.  After long sitting around $1200 to $1300 per ounce, with reportedly the Chinese central bank keeping it above $1000 whenever it occasionally headed down in that direction, gold this year has also moved up to near its old high.  It is now over $1800, not far from its previous high of over $1900.

Oil is not anywhere near a high, but just in the last week or so has suddenly been moving up. While hanging our around $40 per barrel for both Brent crude and West Texas crude for a long time, and even down almost to the mid-30s not too long ago, Brent as of today is at $48.70, pushing 50 for the first time in a long time, with WTI a few dollars behind.

Some are saying all this is due to a fear that the US dollar will collapse.  Maybe, although I do not know.  It is not screamingly obvious why that might happen now more than at other times.  Pro Trumpers might push this, but they were pushing the stock market would collapse if Biden won.  And, heck, the announcement of allowing transition to Biden sent the Dow over 30,000 for the first time ever, not exactly a collapse, although Trumpers say this is all due to the vaccine hopes, and all that is due to Trump.  Sure.

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Yemen: More Damage To World Peace And Security Due To Trump Wrecking Everything As He Exits

Yemen: More Damage To World Peace And Security Due To Trump Wrecking Everything As He Exits

Michigan certified its vote results for Biden, and now crucially Emily Murphey at the GSA has agreed and now recognized officially that at least Joe Biden should be allowed to transition properly as has always happened in the past normally.

But in his lame duckery, still denying his obvious loss, Donald Trump is trashing everything in sight.  Very serious matters of foreign policy are part of this. One of these has been discussed in comments here previously, the removal from the Open Skies Treaty, which right now I am watching Rachel Maddow report that DOD is destroying the planes US used for this. Ack!!!
But for this post I am noting another awful thing they are doing along a bunch of others.  This involves Yemen, long one of the worst humanitarian disasters on the planet, horrible, but so in place for so long that most people pay no attention anymore because, bore, been there done that snore. But it continues to be a place of ongoing civilian deaths from bombs and economic deprivation.
So, just to make things “better,” the Trump admin has decided to declare that the Houthi group who rule not only most of northern Yemen, but also its capital, Sana’a, to be officially a “terrorist group.” The immediate result of this ruling is that all kinds of humanitarian aid that has been going to people in the parts of Yemen they live in will no longer receive it.  This is morally awful and just plain stupid.
So this is part of Trump frustrated in his anti-Iran policy.  He exited the Iran nuclear treaty, leading to a massive increase in enriched uranium there.  Ooops! He killed a top general from there to stop attacks on US forces in Iraq by Iranian militias.  But those continue, with more political support in Iraq. Duh.

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Janet Yellen Will Be Treasury Secretary

Janet Yellen Will Be Treasury Secretary

 I have long been a great fan of hers as well as knowing her and her husband, George Akerlof, personally.  Back in 2009 I was the first person to call for her to be named Fed Chair. I am very pleased with this appointment.  This is as good as it gets. (For those who wanted Lael Brainerd, we need her at the Fed where all the current governors are Trump appointees other than her).  Elizabeth Warren also would have been good, but Mass has a GOP governor who would appoint her successor, not so good. Yellen is the best pick and will be great.

Barkley Rosser

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Lord, the Pain of it

The good mayor of El Paso is at wit’s end. He is worrying himself into the grave. The City’s hospitals and morgues are overflowing. Seems that the people have to work to eat, and, if they work, they get the virus and get sick, and, too many die. Damned capitalism is as deadly as the virus; together they are a catastrophe. Maybe, if he would just step across the border into New Mexico, better yet, hop on a plane to San Francisco, better to get as far away from Texas as possible, we could explain the problem to him without being drowned out by the ignorant Texas dogma coming out of Austin; crapola he’s heard his whole life.

In a functioning state, there are dozens of examples, the government would have handed out masks and hand sanitizer, and free food as the need arose. It would have worked out a deal on the rents. The government would have mandated the changes needed to make the workplaces safe. If the government had done these things, had functioned, instead of blithering on about capitalism and the American way, the people could have kept on working without getting sick and dying by the droves; and, the economy could have kept on working. What our government didn’t do is killing us by the hundreds of thousands; destroying the nation.

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New Fault Lines in a Post-Globalized World

(Dan here,,,I think worth looking at in American Affairs)

New Fault Lines in a Post-Globalized World

By Marshall Auerback and Jan Ritch-Frel

November 20, 2020The economic damage of the coronavirus pandemic has upended the global economic system and, just as importantly, cast out the neoliberal orthodoxy that dominated the industrialized world for the past forty years. But Covid-19 has only accelerated a process that was already well underway, impacting trade negotiations between China, the United States, and the European Union and spreading throughout the world’s largest economies. Although many defenders of the old order lament this trend, it is as significant a shift as the dawn of the era of global trade that began with the birth of the World Trade Organization (WTO).

Economists, politicians, and pundits are often tempted to see new economic patterns through the lens of the past. Thus, we are likely to hear that we are returning to nineteenth-century mercantilism or that we will see a revival of 1970s-style stagflation. But this historical view misunderstands our present moment; the motives now are different, and so are the outcomes.

Instead, what we are experiencing is the realization by governments of developed countries that new technologies enable them to expand or initiate new and profitable production capacity closer to or within their own markets. The savings in transportation, packaging, and security costs that come with domestic production, along with benefits to regional neighbors and to domestic workforces, will increasingly enable developed nations to compete with the price of goods produced through the current internationalized trade system. American politicians from Donald Trump to Elizabeth Warren are increasingly joined by a chorus of European and Asian politicians who see the long-term political benefit of supporting this transition.

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Jobless claims: the beginning of a pandemic reversal?

Jobless claims: the beginning of a pandemic reversal?

 

This week’s new jobless claims rose from last week’s pandemic lows, while continued jobless claims again declined to new pandemic lows.

On an unadjusted basis, new jobless claims rose by 18,264 to 743,460. Seasonally adjusted claims rose by 31,000 to 742,000. The 4 week moving average, however, declined by 13,750 to 742,000. Here is the close up since the end of July (for comparison, remember that these numbers were in the range of 5 to 7 million at their worst in early April):

Unadjusted continuing claims (which lag initial claims typically by a few weeks to several months) declined by 419,670 to 6,081,402. With seasonal adjustment they declined by 429,000 to 6,372,000, both new pandemic lows:

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Weekly Indicators for November 16 – 20 at Seeking Alpha

 – by New Deal democrat

Weekly Indicators for November 16 – 20 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

Nothing definitive yet – after all weekly data is going to be noisy – but there is some indication that the recovery in coincident conditions in the economy have ceased to make progress, and maybe even have begun to reverse, probably due to the pandemic being out of control, and new restrictions put in place in some States as a result.

As usual, clicking over and reading should bring you right up to the moment, and reward me with a penny or two for the effort I put in to bring you this report.

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Housing permits and starts: more evidence for a powerful economic liftoff in 2021

Housing permits and starts: more evidence for a powerful economic liftoff in 2021

This morning (Nov. 19) yet another leading indicator showed that the economy is revving to move ahead strongly, and is only being held back by the pandemic (and the horrible “response” by Trump).

Total (blue in the graph below) and single family (red) housing permits both made yet another 10 year + highs, while housing starts (green), which typically follow a month or two later, also improved. Here’s the longer-term look:

Focusing on the last 18 months shows that only starts have failed to make a new high:

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Economy still expanding, but with retail consumption outpacing production

Economy still expanding, but with retail consumption outpacing production

This morning saw two important releases of October data: industrial production and retail sales. Both showed continued strength.

Industrial production is the King of Coincident Indicators, and more than any other metric typically shows whether the overall economy is expanding or contracting. In October it increased by 1.1%, while manufacturing production increased by 1.0%. The overall number more than reversed last month’s decline, while past manufacturing numbers were revised higher. In the below graph I’ve normed both to 100 as of February to show the pandemic impact:

Note that their actual peaks were in November and December 2018, respectively. After declining about 20% at their April troughs, both are now only about 5% below their February peaks. Still, the pace over the last 3 months has averaged less than a 1% increase per month, so it would take about 6 more months at this rate simply to equal the series’ pre-pandemic levels.

 

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