We keep seeing a picture of two economies in America. One is in a depression, with nearly half the jobs gone in certain low-wage service sectors, and consumer spending falling in ways that have not been seen in 80 years. But if you work in a sector that trades paper or real estate, or if you’re one of the lucky ones that have extra money to spend on those types of assets, things are just fine.
Pending home sales spiked a stunning 44.3% in May compared with April, according to the National Association of Realtors.
That is the largest one-month jump in the history of the survey, which dates to 2001. It beat expectations of a 15% gain. Sales were still 5.1% lower compared with May 2019, however.
Pending sales measure signed contracts on existing homes, so it shows that buyers were out shopping during the month of May. Sales had fallen 22% for the month in April, as the economy shut down to slow the spread of the coronavirus.
As June ends in America, tens of millions of unemployed individuals are in danger of having their expanded benefits taken away in the next month, and people in the service industry are staring at yet another round of layoffs as more bars, hotels and restaurants close up. At the same time, corporations and rich Americans can borrow to their heart’s content, gamble on more financial games, and use their already-received gains from the GOP Tax Scam.
(Side note, a whole lot of us in the middle and upper middle-class are going to be writing checks to the IRS in the next 2 weeks. Not exactly conducive to stimulating consumer spending that is already depressed among higher-income people).
The job losses in the country reflect this uneven distribution of outcomes. While the service industries are bleeding out, finance and real estate positions have barely been nicked.
So we're in the middle of a stock and asset bubble that’s not based on any kind of real growth in the economy. And when that bursts (again), I bet it won’t be the people who recklessly fueled the Bubble that will be facing the largest economic damage.
It’s really hard to find a lot positive about our economic system these days, either currently, or for the future. And the field needs to leveled fast, with an aid package agreed to in DC and sent out in the next month, or else things will turn ugly. Not just for the economy, but our society.
While more than 30 million Americans are receiving unemployment benefits, significant government intervention has likely kept spending and employment from dropping even more. But the month of July is creeping, and with it comes to the potential end of a lot of this help from DC.
The reason that many of those out of work have been able to stay afloat is because of significant help from the Feds. allowing Americans to continue paying the bills and maintaining consumer spending.
As the novel coronavirus pandemic exploded in March and local authorities shut down large parts of the U.S. economy, the Trump administration and Congress softened the blow by moving quickly to roll out a patchwork of emergency aid.
The centerpiece: stimulus checks for most households and more generous unemployment benefits for tens of millions of newly jobless Americans.
The combined cash aid provided $3 in support for every $1 in lost income in April, Oxford Economics’ Gregory Daco estimated. And until it expires on July 31, the extra $600 weekly unemployment payment on average makes up for income lost due to unemployment and reduced hours, he said…..
Outlays by low-income households are now only about 3% below pre-crisis levels, versus minus 13% for high-income households.
Side note, those expanded benefits end in the last full week BEFORE July 31, which actually means the week that ends on July 25. And when those expanded benefits end, there will mean millions of Americans will face a severe income cliff.
When the extra benefits run out, jobless benefits will revert to their typical pre-pandemic levels, low by design to encourage people to look hard for work. In 15 states, the maximum unemployment benefit would replace less than half of the median earnings for a worker with a high school diploma, according to Kathryn Anne Edwards, a labor economist for the RAND Corporation.
That wouldn't be a big deal if jobs were waiting for people to come back to. But that's not happening, and new layoff announcements are starting to crop up due to that depressed consumer spending, especially in discretionary areas. And Wisconsin is part of those troubles, as shown by Marcus hotels announcing that hundreds of workers will lost jobs at the end of July.
Higher-end hotels with large dining and event facilities have been particularly affected by the sharp drop in travel, according to industry consultant Greg Hanis, who operates Hospitality Marketers International Inc.
Also, Milwaukee-area hotels, dealing with the cancellation of Summerfest and other big events, were hit with another blow last week when the Democratic National Convention announced it was converting its August meeting in Milwaukee to a largely virtual format.
Tom Daykin's article adds that federal support that was intended to keep workers on payrolls is going to fade out around the same time as the layoffs (coincidentally, I'm sure).
Marcus Hotels in April received Paycheck Protection Program forgivable loans totaling $11 million for nine properties. Those include the company's three upscale downtown Milwaukee hotels that are now laying off workers.
That federal cash was being used to keep 1,400 to 1,500 employees on the company's payroll for up to three months, Chief Executive Officer Greg Marcus told the Journal Sentinel then.
The program was meant to mainly help small businesses. But it included a provision allowing larger hotel and restaurant chains to seek loans for individual locations.
SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
So if the timeline is correct, Marcus Hotels will get to keep those taxpayer dollars, while hundreds of workers end up out of work at the end of July because the lodging business has remained depressed since the COVID-19 pandemic that existed in March still is not being held in check.
It makes me wonder how many other businesses are in this boat. It’s obvious that PPP inflated the job totals for May, and might also do the same for June. But without an extension of benefits or requirements to keep workers on the payroll to keep the money, it seems likely that many businesses will reduce staff to match economic reality.
It also leads to a showdown in July between Dems in the House who have already passed a large-scale package of additional stimulus and aid, and Senate GOPs who have made noises about not wanting to do much of anything. But with the economy already in danger of falling back after a couple months of fiscally aided expansion and the GOP losing in the polls for November, can that party afford to be the ones that decided to allow the economy to get worse?
It's not been a good week on the COVID-19 front in America. Certainly not in much of the South and Southwest, but also a bad week in Wisconsin. We had our highest number of new COVID cases in 4 weeks, with nearly 400 positive tests a day.
Worse, the increase is NOT because of more testing. In fact, Wisconsin had its fewest amount of tests in more than a month, and the rate of positive tests bumped back above 4%.
The one positive is that deaths from COVID dropped to a multi-month low last week. But you have to worry that this number goes back up in July, based on the typical time span between infection and death.
If you break it down within the state, you can see that Milwaukee County's amount of new cases is still at multi-week lows, but increases in Dane County and the rest of the state are the reason for the recent COVID resurgence in our state.
Now righties may try to blame the racial justice protests in Madison for that recent increase, but it seems more likely that it is due to scenes like this.
Lines to bars in Madison are already long on this Thursday.
It's frustrating, as I was hoping the downward trend in cases and rate of positive tests that we saw in much of June meant that we would continue to take steps back toward pre-COVID times. I wanted this thing to get crushed, resulting in a subdued but otherwise normal Summer. In previous times in this country, we would have had leaders and citizens who took on that challenge, and beat it.
But instead, 2020 America continues to bungle its way through the pandemic. We have a President and far too many other political leaders choosing to put it "out of sight, out of mind", and chose to have a facade of economic recovery instead of real success in having this country physically heal. Which would have been the best way for it to economically heal.
Then far too many weak people followed the example from our "leaders" and had that hubris as well, and backslid when it came to taking actions that decreased their chances of catching the disease. Now it means that this country and this state is likely to have COVID hold it back for the 2nd half of 2020, and a whole lot more people are going to lose their "freedoms" due to a bad economy and bad health.
I wanted to tie a couple of thoughts together relating to unemployment claims and where things might be heading. First of all, new unemployment claims remain at levels that would have exploded past previous records, with 14 straight weeks of new claims above 1.4 million.
And despite the talk of businesses reopening over the last month, the total number of people getting unemployment has remained high. Particularly when you realize that the drop in "regular" claims over the last month has been counteracted by individuals applying through other benefit programs. When you put those numbers together, we've had more than 31 million people filing for unemployment in each week since early May.
We also are seeing the structural decline of retail get sped up as fewer people want to go to stores during a pandemic. Look at this graphic that Yahoo News put out in this week.
Those stores and many others will keep closing in the coming months, and so you can add those workers to the unemployment lines (and the decline of commercial real estate that'll result from a bunch of empty storefronts).
In Wisconsin, we have not been immune from the unprecedented amount of job losses and unemployment claims. And the Wisconsin Policy Forum had a report out this week to see what effect those losses may have on the state's unemployment fund, which is used to pay claims.
From January 1 through June 8, U.S. Treasury Department and state Department of Workforce Development figures show Wisconsin’s unemployment trust fund took in $352.8 million from taxes and other revenues such as interest but saw $665.1 million flow out in state benefit claims and other payments (not counting federally funded amounts) – more payments already than in any year since 2013. The state has already collected the majority of payroll taxes it will take in during 2020 while the pandemic-induced surge in claims payments has only recently begun.
Fortunately, Wisconsin’s UI fund headed into the COVID-19 crisis in a stronger position compared to the last major economic collapse though it still lagged most other states (see Figure 1). After borrowing nearly $1.7 billion from the federal government during the Great Recession, the fund gradually repaid that debt and built up a balance of $1.97 billion as of December 2019. That allowed the state to lower the tax rates on employers that had risen to pay off the debt and rebuild the sagging balance.
And the Policy Forum says that Wisconsin employers are likely to continue to get that tax break for 2021, partially because of a provision that Republicans added to the state's legislation that spelled out some of the ways it will implement the CARES Act.
The basic rates for employers such as restaurants and bars, hotels, and entertainment venues typically would be about to rise at a time when they could ill afford it. Under the state’s normal policy, employers who have paid more in unemployment taxes than claims could see a rate increase of up to 1 percentage point on taxable wages; those whose claims exceed taxes paid could see an increase of up to 2 points, though in both cases the next highest rate in the schedule is used if there is no rate exactly 1 or 2 points higher.
To prevent that, Act 185 provides that benefits resulting from the public health crisis and paid for the weeks between March 12 and Dec. 31 of 2020 will not count against an employer’s claim history or reserve percentage, with the payments charged instead to the balancing account. In addition to federal loans, states may use funds from the Coronavirus Relief Fund within the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act to avoid insolvency in their unemployment funds, according to the U.S. Treasury Department.
In a way, this is kind of funny. Because as WisGOPs cry crocodile tears about how many Wisconsinites are still not able to get their unemployment benefits (largely due to barriers and understaffing that WisGOPs put in place over the last 10 years), the delays in getting benefits along with the GOP amendments to Act 185 are likely to have the effect of keeping taxes lower on employers for a year longer than they should have.
In the interim, we could use a little smaller government this time, and use efficiencies across agencies to get information about applicants and eliminate red tape. Republicans in Congress and the White House didn't seem to have any such problems with that when they were sending out $1,200 or $2,400 checks to Americans earlier this year. Even if some of those people weren't, ahem, eligible.
Wow: Treasury sent $1.4 BILLION in coronavirus stimulus payments to a million dead people, congressional watchdog finds. By @ericawerner https://t.co/hQIgNnP4Fk
But you know what? $300 billion was sent out, which means an error rate of less than 0.5%. That seems to be a small price to pay compared to the 15% of Wisconsin unemployment claims that haven't been decided. I'll take a minor amount of errors that have to be clawed back over legitimate applicants getting screwed over and facing even harder financial situations because of delays in getting unemployment.
However, making Wisconsin unemployment applicants automatically eligible with the review coming later would require an actual act of the WisGOP Legislature, and those guys don't seem too keen on giving up their 10 1/2 month paid vacation at this point. So what could be done in the short-term to pay for the staffing and computer upgrades we need?
OH I KNOW! Given that Wisconsin employers are skipping out on higher unemployment taxes for the next year, why don't we dial back the tax cuts WisGOPs have given to manufacturers and Big Ag, which costs the State of Wisconsin hundreds of millions of dollars a year?
Then we can use some of that money to improve technology and staffing at the Wisconsin Department of Workforce Development. Seems like it'll be needed as unemployment is likely to stay high through 2021, If there's one thing we've learned recently, it's that Wisconsinites don't deserve to wait weeks while someone figures out whether they're a legitimate candidate for unemployment benefits while we have the most people out of work in 80+ years.
These three paragraphs from a story on Friday are an excellent example of the weird economic times we have fallen in. When you can set a record for spending growth, and it still disappoints.
Consumer spending leaped a record 8.2% in May to mark the first increase since the coronavirus pandemic drubbed the economy, but fading government stimulus payments, still-high unemployment and a fresh viral outbreak are likely to muzzle similarly large gains in the months ahead.
The increase in spending fell short of the 10% forecast of economists polled by MarketWatch.
The reopening of business activity in May in several states released a barrage of pentup demand as Americans were able to get out and about for the first time in several months.
As for the spending side, much like we saw with the retail sales figures for May, it involved some recovery of the steep losses we had seen in the last few months. But on an inflation-adjusted basis, we are still down more than 11% compared to the rate we were at in February. And spending in services is still significantly down, as restaurants, bars, non-COVID health care and entertainment industries are still significantly depressed.
FYI- the uptick in durable goods is mostly cars and RVs, while March's gains from people rushing to buy non-durable goods at grocery stores has faded, and gasoline sales remain low.
The decrease in personal income in May primarily reflected a decrease in government social benefits to persons as payments made to individuals from federal economic recovery programs in response to the COVID-19 pandemic continued, but at a lower level than in April (table 3).
In particular, the drop came from most people having gotten their stimulus checks in April, and not getting another in May. Conversely, there was a sizable increase in unemployment benefits paid, which dwarfed the increase in income that resulted from more people working in May.
Most of that increase in unemployment benefits reflects the $600 supplement kicking in for the entire month (+$691.9 billion) and some more was the result of more people getting unemployment through the PUA program ($101.5 billion).
And while there might be further help in spending with more places open for the entire month of June, as COVID-19 resurges and bars close in Texas and Florida, we now are in danger of seeing spending get stuck at this lower level.
Back on the income side, this graph should show remind you how much less people were getting in paychecks in May, both from hours being cut or many millions not having a job at all. The thing keeping incomes afloat are these aids from the government.
Now spin it forward. If COVID’s resurgence means even more shutdowns and layoffs, and the major income sources of enhanced unemployment benefits and stimulus checks are both scheduled to go away in the next 4 weeks, do you really think this economy is going to survive?
After declining for three weeks, the number of borrowers delaying their monthly mortgage payments due to the coronavirus rose sharply once again.
The number of active forbearance plans rose by 79,000 in the past week, erasing roughly half of the improvement seen since the peak of May 22, according to Black Knight, a mortgage data and technology firm. By comparison, the number of borrowers in forbearance plans fell by 57,000 the previous week. Increases happened every day for the past five business days.
As of Tuesday, 4.68 million homeowners were in forbearance plans, allowing them to delay their mortgage payments for at least three months. This represents 8.8% of all active mortgages, up from 8.7% last week. Together, they represent just over $1 trillion in unpaid principal.
So we're in a significant economic deficit as the 1st half of 2020 ends. And if Moscow Mitch and other Senate GOPs refuse to add money to everyday people’s wallets in July? Disaster. I think even McConnell recognizes that it’ll be economic and political suicide to do nothing, as today even the Grim Reaper is saying some kind of stimulus might happen in the next month.
When you dig into economic reports and combine it with the rising COVID-19 numbers, it sure seems like we are teetering on the edge of ending the slight recovery that we saw in May and June. We could well fall further in Q3 2020 if there’s no help coming from DC, and we’re still pretty far down as it is.
As much as TrumpWorld and Wall Street try to convince people that we'll see a V-shaped recovery with the economy getting back near normal in a few months. But reality keeps intruding on those statements, including today's projection from the International Monetary Fund.
The IMF's latest dire World Economic Outlook update is nearly 2 percentage points worse than its last forecast in April, representing a slower-than-expected global recovery. The organization also downgraded its 2021 growth projections from 5.8% to 5.4%, which would leave global gross domestic product next year about 6.5 percentage points lower than pre-pandemic projections from January.
"We are definitely not out of the woods," IMF chief economist Gita Gopinath said at a news conference. "We have not escaped the great lockdown."
Gopinath said the crisis has had an "unprecedented global sweep." Real GDP growth is projected to decline 8% for advanced economies in 2020, while emerging market and developing economies could see a 5% decline – nearly 3% worse than the IMF forecasted in April. Contact-intensive economic sectors such as tourism "remain depressed" and trade is expected to collapse by 12%, according to Gopinath. Public debt will also exceed a post-World War II peak, according to data shared during the news conference.
And as UW's Menzie Chinn notes at Econbrowser, the IMF says that the US is among those places that'll have a lower GDP at the end of 2021 than they did at the end of 2019.
And a big reason why is because we have a COVID-19 pandemic in America that is resurgent. In no small part because our "businessman president" and other Republicans wanted to "keep it out of sight, out of mind", and they ended up reopening the economy too fast and too soon, as they tried to trick the average person into thinking things were returning to normal.
The U.S. broke its record for the highest coronavirus cases recorded in a single day, with 36,358 new positives reported on Wednesday, according to a tally by NBC News.
Wednesday’s cases top the previous highest day count from April 26 — the first peak of the pandemic in the U.S. — by 73 cases, according to NBC News tracking data. The World Health Organization saw its single-day record on Sunday with more 183,000 cases worldwide.
Health experts told NBC News on Monday that the resurgence in cases in Southern and Western states can be traced back to Memorial Day, when many officials began loosening lockdowns and reopening businesses.
Meanwhile, the Northeast region have seen significant decreases in cases as authorities in the area have maintained policies around social distancing and wearing face masks.
This graph is damning, particularly when you consider that there are 120 million more people in the EU than in the US.
That's a whole lot of lost productivity and lives. And it's not going to encourage more people to go out, travel and spend.
The flash U.S. service sector purchasing managers index rose to a 4-month high of 46.7 in June from 37.5 in the previous month, IHS Markit said Tuesday. The flash manufacturing sector purchasing managers index rose to a 4-month high of 49.6 from 39.8 in May. Though an improvement, the readings remain slightly below 50 which indicates worsening conditions. The flash estimate is typically based on approximately 85%-90% of total survey responses each month. The composite index rose to 46.8 in June from 37 in the prior month.
What happened: U.S. firms reported a slower contraction in June as businesses began to reopen on a larger scale after the lockdowns imposed to combat the coronavirus pandemic. Still some businesses reported that renewals and requests for new business were muted. There were further cuts in workforce numbers. Firms also reported higher prices for the first time since February. Separate readings from the eurozone showed that their economies are no longer collapsing.
Hate to tell you, but a "slower contraction" means it's still falling! That's not the direction you want to be going!
We still have new unemployment claims running at well over 1 million a week, most places have reopened in the last few weeks, so there's no one-time blip to counteract the new layoffs, like we saw in May. In fact, Wisconsin has had numerous mass layoffs announced in June - mostly in manufacturing, with more than 1,600 workers affected.
That's 700 more mass layoffs than Wisconsin had announced in May, and nearly 4 times the amount we had in February. And the real danger looming is when enhanced unemployment benefits run out next month and jobs have not returned. Between that cut off of income, and Moody's saying Congress refusing to give aid to state and local governments might cost 4 million jobs and 3% of GDP, and you can see that we are in significant danger of having things fall again.
Which helps explain why this was by far the most common prediction from economists in a 538.com survey.
And the biggest concerns from those economists that might lead to the recession deepening?
I’ve got a few thoughts after last night’s “action” at the Capitol. I’m enraged for a few reasons.
First, I’ll talk about the incident that seems to have precipitated the anger from last night. I’ve frequented Cooper’s Tavern on the Capitol Square in my time on the Mad City, so I know where this is (nice place, good beer). I can't say I've ever had a guy follow me into there with a baseball bat and yelling into a megaphone, and he rightfully got the boot for doing so.
All he had to do was keep it on the street, and things might have been OK. But after he was taken outside and the cops showed up, things got bad.
Four cops trying to tie a guy down for a disorderly conduct ticket seems overboard, and it deserved to be added to the list of rightful grievances that protestors have about police behavior. But the vandalism is pointless and hurts the cause. I get the whole argument of “black people are being left out of the Wisconsin that exists today and we need to wake people up”, but tearing down statues of Hans Christian Heg and Lady Forward isn’t going to get us toward a fairer, more inclusive state.
Instead, it is giving weak-minded white people the excuse they need to ignore legitimate concerns. The fact that WisGOPs did more today to condemn the vandalism and to try to pin the blame on Tony Evers than anything else they have done in their 10 WEEK PAID VACATION should tell you all you need to know.
.@GovEvers: With the City of Madison Police, State Capitol Police, WI State Troopers and the National Guard at your sole disposal, the power lies with you alone to bring an end to this destruction. Enough is enough. pic.twitter.com/CdlpbcroUV
Wisconsin Republican state Rep. Rob Hutton says he will be introducing a bill later today that will "address the unlawful destruction of monuments and statues."
He says his office had been working on it prior to the toppling of 2 statutes outside of the state Capitol last night
While the Governor slept in his estate, the statehouse was under siege. We need a leader, not an apologist. Governor Evers and Mayor Rhodes-Conway have enabled this destructive and violent behavior through consistent inaction and appeasement. pic.twitter.com/tKVizTMcZW
— Sen. Chris Kapenga (@SenatorKapenga) June 24, 2020
Republican Congressman @RepTiffany, who until last month was in the state Legislature, calls for @GovEvers to resign over his handling of protests in Madisonhttps://t.co/spxML3AWxq
I wish some of these people were a fraction as concerned about the lead in Milwaukee's water as they are about the bronze in Madison's statues. pic.twitter.com/yQgDty3hLG
It’s catnip to these lowlifes - they think using this incident to go off on blacks/Madison liberals is a winner in their lily-white districts. It also allows them to avoid talking about the issue of police brutality and examining the massive amount of tax dollars we spend on policing and locking people up, which is a political loser for WisGOPs in Summer 2020.
WalletHub — a personal finance website based in Washington, D.C. — assessed state-by-state disparities between white and Black residents using several measures of wealth and employment. These metrics included gaps in median annual household income, unemployment rate, labor force participation rate, homeownership rate, poverty rate, homeless rate, share of executives and share of unsheltered homeless. It used the most recently available data from the U.S. Census Bureau, U.S. Equal Employment Opportunity Commission and U.S. Department of Housing and Urban Development. …
Among the 50 states — again, not counting the District of Columbia — Wisconsin had the highest disparities between its Black and white residents in both median annual household income and labor force participation rate. WalletHub calculated a 107% racial income gap for the state, meaning that the median yearly income for a white household in Wisconsin is more than double that of a Black household.
WalletHub's analysis also indicated that Wisconsin has the second-highest poverty rate gap in the country — a 23% difference between white and Black Wisconsinites — with only Maine's being larger.
In terms of unemployment rate, Wisconsin's racial gap surpassed that of 47 other states. Wisconsin ranked 45th in terms of homeownership rate gap and 14th in the share of executives.
In fact, I’d argue that the average WisGOP politixian wants those disparities to persist. Because it allows them to soothe low-info, lower-income whites by saying “at least you’re not THOSE PEOPLE in Milwaukee/Madison/other city with African-Americans.”
It angers me that this one foolish night of vandalism is going to counteract 3-4 weeks where I had sensed the conversation changing, and that it had finally sunken in to much of comfortable white America that they need to listen to people of color and care about the unequal treatment and outcomes that exist in everyday American society.
I’m also sick of how this incident reminds me that Dems and the “left” have to act so much better than the GOP and the right. These GOPs never have to answer for all the racist behavior by MAGATs or the killing of cops by Boogaloo Boys, or any of the other heinous acts that their electoral allies pull (up to and including the President of the United States).
But the GOPs didn't hesitate to pounce on Governor Evers today and try to make Dems responsible for what these idiots did in Madison last night. And the GOPs are definitely trying to stir up the fear quotient ahead of tonight (as Tamarine Cornelius referenced, just read the Wheeler Report’s feed today). I know how this works, and it enrages me that WisGOPs will play this race-baiting game to avoid having real action.
It also shows that a “throw shit against the wall while doing nothing” strategy will be what the WisGOPs plan on for the next 4 months. It reflect the desperate spot they’re in, where their only chance of not losing big in November is to drag things down and make people vote GOP out of fear and hatred.
These actions and the GOP's misdirection play is a threat to blunt the momentum of the Black Lives Matter movement and the related protests, which a strong majority of Wisconsinites favored as of last week.
In the aftermath of the death of George Floyd in Minneapolis, 61% of WI voters overall approve of the mass protests while 36% disapprove. #mulawpoll
The last thing WisGOPs want is any kind of discussion of how Wisconsin’s disparities got so bad, why our current policing system isn't working, or how these things should be fixed. They want to turn this into resentment-based tribalism that avoids the issues entirely between now and November (outside of emotional BS like guns or religion). Which is why Evers needs to call a Special Session for next week to demand that GOPS go on the record and take action about these issues.....or not.
I bet the talk-show-driven WisGOPs don’t do anything. Because they don’t have anything beside hate radio talking points, and the rest of the state should be forced to recognize just how little these guys care about so many Wisconsinites.
In 1986, municipalities spent about $353 million on law enforcement (both operating and capital); this rose to $1.28 billion in 2018, an increase of 262% in raw dollars and nearly 60% after accounting for inflation.
On a per capita basis, municipal spending on law enforcement rose from $74 in 1986 to $219 in 2018, a 197% increase in raw dollars and a 30% increase after adjusting for inflation.
Law enforcement spending comprised 17.8% of total municipal operating and capital spending in 1986 and was somewhat higher at 20.0% in 2018, although the percentage has trended downward since peaking at 22.1% in 2013 (see Figure 1).
And Wisconsin is hardly alone in spending a significant amount of tax dollars on policing. In fact, the Policy Forum says that the state is in the middle of the road for overall local spending on police, which substitutes for a lack of direct funding for police from the State.
Once all local governments are accounted for, including entities like counties, school districts, and special districts, the gap narrows: 6.6% of all local government operating spending in Wisconsin goes to police protection versus 6.3% nationwide. If state spending is considered, then the trend reverses: 3.7% of all state and local operating spending in Wisconsin goes to police protection, compared to 4.0% nationwide.
The takeaway is that Wisconsin’s municipal governments appear to devote a higher proportion of their budgets to police than the national average, but this is balanced by Wisconsin’s lower proportional spending at the county and state levels. Across all states, Wisconsin ranks 18th in terms of the percentage of municipal operating spending devoted to police protection, as well as 26th as a share of county operating spending. At the same time, Wisconsin ranks dead last in the same metric at the state level.
However, it must be noted that the state of Wisconsin sends general shared revenue to local governments, which indirectly pays for police, even if those funds aren't earmarked toward cops. And this analysis does not seem to include Corrections spending, which we the state was slated to spend more than $1.2 billion on in Fiscal Year 2020.
This is the part of the post where I remind you that Scott Walker and the Wisconsin GOP exempted police and fire services from the union-busting Act 10 of 2011 as a "thank you" for those unions supporting Republicans in elections. That should have removed any facade that Act 10 was anything but a power play against workers and unions who were more likely to support Dems, but in case you had any doubt that Act 10 was nothing but politics, Scotty himself put that to rest.
Funny how he changes his tune when he doesn't need the votes of cops' unions anymore, and when public opinion has shifted against the race-baiting "law and order" garbage Scotty used to constantly spew. But he still peddles the "teachers can't get fired" lie, because he'll always have a paycheck waiting for him to say that garbage.
There's no question that Wisconsin's largest city continues to have to pay an increasing amount to its police force under the Act 10 exemption, even as the number of cops in Milwaukee has leveled off. Even more remarkable is that the Policy Forum notes that wages and salaries for Milwaukee Police went up by more than $50 million in the last 5 years, while all other expenses (like equipment and supplies) actually went down.
I got a better idea than Gov Dropout. Let's have cops deal with Act 10-style restrictions on collective bargaining, and give those bargaining rights back to workers whose agencies don't kill citizens and cause millions of dollars in taxpayer-funded settlements. And give those agencies some of the duties that cops have had to take on, like dealing with OD's and people suffering from mental health situations. Win-win all around.
With the lack of local revenues that have resulted from the COVID-19 recession and the associated shutdowns, it seems likely that Wisconsin's local governments are going to be tight for 2021. Add in the limitations that WisGOPs have imposed on raising property taxes in the state, and this means that cutbacks in services are likely to happen without a significant bailout from the Feds. And the Policy Forum notes that this, even more than calls to defund the police, are likely to be reasons that police forces might face funding cuts next year.
In the end, however, decisions on whether to reduce police spending may be driven at least as much by fiscal reality than by debating the merits of police “defunding.” Given law enforcement’s large share of overall local government spending in Wisconsin, many of the state’s municipalities may have little choice but to consider cuts or freezes to police spending as their financial challenges intensify from the COVID-19 pandemic.
For your weekend reading, I wanted to highlight a blog by historian Patrick Wyman that's titled "Don't Quote Laws to Men with Swords." In this blog post, Wyman mentions that over the last 20 years, we have seen one group of elites be allowed to play by (and bend) one set of rules, while everyday citizens try to play fair under the rules that they think are in place, and find themselves continually steamrolled by the forces in power.
For the past two decades, the American political system has taken blow after blow, slow cut after slow cut. In hindsight, it’s a miracle that Bush v. Gore didn’t turn into a major constitutional crisis back in 2000. Immediately after that came 9/11, the massive expansion of the security state, and the beginnings of the War on Terror. Then came the push to invade Iraq and the associated outright lies, half-truths, and delusions of imperial grandeur. The Great Recession, the unfulfilled promise of the Obama presidency, Sandy Hook, the Tea Party, Ferguson, Donald Trump, and the last four chaotic years have all reinforced the same basic message: The political system is creaking, clattering, and it has failed time after time.
These incidents and processes, not the prosperous 1990s, much less the Reagan era, Watergate, Vietnam, or the turbulence of the 1960s, are what have fundamentally shaped younger Americans’ expectations and understandings of their political system. No thriving middle class is waiting to welcome the indebted, under-employed, overeducated Millennials and emerging Zoomers through the doors of an affordable single-family home; instead, the winners take all, and those winners seem increasingly predetermined. There is a history to the past two decades, a history of slow-burning disasters both political and economic, and very little about it inspires confidence in the system’s ability to accommodate necessary, broadly supported changes and move forward. Why would someone in their early 30s, facing the second major economic disruption of their adult life and watching their friends and acquaintances get tear-gassed by police at peaceful protests, feel much investment in the system that produces those outcomes?
That’s a legitimacy crisis. If systems don’t live up to their values, if they can’t deliver on their promises of prosperity, peace, and justice, then the participants lose faith. As norms break down and the understanding of the possible shifts, so too do the actions of those participants. In differing ways and to differing degrees, wide swathes of the American public have lost faith in what the political system has to offer. Tax revolts, armed protests, the refusal to follow simple public health instructions, and protests against police violence all share that lack of faith in common.
And this is what brings us all the way back around to the end of the Roman Republic. “Stop quoting laws to men with swords,” a young Pompey said. Soldiers ruled, not the niceties of the legal system or the institutional traditions of the Roman state, and the young men molded by the first round of conflict - like Pompey and Caesar - carried its lessons with them forever .....
For entire generations of younger, but not young, Americans, their formative political experiences now include rows of police in riot gear, protesters armed with long guns at state capitols, and the nation’s paper of record broadcasting calls for military intervention in American cities. That’s the culmination of a decades-long crisis, and the beginning of another. At the heart of those crises are basic questions about what the system has to offer, for whom, and whether it’s capable of delivering on its promises. Those are questions of legitimacy, of whether we have to do what we’re asked and why. If there are no good answers to be found, there’s no guarantee that the system will survive unscathed.
And when you recognize the depths that the people clinging to power will sink to, it makes this statement by the alleged political opposition all the more infuriating.
Hey Jerry, I DON'T CARE WHAT THE CROOKED GOP SENATE MIGHT DO, and neither should you. It is your job to hold Barr and the rest of this amoral crew accountable, and if you do nothing about it, they'll recognize that as a green light to do even more bad things. And they don't care about what is proper and they don't have an ability to feel a sense of shame about what they are doing to American democracy.
Besides, it's good politics. If you step up, drag Barr, and impeach him for his abuses of power and clear disregard for the rule of law, it makes GOP Senators look horrible if they acquit. Especially since a whole lot of them are facing the voters in a few months in what is already looking like a big pro-Dem year. The one way you blow this is by NOT impeaching the rule-breakers, which makes casual voters ask "Why did we put these guys in charge if they aren't going to do anything about Trump/GOP?"
2020 politics is not a debating society, Rep. Nadler. It's how you choose to use the power the voters have given to you. And I don't think they put Dems in power in the House just so they can pass the buck and try to wait out more abuses of power that'll come over the next 4 1/2 months.
Fishy enough, given the Friday night release of that info, and that we know SDNY is charged with overseeing President Trump's sketchy financial dealings and the related sketchy people from multiple countries that are involved with them.
And Mystal calling out Mueller is right on the money. Especially as we also found out on Friday night via the release of that Mueller had clear evidence that Trump lied to him on knowing about Russian work with WikiLeaks, and didn't indict him or go public with that information because didn't have the guts to pull the trigger and deal with the Trump/GOP hate machine. So he did nothing and let the corruption continue.
Trump told Mueller that he was ignorant of his campaign's contacts with Wikileaks.
That was untrue.
The special counsel offered the most generous possible interpretation - maybe Trump just forgot. They bent over backwards to avoid accusing him of lying. https://t.co/dRacOXbrCApic.twitter.com/odjRlfQ6uk
There's this belief among far too many Americans (and especially elites) that our system will work out, no matter who is in charge of pulling the levers of power and administering the rules of the game. Because fixing the flaws takes work, and also requires us to recognize that we have been playing in a rigged, losing game where the average person isn't able to see justice, accountability or economic advancement no matter how many things they did right.
Few want to admit they're losing, and even fewer of the winners will want to change that game, so we keep this failing system until disasters strike. And yes, it's odd that we have to rely on a politician I called Status Quo Joe to play a big role in changing this losing game. But as we've seen in the last few weeks, what is the "acceptable middle" can change pretty fast when people give a damn and take action.
Because our "leaders" want to keep their livelihoods and not have people become so engaged that they pay attention to their (in)action, they are now put into a situation where they might have to get off their backsides and do something. Others are so far gone into the Swamp that they don't care, or think so little of their constituents that they think they can continue to cover up for their crookedness and failing system without having any consequence.
If they keep cheating and ignoring, then they need to be shoved out of their jobs through primaries, general elections, and impeachments....although that's a bare minimum. I wouldn't mind if this came back for a while to serve as a reminder about the whole "consent of the governed" thing.
A few perp walks would also be nice. "Law and order" has to apply to our politicians and their lackeys FIRST, not last. And this country has gotten that backwards for far too long.
As much as the WisGOP-controlled Legislature might want to veto where the funding goes to, the way the CARES Act was written, they can’t. It goes through Governor Evers’ Department of Administration and needs to be sent out by the end of the year.
The CARES Act laid out certain guidelines for the use of money received from the CRF, and additional guidance has been received from the U.S. Department of Treasury. Money that state and local governments receive from the CRF must be used for expenses incurred in response to the public health emergency declared in response to COVID-19. These expenses must not have been accounted for in the most recently passed budget, and must be incurred between March 1, 2020, and December 30, 2020. Money received from the CRF that is not used by December 30, 2020, must be returned to the Treasury. Furthermore, Treasury has issued guidance and provided answers to questions on what is and is not considered an eligible expense incurred in response to the public health emergency; notably, governments may not use the money from the CRF to replace lost revenue.
The Department of Administration (DOA) has indicated that the approximately $2.0 billion in CRF monies were deposited to a DOA federal, all monies received appropriation [s. 20.505 Page 2 (1)(mb)]. Because this appropriation is an all monies received appropriation, the administration can expend the total amount of funds received without additional legislative authorization. DOA has established a system for agencies to track the financial impact of the coronavirus public health emergency. Agencies have been asked to report any unanticipated expenses related to emergency response to the public health emergency, the financial impacts of canceling or rescheduling events, revenue lost from canceling or rescheduling planned events or from canceled or postponed state operations and services, the amount of cost savings resulting from rescheduling or canceling planned events, the financial impact of grants received or lost, and the fair market value of any donations received by a state agency from a nongovernmental source.
You can see that the largest chunks of those dollars are going to preparedness efforts for hospitals and communities, as well as COVID 19 testing and reimbursements to health providers to help them put on those tests.
There also is that $190 million to local governments and $10 million to Tribes to help them pay for certain types of costs that they take on between March 1 and October 31. The Evers Administration announced the allocations under a program called Routes to Recovery (you can see what your community is getting at this link). Here’s what that money can be used for.
….. Funds distributed to local governments under this program may be used for: (a) emergency operations activities; (b) purchases of personal protective equipment; (c) cleaning and sanitizing supplies and services; (d) temporary isolation housing; (e) testing and contact tracing costs not otherwise reimbursed by the state; (f) Family and Medical Leave Act (FMLA) and sick leave for public health and safety employees; and (g) meeting local match requirements for expenses submitted for reimbursement to the Federal Emergency Management Agency (FEMA)…..
State government has also been taking on extra costs and services due to the COVID outbreak, and some of the CARES money will go to pay that back. As the LFB notes, much of that $200 million has already been spent out.
Agency Reimbursements. As mentioned above, DOA has asked state agencies to keep a record of costs incurred due to the public health emergency related to the coronavirus. The Governor has indicated that $200 million in CRF money will be set aside to reimburse state agencies for their eligible 2020 COVID-19 expenses. As of mid-May, state agencies had incurred approximately $142 million in COVID-19 expenses. DOA has characterized these expenses as being broadly related to the purchase and distribution of personal protective equipment and cleaning and sanitizing products, tests and testing services, decontamination, contact tracing, and isolation and alternative care facility establishment and operation.
It sure seems like many of those agencies will have to dip into their own pockets as that CARES money runs out and the need to invest in changes to increase safety and lessen exposure to COVID-19 continues.
There are also $40 million that will go to hospitals to help defray losses that COVID-19 has made them take on (both from taking on extra costs to treat COVID, and from losing funds from a lack of “regular” doctor visits because people don’t want to go into offices to risk getting COVID). And more will go to other types of private health providers that have had financial stresses due to COVID-19.
Assistance for Health Providers. A total of $110 million has been allocated for providing financial assistance to health providers, including emergency medical services, home and community-based services, and long-term health providers, such as nursing facilities and assisted living facilities. Of this amount, $10 million has been set aside for providing grants to clinics serving underserved populations, including tribal federally qualified health care centers, rural health clinics, and free and low-cost clinics. The money distributed under this initiative is intended to help health providers cover expenses directly related to their COVID-19 responses, in addition to additional expenses such as overtime pay, changes to sanitation procedures, and disruption to standard care delivery.
All of this $150 million in assistance to medical providers and hospitals is supposed to go out by the end of July.
You’ll also notice some assistance that goes to non-medical, non-governmental outlets. This includes $75 million for $2,500 grants to 30,000 small businesses under WEDC’s We’re All in program, which opened for applications this week and closes on Tuesday.
I’ll be interested to see if they get enough apps, and if not, maybe they’ll add more money to each of the grants. My instinct is that giving away more than $2,500 to fewer recipients would seem to a much better bang for the buck in keeping those small businesses afloat (that advice is worth what you paid for it).
There is also $25 million that is designated for landlords to pay for $3,000 of rent and other housing, in order to help low-income Wisconsinites stay in their homes, and $65 million for the state’s beleagued agricultural sector.
…. The $50 million Wisconsin Farm Support Program will provide direct payments of $1,000 to $3,500 to farmers with gross farm income of $35,000 to $5,000,000 in 2019. Farmers will be eligible to apply from June 15, 2020, to June 29, 2020. The Department of Revenue (DOR) will administer the program by awarding payments of a percentage of applicants' 2019 gross farm income. The percentage will be calculated based on the number of applicants so that all $50 million will be allocated. DOR estimates approximately 26,500 farmers are eligible, suggesting an average payment of $1,900 per farmer if all eligible farmers apply. At the end of the first day of the application period, DOR indicated that 3,673 farmers had applied for payments from this program. The Department of Agriculture, Trade and Consumer Protection (DATCP) will administer the $15 million Food Security Initiative, which will provide payments to food banks, food pantries, and other nonprofit organizations to support the purchase, processing, and storage of Wisconsin agricultural products. Funding will also support implementation of social distancing and public health guidance at recipient organizations, such as curbside pick-up or delivery services. DATCP reports it is in the process of determining program structure and eligibility requirements for the Food Security Initiative and that additional guidance is forthcoming.
So we’ll likely see a lot of this $2 billion pay for items in Wisconsin in the coming weeks, and once that money comes out, we should track who gets it and how effectively it was used (and both the states and feds are going to report on what was done with the CARES money in the next few months).
But this $1.72 billion will likely not take care of all of the needs that have developed to deal with the pandemic, and once that money runs out this Summer, that’s when the real hard choices will begin. Not just in Wisconsin at the state and local level, but also in DC. Congress and President Trump are going to have to decide if they want to keep helping, or if they want to risk a lot of severe cutbacks in these services and a resumption of our economic decline right before the November 2020 elections.
We got a look today to see if Wisconsin joined in the restoration of jobs that the U.S. had in May. And much like the country as a whole, we got a decent bounce-back after the big losses in the previous two months.
• Place of Residence Data: Wisconsin's labor force participation rate in May was 66.6, nearly 6 percentage points higher than the national rate of 60.8 percent. Wisconsin's unemployment rate in May was 12.0 percent, 1.3 percentage points lower than the national rate of 13.3 percent.
• Place of Work Data: Wisconsin added 74,900 total non-farm jobs and 72,100 private-sector jobs from April 2020 to May 2020. From May 2019 to May 2020, Wisconsin total non-farm and private-sector jobs declined by 387,700 and 338,100 respectively.
As that last sentence hints at, we are still in a major hole compared to where we were last year, just like America still was after May’s gains. If you look at the rate of losses, both the US and Wisconsin had still lost more than 1 out of every 8 jobs that existed in February.
Interestingly, Wisconsin has lost a higher percentage of jobs than the US overall, but a smaller percentage of private sector jobs.
The biggest sector of job losses has taken place in Leisure and Hospitality - basically hotels, bars, restaurants and various types of live entertainment. That sector still was significantly down in mid-May, reflecting that many types of those businesses had yet to open by that time.
This was especially true in Wisconsin, whose largest cities were still under Safer at Home restrictions at the time of the May jobs survey, and we had suffered disproportionate losses in the Leisure and Hospitality sector in April. As of the May survey, we had still lost nearly 48% of the state’s jobs in the sector.
As for the household survey that determines the unemployment rate, you can see that Wisconsin was slightly delayed in having its unemployment pile up. We dropped down like everyone else in April and recovered some in May, but have slightly outpaced the country with a lower unemployment rate, and Wisconsin has a higher rate of the working-age population having jobs.
While there still seems to be a lot of assumption in financial circles that May will be the start of a vigorous recovery that gets us near to where we were over the next few months, I wouldn’t be so sure of that. For example, at the end of May, we still had more than 30 million Americans filing unemployment claims between the three main programs.
And sure, jobs have come back over the last month as more of the economy reopens. But it's still being offset more than 2 million new unemployment claims a week getting filed, an amount that is three times more than any week we had during the Great Recession.
At the state level, having 15% of claims still being undetermined is unacceptably large. But let’s also note that while we are finally declining from the absurd numbers of April, we are still seeing as much (if not more) new claims being filed in Wisconsin than any time during the Great Recession, when Springtime totals of new claims peaked at just over 27,000 claims.
And in 2009, we didn't have nearly the barriers and extra oversight that we have in the Age of Fitzwalkerstan.
With all of the happy talk about jobs coming back, I think we’ve gotten numbed to the scope of just how many people have been laid off, and we ignore that at our peril. We’re still at the highest unemployment levels that this country has had in the last 80 years, and if we level off from a recovery rate of 2.5 million-a-month, we will be left with a jobs hole that would be as bad as what we had at the depths of the Great Recession.
That’s a place few likely thought we would be in as 2020 started. If we were told 6 months ago that even 9 million jobs were lost and unemployment of 8% developed over the first half of this year, I think we would have expected to be stunned and called it a disastrous economy. And it's much worse than that today. It’s the fact that COVID-19 led to the declines that allows some people to ignore the awful state of the jobs market in both Wisconsin and America.
But if we still see double-digit unemployment and 8% of our jobs still gone in 4 months, I think we’ll be feeling differently about the economic situation, and be a lot more angry.
This post sort of supplements the other one, as it also deals with retail sales in Wisconsin. But this one is going to widen out to taxable retail sales throughout Wisconsin, and it's going to discuss a couple of findings that Forward Analytics released earlier this week.
The organization looked at sales for March and April, as COVID19 broke out and many Wisconsin businesses shut down, and compared the totals to what the numbers were in March and April of 2019. Overall taxable sales were down 10.5%, and you can see the significant shift away from tourism-related industries and brick-and-mortar types of consumer spending, and into online sources and products to be used around the house.
There also was a wide variability among Wisconsin counties. Some counties actually continued to see increases in sales, but one tourism-heavy county had a drop of more than 30%, and the state's high-population counties suffered from no sports or other entertainment events going on for those two months.
Figure 2 on page five shows changes in county taxable sales ranged from a decline of 31% in Sauk County to an increase of 7% in Burnett County. In 14 of the 66 counties studied, taxable sales were higher in March and April of 2020 compared to the same months in 2019.
After Sauk County, the counties of Dane, Milwaukee, and Brown had the largest sales declines, ranging from -14.8% to -16.4%. These are three of Wisconsin’s most populous and urban counties and, along with Kenosha and Waukesha counties, had the most positive cases of Covid-19.
As you can see here, the counties that had taxable sales growth were rural places that likely don't have high tourism totals in March and April, and Forward Analytics indicates that some of those places had wholesale retail that shipped high amounts of product as people were homebound.
I'd be intrigued to see what these numbers look like for May, partially because we get to see whether we fell further back as the Summer tourism season began, and to see what differences there may have been around the state due to different levels of Safer at Home restrictions.
But what we do know is that this decline is going to hurt these counties' budgets for this year. They didn't count on such a drop in sales tax revenues for this year, and with no plans to increase shared revenues or property tax limits for these counties, it may be difficult for those communities to make ends meet through the end of the year. There is some CARES money that has gone down to local communities via the state, but much of that is to handle the extra medical services that have resulted from the COVID-19 pandemic.
Maybe Wisconsin saw large increases from retail sales like the rest of the country did for May. But remember, that still left US retail sales at a level that was 8% below where it was in January. This would likely put Wisconsin counties in the hole again for that month compared to May 2019, and time is starting to run short before cities and counties have to put together their 2021 budgets.
Wisconsin has been fortunate to avoid the recent increases in COVID-19 cases that we're seeing in the Southern half of the country, so maybe things will improve as the Summer goes on. But check back on the local sales tax returns going forward, because with no Brewers, no Summerfest, and many people still cutting back on travel, a lot of places that generate sales tax revenue aren't going to be generating sales near what we've been used to seeing. And that could mean a lot of cuts of many types of services at the local level if there isn't any bailout from DC or Madison.
