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

Coronavirus dashboard for April 5: the problematic cases of Chile . . . and Michigan

Coronavirus dashboard for April 5: the problematic cases of Chile . . . and Michigan

As you probably already know, the news on the vaccination front continues to be good, as the US is now administering on average over 3 million doses a day – and still climbing. At this rate of improvement, every adult in the US could be vaccinated by Memorial Day at the end of next month.

One bit of not so good news is that the percentage of seniors who have received at least one dose has almost stalled out at roughly 75%. For example, yesterday that percentage improved by exactly 0.1%. If 1/4 of even the most vulnerable population simply refuses to be vaccinated, we are not going to achieve herd immunity.

Further, while in the past few weeks I have been highlighting the success stories in vaccination, particularly in Israel and the UK, there are a number of counter-examples that I want to examine today.

First of all, Chile. Chile has administered even more doses per capita than the US, equivalent to about 55% of its population vs. 50% for the US. And yet both cases, and with about a 4-week delay, deaths, have both risen about 50% from the date that vaccinations started to be administered:

I bookmarked a prediction about the coronavirus by supply-sider Scott Grannis one year ago …

I bookmarked a prediction about the coronavirus by supply-sider Scott Grannis one year ago …

 As I mention from time to time, I read a number of economic observers with whose opinions I usually strongly disagree, partly because it is good to consider other points of view, and partly because some compile excellent and interesting data, even if I disagree with their conclusions about what the data means.

The “Calafia Beach Pundit,” Scott Grannis, is one of those writers. His chart work is frequently compelling and often challenging. But, when it comes to the ideologically inspired response to COVID-19, he has been out of his mind.

So almost exactly one year ago, on March 27, 2020, I bookmarked one of his observations and forecasts, because I expected that the truth would be very different than he thought: 

American plutocracy in two simple graphs; plus, when will wage growth bottom?

American plutocracy in two simple graphs; plus, when will wage growth bottom?

The JOLTS report for February comes out later this morning; I may post on it later or tomorrow.

In the meantime, here are updates on several graphs I used to run during the last expansion in order to examine how shared out (or not) economic growth was.

First, here is a graph comparing corporate profits adjusted for inflation, and total nonsupervisory wages, also adjusted for inflation. Both are also adjusted for population growth, so that we can see how much each has grown (or not) per person:

The “Work Ethic” Hoax

The “Work Ethic” Hoax

The story has been told that Martin Luther invented the doctrine of the “calling” and that John Calvin (“my friends call me Jean”) intensified it with his doctrine of predestination. Subsequent pastoral literature softened the predestination blow with the Protestant ethic that working hard and succeeding would show that you were one of the elect. Max Weber told that story. 

It was, of course, a fable. But that is beside the point. Max Weber’s fable wallowed in relative academic obscurity and sports clichés until… [wait for it]… 1971 when Dick Nixon dusted it off as a cudgel to bludgeon those folks driving around in their Welfare Cadillacs — we all know who they are — and the nattering nabobs of negativism enabling them. Pure backlash dog whistle. 

“Keep religion out of it,” Nixon told a speechwriter who labeled it “the Protestant ethic” for a Labor Day address in 1971, “Let’s just call it the work ethic.”

I would like you to join me in exploring one of the basic elements that gives character to a people and which will make it possible for the American people to earn a generation of prosperity in peace.

Blockbuster March jobs report, but still a long way to go

Blockbuster March jobs report, but still a long way to go


  • +916,000 million jobs added. The alternate, and more volatile measure in the household report indicated a gain of 609,000 jobs, which factors into the unemployment and underemployment rates below.
  • U3 unemployment rate declined 0.2% to 6.0%, compared with the January 2020 low of 3.5%, and the April 2020 high of 14.8%.
  • U6 underemployment rate declined 0.4 to 10.7%, compared with the January 2020 low of 6.9%, and the April 2020 high of 22.9%
  • Those on temporary layoff decreased -203,000 to 2,026,000.
  • Permanent job losers decreased -65,000 to 3,432,000.
  • January was revised upward by 67,000, and February was also revised upward by 89,000, for a net gain of 156,000 jobs compared with previous reports.

Weekly Indicators for March 29 – April 2 at Seeking Alpha

 by New Deal democrat

Weekly Indicators for March 29 – April 2 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

One fairly unique service I think I provide is not just forecasting the next few months, but into the next year as well. So in the second half of last year I was writing about how all of the indicators were lining up for strong growth in 2021 if the pandemic could be brought under control.

Now I am beginning to look at 2022, and what I see are increasing signs of jumps in the prices of important middle class commodities and assets, mainly houses and gasoline. Which means, we could see the old-fashioned type of end of an economic boom.

As usual, clicking over and reading will not just bring you right up to the moment in the nowcast and the forecasts, but also reward me a little for bringing that information to you.

Construction Spending Fell 0.8% in February

Commenter RJS at MarketWatch 666

Construction Spending Fell 0.8% in February after January & December Figures Were Revised Higher

The Census Bureau’s report on February construction spending (pdf) reported that “Construction spending during February 2021 was estimated at a seasonally adjusted annual rate of $1,516.9 billion, 0.8 percent (±0.7 percent) below the revised January estimate of $1,529.0 billion. The February figure is 5.3 percent (±1.0 percent) above the February 2020 estimate of $1,441.1 billion. During the first two months of this year, construction spending amounted to $213.2 billion, 4.9 percent (±1.0 percent) above the $203.2 billion for the same period in 2020. “…the January annualized spending estimate was revised 0.5% higher, from the $1,521.5 billion reported a month ago to $1,529.0 billion, while December’s construction spending was revised from $1,496.5 billion to $1,510.4 billion annually, which together meant that the January construction spending increase was revised down from +1.7% to +1.2% . . . the $13.9 billion upward revision to December’s annualized spending would mean we’ll see a upward revision of about 12 basis points to 4th quarter GDP when the annual revisions are released later this summer . . .

A further breakdown of the different subsets of construction spending are provided in a Census summary, which precedes the detailed spreadsheets below:

Trade Incentives and Whoppers: A Finger Exercise

Nick Rowe was looking for the role of money in the Heuristic Macro Model, which is often used to introduce students to Trade economics. The problem he discovered is that there is only a role for money if there is friction in the model, and therefore a two-household (or household-firm or firm-firm) model makes money if not superfluous, then at least a poor substitute to direct barter.

Following is a “finger exercise” for introductory economics the way (I think) it should be taught, using that heuristic model and the Whopper story that often is used at the start of Introduction to Economics.1

Telling a Whopper

The Whopper story basically has the eager student challenging talk about scarcity and optimal reource allocation by saying, “But I can go into Burger King and get a Whopper for $1 and I can keep ordering $1 Whoppers all night.” The general Professorial Counter runs “well, that wouldn’t really happen because you run out of money and/or they run out of supplies,” which is a missed opportunity.

First, relax all of the normal constraints. You have an unlimited cash availability, and the Burger King has unlimited supplies and is open 24/7. Both the workers and any other customers are nether going to be irritated by you buying a new Whopper every five or ten minutes nor start calling their friends/hitting social media to get others to see the “spectacle” (no external incentives to start or stop). Oh, and the $1 price includes any taxes.

All Hail Declining Marginal Utility

For the first few rounds, both parties will act in keeping with the premise. You get your second, third, fourth, and even fifth Whopper and have spent $5.

You also are now less hungry than when you bought the first Whopper. That first Whopper cost you $1–and you valued it at least that much, if not more (consumer surplus >=0). The second was almost as good as the first; still well worth its dollar. The third, fourth, and fifth aren’t being eaten to satisfy hunger pangs, but you enjoy them at the $1 price.

You always have the same choice: give a dollar, get a Whopper. But sooner or later,2 you will decide that keeping that next $1 in your pocket is worth more than eating another Whopper (consumer surplus<0).

On to the Model

The Need for a Global Corporate Tax Regime

by Joseph Joyce

The Need for a Global Corporate Tax Regime

When the Organization for Economic Cooperation and Development began its call for a reform of the rules of global taxes in order to clamp down on the avoidance of taxes by multinational corporations, its efforts looked quixotic. But the OECD persisted, and U.S. Treasury Secretary Janet Yellen is now participating in negotiations with the other OECD members to reform the (non-)system. While there is much left to negotiate, the broad framework of an agreement to establish a new regime, which governs where taxes are assessed and the determination of a global minimum tax, now exists.

A new volume edited by IMF economists Ruud A. de Mooij, Alexander D. Klemm and Victoria J. Perry, Corporate Income Taxes under Pressure : Why Reform Is Needed and How It Could Be Designed, presents the case for implementing a global approach. The first part of the volume describes the reasons for taxing corporate profits, explains the emergence of the rules governing how multinationals could be treated, and shows the complications that the growth in services and digital trade placed on an already fragile system. The second section examines the workings of the current system, including the difference between source-based and residence-based taxes, the use of bilateral tax treaties to allocate taxing rights, and the ability of corporations to use the differences amongst tax regimes to lower their liabilities by shifting the source of their profits to low-tax jurisdictions. The third section analyzes the relative merits of various reform proposals.

Housing and the economy, now and in 2022 – recession caution?

by New Deal democrat

Housing and the economy, now and in 2022 – recession caution?

My long-form review and forecast of the housing market and its potential effect on the 2022 economy is up at Seeking Alpha.

If the market stays like 2014 when interest rates went up, no biggie. But if it’s more like the 1950s, we have a problem.

As usual, clicking over and reading should be informative for you, and it rewards me a little bit for my efforts.