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

September auto sales were the worst (economic reporting) in a long time

September auto sales were the worst (economic reporting) in a long time

I don’t think I have seen as badly, or worse, outright misleading reporting in a long time as I have seen concerning September auto sales.

Almost all of the stories — and especially the Doomish punditry that dominates the clickbait econoblogosphere — have seized on the BIG BIG DOWNTURN!!! in auto sales YoY, varying between a -5.6% decline (“So, all in all it was a lousy month”) to a 7% decline (“Auto sales sputtered … Several major auto makers reported steep declines in U.S. sales”). Or, “U.S. Auto Sales Look Shaky, Could Be Start to Rough Road Ahead.”

OMG, head for the hills!

Then, down maybe 10 paragraphs (if at all), it’s noted that the YoY comparison is with the spike in replacement sales that occurred after Hurricane Harvey dumped up to 50″ of rain on east Texas, including the 6 million population Houston metro.
Oh.
And somewhere before the end of the article, it might be grudgingly conceded that the seasonally adjusted annualized rate of sales for September 2018 might be over 17 million.  In fact, the two best estimates are 17.3 million from Ward’s Intelligence, and 17.4 million from AutoData. Here’s the graph from Ward’s:

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August residential construction spending declines

by New Deal democrat

August residential construction spending declines

Yesterday construction spending for August was reported. While overall spending rose very slightly, residential construction fell -0.7%.

The big issue with housing this year is whether higher mortgage rates and higher prices are leading merely to a deceleration of growth, or to an actual turning point.  Yesterday’s report adds to the evidence that it is the latter rather than the former.

My detailed post is up at Seeking Alpha.

As usual, besides being informative, reading the post also rewards me a little bit for my efforts.
UPDATE:  I was looking for something else this morning, and found this.

Two months ago, discussing the June residential construction report, I wrote:

As interest rates have ticked higher in the last several months, I expect permits to continue to be flat, and residential construction should follow in a few months.

And indeed, permits have since been a little worse than flat, and residential construction has indeed followed.  As I point out from time to time, you’re reading the right blog!

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Trump’s trade war isn’t hurting manufacturing . . . yet

Trump’s trade war isn’t hurting manufacturing . . . yet

The Trump Administration’s trade war hasn’t hurt manufacturing and production yet. At least that’s the message from this morning’s ISM report on manufacturing.

According to the ISM:

The September PMI®registered 59.8 percent, a decrease of 1.5 percentage points from the August reading of 61.3 percent. The New Orders Index registered 61.8 percent, a decrease of 3.3 percentage points from the August reading of 65.1 percent.

Here is what the overall index and the leading new orders index look like since the turn of the Millennium (except for this morning’s report) (h/t Briefing.com):

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2018 Arctic sea ice minimum

2018 Arctic sea ice minimum

As I may possibly have mentioned once or twice before, I am a total nerd.  One of the web sites I watch is NSIDC’s site tracking arctic sea ice.  To be honest, I’m a little surprised that it is still functioning, since the Trump Administration believes that climate change is just a Chinese hoax, so I thought they would take it down almost immediately after coming into office.  Guess they haven’t found it yet!

Anyway, if climate change is just a Chinese hoax, they sure are going to extremes to perpetrate it.  Because arctic sea ice hit its 2018 minimum on September 23.  Here’s what it looked like on that date:

All that was left was a rectangular shaped piece in the middle of the ocean into the Canadian archipelago, and a narrow salient reaching towards eastern Siberia. While the “Northwest passage” on the American side never quite opened up this year, the “North sea” route on the Asian side was open for several months. This was tied for the sixth lowest minimum sea ice extent in the last 40 years.

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Michigan Today

US Auto Sales Fell by 4 Percent in the Third Quarter

“Major automakers said Tuesday that U.S. sales fell 7 percent in September and 4 percent for the June-through-September quarter, compared with the same periods last year.

Weaker numbers for September and the third quarter wiped out a 1.8 percent gain during the first half of the year, and left auto sales on pace with 2017. Some analysts had cautioned that the first-half gains were driven by incentives and low-margin sales to fleet buyers like rental car companies.”

Auto makers are blaming this on the hurricanes. More likely, it is building to an inventory goal without adjustments to meet demands. Inventory costs money.

Michigan’s Gubernatorial Race: Whitmer Focuses on ‘Fundamentals’ Like Roads

“Democrat Gretchen Whitmer said she is focused on fixing Michigan’s ‘fundamentals’ like roads, water systems and schools in her run for governor, contending that not spending enough on core services under Republican leadership has still left residents paying more out of pocket for car repairs and other unexpected expenses.

She said her polling lead over GOP rival Bill Schuette since last month’s primary shows the problem-solving message is resonating, but “not for one second” will she let up less than two months until Election Day. She dismissed as ‘phony political talking points’ Schuette’s warning that she would be the next Jennifer Granholm, a Democrat who was governor during the state’s protracted economic decline.

‘It’s not working. Maybe they’re going to figure that out at some point during this campaign, that people want solutions to problems,’ Whitmer told The Associated Press in an interview.”

Michigan Repubs and the AFP are claiming Whitmer is trying to steal another decade from Michiganders by fixing infrastructure through increased revenues.

US House Candidate Arrested During Wage Protest in Detroit

“A U.S. House candidate was arrested Tuesday in Detroit during a protest for higher pay and the right to form unions.

Democrat Rashida Tlaib and more than a dozen other demonstrators sat at — and banged on — a long table that took up a lane of traffic in Detroit’s Midtown. They were part of a group of several hundred people who marched along the street before gathering outside a McDonalds. Management inside locked the doors as marchers approached.

The protest followed one Tuesday morning in Flint where eight people were injured after being struck by a pickup truck as they marched outside another fast-food restaurant. Flint Police Chief Tim Johnson said he doesn’t believe the crash was intentional and that the driver “seemed pretty shaken up” afterward.

Both protests were organized by Fight for $15, a national movement seeking to increase the minimum wage to $15 an hour for fast food.”

I do not believe we would see Kavanaugh out there protesting for a $15/hour wage. He would be to busy trying to explain away what he meant by “boofed” as a teen.

Major GOP Group Pulls Support for 2 Imperiled Congressmen

“In an ominous sign for the GOP’s bid to hold onto the House, the political group affiliated with Speaker Paul Ryan on Friday dropped its support of two incumbent congressmen, signaling how difficult November could be for the Republican majority.

The Congressional Leadership Fund canceled $3.1 million in ad spending in the districts of Michigan Rep. Mike Bishop and Colorado Rep. Mike Coffman. It’s CLF’s first act of triage ahead of the election and comes at the time of the cycle when major spenders cut their losses in races they think are no longer winnable.
The Congressional Leadership Fund canceled $3.1 million in ad spending in the districts of Michigan Rep. Mike Bishop and Colorado Rep. Mike Coffman. It’s CLF’s first act of triage ahead of the election and comes at the time of the cycle when major spenders cut their losses in races they think are no longer winnable.

Dropping Bishop is perhaps the more significant sign of the party’s prospects. President Donald Trump won the suburban Detroit district by 7 percentage points while narrowly winning Michigan overall. But Republicans in Michigan have struggled this year, and Bishop has been regularly outraised by his challenger Elissa Slotkin, a former CIA agent and defense official.

Jesse Hunt, a spokesman for the National Republican Congressional Committee, said the House GOP campaign arm has not canceled its ad reservations in either Bishop’s or Coffman’s district.”

It is too early to declare a victory. Pour it on . . .

State of Michigan Rank amongst the 50 states?

Click on the picture to make it bigger.

Republicans have a lot to account for in Michigan. They have controlled the legislature and the governorship since 2011. Republicans have controlled the Senate since 1992. Republicans have controlled the House 18 years since 1992. Since 1992, the governorship has been controlled by a Democrat 8 years of 26 years. Yet, everything is former Governor Granholm and Senate leader Whitmer’s fault for infrastructure being in bad shape.

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I Was Wrong: US-Mexico Trade Deal Lives With Canada: USMCA Rather Than NAFTA

I Was Wrong: US-Mexico Trade Deal Lives With Canada: USMCA Rather Than NAFTA

At the last minute last night the US and Canada cut a deal, so now Canada is on on the deal to change NAFTA to USMCA.  I think the name change is the biggest part of it, even though Trump still claims that NAFTA was “the worst trade deal ever” and the new deal makes relatively minor changes in it, especially if one considers what would have been the case if the US had actually joined the TPP, as most of the environmental, labor, and intellectual property parts of the new deal (the environmental and labor parts largely improvements, if not too dramatic) were already agreed to by Mexico and Canada when rhey joined TPP, which they belong to along with all its other members aside from the US.

Beyond continuing NAFTA and adding the TPP parts, the main changes are in the auto industry and the dairy industry, the former mostly affecting Mexico, the latter mostly affecting Canada.  Between the restrictions on outsourcing and the $16 per hour limit on imports, there may be some shifting of auto parts production from Mexico to the US and possibly Canada as well.  This will lead to job losses in Mexico, but there may be some Mexican autoworkers who see wage boosts also.  The auto deal has little impact on Canada aside from Trump retracting his threat to impose tariffs, which was opposed by GM and Ford as well as the UAW thanks to the profound integration between the US and Canadian auto industries.

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A thought for Sunday: Trump is stomping all over the GOP’s message

A thought for Sunday: Trump is stomping all over the GOP’s message

If the Congressional GOP had their druthers, they would probably like the autumn mid-term narrative to be about a strong economy, low unemployment, a tax cut, and a big increase in military funding. In vulnerable districts, they’d like to run on local issues, as would GOPers running for state and local offices.

But I knew that was never going to happen, because Trump wants the spotlight to be on him and him alone, 24/7 and always.

So it was inevitable that he was going to stomp all over whatever narrative the GOP wanted to tell, with controversey after controversy after controversy.

And look, according to Gallup, what it’s done to his approval numbers:

He’s right back at the low point he was last December before the tax cut brought the country club wing of the GOP back home. His high point was the summit with North Korea’s Kim in June. But this was immediately followed by the disastrous Helsinki summit with Putin, and recently by a very unpopular nomination of Brett Kavanaugh to the US Supreme Court. After last week, one almost wonders if the GOP is aiming to get exactly zero votes from any woman anywhere.

This isn’t going to change in the remaining five weeks before ethe midterm elections. Trump is going to keep on creating new controversies, stomping all over any othe news. He will ensure that he is the only issue on the ballot, for races all the way down to dog catcher.

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I Believe Kellyanne Conway

In an interview with Jake Tapper on CNN’s State of the Union, Kellyanne Conway said, “I’m a victim of sexual assault, I don’t expect Judge Kavanaugh or Jake Tapper or Jeff Flake or anybody to be held responsible for that. You have to be accountable for your own conduct.”

 I believe Conway because she spoke about this before, in October 2016, in an interview with Chris Matthews, right after the Access Hollywood tape of Donald Trump’s “locker room talk” came out.

KELLYANNE CONWAY: I would talk to some of the members of Congress out there when I was younger and prettier, them rubbing up against girls, sticking their tongues down women’s throats who – uninvited, who didn’t like it.

CHRIS MATTHEWS: Yes.

CONWAY: Yes, you’re saying yes because you know it’s true. They used to –

MATTHEWS: No, I’m hearing it – I’ve heard the accounts, of course, but I want to ask you –

CONWAY: They did – no, absolutely. And some of them, by the way, on the list of people who won’t support Donald Trump because they all ride around on their high horse.

Conor Friedersdorf summed up that exchange at the time: “the GOP nominee’s campaign manager declared on national television that multiple prominent Republicans –– some who oppose Trump, and others, apparently, who support him –– perpetrated sexual assaults, and she knows their names.”
The headline on that story was, “Trump Tries to Intimidate Republicans Into Sticking With Him” and the subhead was, “His campaign manager, Kellyanne Conway, warned that she knows of GOP congressmen who perpetrated sexual assaults.”

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