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

Housing continues to surge

Housing continues to surge

Low interest rates continue to fuel a strong upsurge in new housing construction.

I’ll put up a more detailed post later, but for now simply note that housing permits, both overall and for the less volatile single family housing component, made new expansion highs, at levels not seen since 2007. Housing starts backed off from December – but to only the second highest numbers of the entire expansion.

Here’s the graph from the Census Bureau:

This is extremely bullish for the economy at the end of this year and into next year.

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What Is “Democratic Socialism”?

What Is “Democratic Socialism”?

Probably the best answer is whatever Bernie Sanders says it is as he is by far the most famous person ever to adopt this term as a label for his beliefs.  There is a group  in the US bearing that name, the Democratic Socialists of America (DSA), which has been in existence since 1983.  But while its membership has since then generally fluctuated between 4,000 and a bit over 6,000 through 2016, its membership had surged to over 45,000 by 2019, clearly responding to Bernie’s identification with the term, even though as near as I can tell, he has not been a member of the DSA.

If one goes to the Wikipedia entry  on “democratic socialism,” one finds claims that it originated with the utopian socialists and chartists in the early and mid-1800s.  Certainly many of these groups supported democracy and also some sort of socialism.  For that matter, Karl Marx also in many writings supported democracy and socialism, although in other places Marx sneered at what he called “bourgeois democracy,” and we know many regimes claiming to be inspired by Marx have not been democratic, unless one wants to call Leninist “democratic centralism” to be democratic, something most of us would not go along with, and current DSA types would not go along with.

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Bloomberg’s Plan for Reskilling America: The Quid without the Pro Quo

Bloomberg’s Plan for Reskilling America: The Quid without the Pro Quo

The Intercept usefully preports Michael Bloomberg’s proposals for higher education, focusing on plans to upgrade workforce skills along the lines desired by employers.  Here’s the selection they excerpted that covers this, worth reading carefully:

There’s a lot here that would be useful to businesses located in the US if they want to take advantage of it: money for vocational degrees geared to business needs, improved credentialing for these degrees, and support for internships and similar on-the-job training programs.  As the language of the press prelease makes clear, businesses would play a determining role in deciding what is worthy of being learned, how instruction and work experience would be carried out, what criteria would be used to ascertain skill acquisition, and how credentials would be standardized for use in an economy where workers primarily move horizontally across employers.  Some of this is based on a partial reading of the German apprenticeship system, where businesses work closely with education and training institutions to promote similar types of skills.

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Weekly Indicators for February 10 – 14 at Seeking Alpha

by New Deal democrat

Weekly Indicators for February 10 – 14 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.Several of the coincident indicators that turned positive one week ago turned right back to negative this week. The bifurcation between the producer and consumer sides of the economy continues.

As usual, clicking over and reading should be educational for you, and ever so slightly enumerative for me.

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Review of Stuff Matters

by David Zetland (One handed economist)

Mark Miodownik’s 2014 book is another in the most-welcome genre of “pop science” — a genre of books that explains scientific ideas in clear and comprehensible prose.

Miodownik’s insights into the abundant materials surrounding us (glass, steel, plastic, etc.) really help you grasp the miracles that scientists, engineers, entrepreneurs and geeks have brought to our lives. The paradox is that “stuff” costs us so little that we often forget its tremendous value. (One of Miodownik’s funnier lines guesses at what would happen if we thought more deeply about the value of concrete: We’d be “treated as lunatics if we spent the whole time running our fingers down a concrete wall and sighing.”) This book highlights those values while explaining how we got access to the stuff and the ways in which various stuff has transformed human existence.

Indeed, humans trace their own history in terms of access to stuff. From the Stone Age, Bronze Age, and Iron Age, we have moved into the Hydrocarbon Age, which may be — if the negative impacts of fossil fuels arrive as predicted — the last age of positive improvements before the cycle reverses, and we put our energies into defending and withdrawing rather than building and expanding.

Each chapter in the book covers a different material, so I will (as usual) transcribe and expand on the notes I made as I was reading.

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Standing on the shoulders of cranks

Standing on the shoulders of cranks

I use the term “crank” affectionately. The figure below is a valiant effort by Arthur O. Dahlberg to depict the “socio-economic process” as a network of troughs, pipes and valves. Even this elaborate contraption is confined to “the movement of the major social variables.”
Dahlberg believed that his chart technique communicated his analysis more effectively than words could. What the chart communicates to me, besides Dahlberg’s intense commitment is “it’s complicated” and “everything is connected to everything else.” That’s not nothing.

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Real retail sales continue flat in January; production sector still in recession  

Real retail sales continue flat in January; production sector still in recession

Retail sales increased nominally by +0.3% in January, while December was revised downward by -0.1%, for a net gain of +0.2%. Since consumer inflation increased by +0.4% during those two months, real retail sales were unchanged.  On a per capita basis, they declined less than -0.1%.

This means that neither real retail sales, and real retail sales per capita have made new highs since last August. The former is off -0.4% and the latter -0.6%. Here are both measures, normed to 100 as of then:

As I’ve noted several times recently, We’ve had similar periods of flatness previously during this expansion, for example late 2018 as shown in the above graph. It would still take one more month of a reading below the August peak for me to flip this to neutral. For now it remains a very weak positive.

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Engel Criticizes Trump On Soleimani Assassination

Engel Criticizes Trump On Soleimani Assassination

Juan Cole reports that House Foreign Affairs Committee Chair, Eliot Engel (D-NY) has criticized the administration for its assassination of Iranian General Qasem Soleimani in response to a report fresh out of the DOD that said the attack was for past activities by Iran in attacking tankers and oil facilities in Saudi Arabia without any mention of a threat against US personnel in Iraq, the ostensible reason and the only legal reason for doing this.

Cole also reminds that Soleimani had been in Baghdad to negotiate peace with Saudi Arabia at the  invitation of the Iraqi prime minister.  He also reminds us that the Iraqis are denying that the original attack that killed the American contractor and initiated the escalation by the US before the Soleimani attack almost certainly did not come from Kata’ib Hezbollah, the Iranian-backed militia the US claimed was respoinsible because that Shia militia has not been anywhere near the base in Kirkuk that was attacked for 18 months, with the attack almost surely having come from ISIS/ISIL/Daesh.  This puts the US attack that also killed the Iraqi general who commanded Kata’ib Hezbollah to be utterly illegal and essentially just murder and a war crime.

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The Gods of Davos Have Spoken

Despite protestations to the contrary, the Gods are not interested in any of its proclaimed stakeholders, be it labor, the environment, or climate change.

As they did in 2007, they still sing the same old tired tunes, blindly pursuing profits at the expense of the health of the globe and of its citizens.

In the World Economic Forum of 2007, Professor Klaus Schwab, proudly announced:

“In today’s increasingly interconnected and complex world….Climate change…all require a coordinated approach, one in which different stakeholders collaborate across geographical boundaries, geographical, industrial…boundaries

“…the need of business not only to serve its shareholders but also its stakeholders–all whose future depends directly or indirectly on business decisions….I have defined this new dimension for responsible business–or “creative capitalism” as our member Bill Gates called it in Davos this year–as Corporate Global Citizenship.”
[italics mine] WEF Annual Report 2007-2008

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Have we reached “full employment”? An update

Have we reached “full employment”? An update

As an initial matter, this morning’s initial and continuing jobless claims report were positive as to all metrics by which I judge them. They are near the bottom of their recent ranges and/or are lower YoY (lower being good). I’ll add a graph once the info is available at FRED.  UPDATE: Here it is:

Here is something I haven’t updated in a couple of months: given recent gains in labor force participation and declines in unemployment, have we finally, by at least by some measures, arrived at “full employment”?

At 3.6% in January, the unemployment rate is only 0.1% above its November and December 65 year low (except for a few months in 1968-69). The underemployment rate, at 6.9%, is only 0.2% above its series low from December:

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