Thursday, December 31, 2020

In DC, $2,000 is too much for most Americans. But there's never enough for the rich ones

As Congress debates whether or not to give 90%+ of Americans $2,000 instead of $600 in a time of high unemployment and a record level of death keeping people from wanting to spend, let me remind you that a certain subset of Americans got their bailout from DC 3 years ago. Yeah, how dare we encourage consumers to spend money in an economy that has 2/3 of its activity based on consumer spending! Encouraging rich people to hoard cash and inflate stock market and real estate Bubbles is a MUCH better strategy. (Slams head on desk)

The lack of self-awareness is vomit-inducing. And yet idiots like this guy keep get re-elected (or at least the numbers say so). As a new batch of Americans becomes unemployed after the Holiday season, adding to the 20 million+ that are already receiving benefits, we have a new set of unemployment rules being passed down to states to figure out. And there is little to no guidance (or much money) from DC to help them get this figured out, and to get the extra funds out to those out of work. And watch as Wisconsin Republicans complain about the time it takes to get the new benefits out (no matter how quick it is), while not doing a thing to invest in technology or staff in the upcoming state budget to take care of such problems. Or in removing the red tape WisGOPs put in place to make it tougher for Wisconsinites to get those benefits.

It's also funny how we don't hear a WORD in the national debate over stimulus and the national debt about the easiest way to reduce the deficfit. Reverse the tax cuts for the rich and corporate that went through in 2017. And why haven't the Dems in charge of the House constantly held votes to overturn those giveaways, and why didn't they and Biden openly and forcefully run on that during the election?

It feels like this is coming to a head in 2021, especially as I believe the economy will continue to drag as COVID Winter drags on. And it is well past time to stop pussyfooting around the crippling inequalities that are obvious to anyone who cares to look.

One group of Americans has been able to buy their way out of pain and inconvenience in 2020. And we need to make them start chipping in and being as accountable as the rest of us.
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Tuesday, December 29, 2020

As CARES money goes away, how will Wisconsin handle the costs of the COVID World?

As 2020 finally draws to a close, it also means that states like Wisconsin have to set aside all of the money it received under the CARES Act this Spring. Wisconsin got nearly $2 billion in aid, which went through Tony Evers' Department of Administration, but it has to be "expended or obligated" by tomorrow.

With that in mind, the Legislative Fiscal Bureau recently gave an update on where Wisconsin stands on these CARES funds, and told legislators what had been added or modified since October.
In a release dated December 15, 2020, the Administration reported that it expects to have expended or obligated nearly the full amount of the state's CRF allocation by December 30, 2020. Approximately $900,000 remains unallocated at this time. The table below summarizes the planned uses of the CRF allocation, as well as the reallocations from previously-reported initiatives.
You can see that the Evers Administration used $242 million of those funds for grants to businesses, including finds earmarked for restaurants, lodging establishments, live music and arts venues, and movie theatres. Which is a good thing, because while the new stimulus package from DC gave $15 billion to music venues, cinemas and museum, there was only a reduced amount of PPP assistance made available for other types of businesses.

As for other aids, states did get some help for COVID testing and treatment, and additional funds for education, roads, transit and child care. But it didn't have CARES-like direct asssistance to states that allowed for state-generated programs like Evers' funds to small businesses or added payments to hospitals and long-term care facilities. But those extra costs and needs won't go away with the start of the year, which means that there will be a question as to how that level of services is going to continue.

At the same time that some Federal help is being reduced, there is a continued decline in Wisconsin's state income taxes, as shown by figures released by the Wisconsin Department of Revenue earlier this month. However, a continued rise in the collection of corporate taxes (partly due to increased audits of businesses by the DOR) continues to make up for it.

Change in Wisconsin revenues, Nov 2020 vs Nov 2019
Individual Income Taxes (adj) -6.0%
Sales Taxes +0.2%
Corporate Taxes +324.4% ($157 mil vs $37 mil)
Excise Taxes -4.2%
Other -4.8%
TOTAL CHANGE +4.3%

Wisconsin reflects the national trend, as federal income taxes also were lower in November 2020 vs November 2019, according to the most recent Treasury Statement. They were down 11.3% for November and 12.8% between October and November combined, which shows what a jobs and wages hole we are still in.

Given the rise in unemployment claims since the time of the November survey, I don’t see this revenue picture getting much better, although the temporary restoration of higher unemployment benefits (which get taxed) might at least keep the decline from getting larger during our COVID Winter.

So while the Federal help in 2020 has given the State of Wisconsin a lot of stability and fiscal cushion at this point, the loss of those items in 2021 means that the state's fiscal and economic situations can become more perilous. Then forecast ahead to job and fiscal deficits that may well exist for the next 2-year budget cycle, and a crunch could come quite quickly.
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Monday, December 28, 2020

Trump signs! But the stupid delay will cause more economic damage in 2021

You may have heard that President Trump decided to sign the stimulus and funding bills after all, following one week of big talk and complaints. So hurray, millions of Americans won't be cut off of unemployment benefits and/or face eviction as 2020 ends.

But Trump's dithering and posing will still lead to issues for many people, even if they aren't going to be cut off of unemployment. Channel 27 in Madison had a story talking about the added difficulties some Wisconsinites may be going through this week.
Jennifer Gorman's Sunday routine since May has included filing a weekly claim for Pandemic Unemployment Assistance (PUA), a federal relief program for people unable to get traditional unemployment insurance through their state.

But on this Sunday, Gorman was unable to submit her claim. PUA benefits expired on Saturday, December 26, along with Pandemic Emergency Unemployment Compensation, a 13-week extension of federal benefits for people whose state unemployment benefits had run out.

While President Trump signed the relief packages approved by Congress, he waited nearly one week to do so. Over the course of those six days, PUA and PEUC expired. Gorman said when she want to apply for what she thought would be the last week of benefits, she instead got caught in a cycle on the Wisconsin Department of Workforce Development's website.

"It says you need to file an initial claim or re-open your claim. Once you click on that button to file an initial claim, it'll bring you to another page that says reopen your claim," Gorman said. "When you click on that button to reopen your claim, it brings you back to the other page that says you need to file an initial claim so it's just a back-and-forth, back-and-forth."…

It was unclear Sunday whether Gorman and others would get backpay for the past week and, if so, whether they would need to re-apply for the federal assistance programs.
In addition, if individuals have to start over in filing PUA (like if they had gig work during the Holidays and then lost it afterwards). And according to another provision of the stimulus package, if they end up filing in Feburary or March, they may need to supply additional documentation, which can cause even more delays.

•Effective January 31, 2021, requires new applicants for Pandemic Unemployment Assistance (PUA) to submit documentation to substantiate employment or self-employment within 21 days and provides for such deadline to be extended when an individual has shown good cause.
•Requires individuals receiving PUA as of January 31, 2021 to submit documentation to substantiate employment or self-employment within 90 days.
I assume the intent is to reduce the possibility of fraud, but this will likely trip up many applicants who will assume they can file claims the same way they used to. Then, when the Wisconsin DWD (or the equivalent in other states) asks for more information, they won’t have it readily available. And it'll take longer for them to receive their PUA benefits.

Another possible hangup in the new stimulus bill relates to the one-week waiting period for benefits. Wisconsin had this provision before the COVID World began, but got rid of it after the CARES Act had the Feds pay all of the cost of that first week. You may remember this coming up when the WisGOP Legislature took 3 weeks to pass the bill that adopted this CARES provision, which cost the state $25 million in federal funding.

Well, the new bill still gives an incentive to not have the waiting week, but it's only 50% of the cost, not 100%. In addition, if there is not another law passed by the WisGOP Legislature, the waiting week comes back after February 6. You can bet that one-week waiting period to get money would come as quite a surprise to people laid off after then.

And watch for WisGOP legislators to use these delays and confusing changes in laws as an excuse to blame the Evers Administration. Despite the reality that some of these items didn't become law until Trump got off the golf course on Sunday, and others will likely be due to WisGOP inaction/sabotage. Just another parting gift from the lowlifes, you know.
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Sunday, December 27, 2020

While Trump dithers on the golf course, a lot of Americans are staring into an abyss

Yesterday was a big deadline for getting a number of CARES-related provisions at extended, which would give needed security for a lot of Americans. I'm sure this greatly concerned our President, and made him burn the midnight oil to make sure his constituents were not left in the lurch. The relief payments that Americans are missing out only a small portion of the damage that is happening while Trump refuses to act. Remember that there are millions of Americans out of work that are not getting an additional $300-per-week through mid-March, which is a loss that could reach $3,300 for tens of millions of people that are likely to need support during a COVID winter.
And see those 14.8 million people in orange and green? Almost all of those people are cut off of unemployment benefits today due to Trump's inaction. That only covers the figures through December 5 (the last week we have for all forms of this data) - it is likely that the numbers are even higher today.

Another key area of assistance that won't happen if Trump doesn't act is a 15% increase in SNAP benefits, which is badly needed as 2020 ends. Trumpian inaction also means that there will not be another round of aid to agribusinesses, including specific help for dairy farmers that was included in the stimulus bill. Worse, the government will shut down if no agreement to fund operations is signed by the end of tomorrow, so no current agriculture assistance either.

If nothing is signed, there are potentially millions of Americans that are in danger of losing their housing by the end of the week, and Wisconsin is not immune to that danger as layoffs accelerate in our part of the country. Another cliff that looms is the ending of the enhanced Federal Medical Assistance Percentages (FMAP), which has allowed the Feds to cover an additional 6.2% of Medicaid costs since March. US HHS Secretary Alex Azar has extended the COVID emergency to January 21, which means the higher FMAP coverage goes until March 31.But if nothing is signed by Trump, it also means there is no extension coming past that date.

With unemployment already high and likely going up in the coming months, it seems likely that Medicaid rolls will remain high by the end of March, which means state governments are going to have to take on more of that burden just as they begin their 2021-23 budget work. Worse, one of the few areas where state and local governments were getting assistance in the stimulus bill was in funding for administering COVID vaccinations and treatment. So are they going to have to take on those costs in the coming weeks?

And perhaps even worse, Americans that are on Medicaid might not have their COVID vaccinations covered, according to the Feds.
...States must cover, under the state plan (or waiver), testing services and treatments for COVID–19, including vaccines, specialized equipment, and therapies, for any quarter in which the temporary increased FMAP is claimed.
So if there is no increased FMAP on March 31, there is no requirement to cover COVID-19 testing, treatments and vaccinations. Governor Evers has asked for the Department of Health Services to cover this, as part of his latest COVID coverage bill, but current Wisconsin law (as laid out in the bill passed in April), only allows free testing through March 13, 2021.

That's a problem, given that a lot of Wisconsinites are not likely to be vaccinated by March 13. Which means that paying for COVID vaccinations, the costs of testing and the costs of distribution (and deciding who pays them) is something that will have to be hammered out at the start of the Biden Presidency.

But the current president has other priorities, and methods of "law-making". As I said last week, maybe we should stop electing politicians who care more about making noises in the media and in making every action based on their personal fee-fees over in making things better for their constituents. Just a thought.
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Saturday, December 26, 2020

Population growth grinds to a halt in 2020. Especially in the Midwest

Between the Holidays, the stimulus and the potential shutdown that's coming, you might have missed a remarkable release of data showing another reason 2020 is an extraordinary year in America.
The U.S. population grew by the smallest rate in at least 120 years from 2019 to 2020, according to figures released Tuesday by the U.S. Census Bureau — a trend that demographers say provides a glimpse of the coronavirus pandemic’s toll. Population growth in the U.S. already was stagnant over the past several years due to immigration restrictions and a dip in fertility, but coronavirus-related deaths exacerbated that lethargic-growth trend, said William Frey, a senior fellow at The Brooking Institution’s Metropolitan Policy Program.... The U.S. population grew by 0.35% from July 2019 to July 2020, an increase of 1.1 million people in a nation whose estimated population in July was more than 329 million residents, according to Census Bureau estimates. An analysis by Frey shows that it's the smallest increase this century and smaller than any in the last century as well. At the height of the Spanish flu, the growth rate from 1918 to 1919 was 0.49% — even with U.S. troops abroad during World War I. The Northeast and Midwest regions of the U.S. had tiny population declines from 2019 to 2020, while the South and West regions had slight increases.
Now this estimate isn't going to be a neat 1-for-1 match to the US Census figures that are due to be released in the next week, but it gives you a prety good idea, and Election Data Services used these new figures, and also projecte back to the April 1 numbers that the Census is based on, to see which states might gain or lose seats in the House of Representatives as maps get redrawn ahead of the 2022 midterms.
You'll notice that Wisconsin is one of the few states in the Midwest not projected to lose a seat in Congress after this year. If you go into the state-by-state estimates, it shows that we were not growing by great numbers ourselves, as we were not immune from the slowdown in population growth that happened last year or the last 10 years.
Wisconsin had enough cushion going into the 2010s to not be in danger of losing a seat, which helps explain why they are able to keep 8 seats in the House for the next decade, while Minnesota will lose one. This is despite the fact that Minnesota gained many more people in the last decade than we did, as they cut the gap in residents between the two states by 236,000 over the last 10 years.
But while we were significantly outpaced by Minnesota, Wisconsin outgained the other states it borders over those 10 years. Illinois in particular lost a lot of people over the last 7 years, and Michigan is also estimated that have lost people in 2019 and 2020.
The stagnant (and in some places) declining population of Wisconsin and the rest of the Midwest is going to put a significant lid on the level of growth that can happen as the 2020s proceed. And with COVID deaths increasing since the July 1 date of these estimates, it is not inconceivable that we see even more places drop in population for next year, increasing disparities that caused the US economic recovery to be quite uneven in the latter half of the 2010s.

And if we don't reverse the record level of US deaths for 2020, increase birth rates (good luck on people in their 20s and 30s wanting to bring more kids into THIS world) or make America more attractive for immigrants than it was in the Trump era, then this country will also have limited growth. And that's not even accounting for who will (or won't) get those gains.

Let's see if the full Census figures get releaed next week, and if they match up with the estimates that we saw come out this week. Then watch the appeals, complaints and gerrymandering attempts follow!
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Thursday, December 24, 2020

While COVID cases decline throughout Wisconsin, deaths stay up and testing stays down

While the rest of the country continues to set notorious records for new COVID cases, Wisconsin has seen its level of new positive tests go down in December. While we are still at levels that weren't reached until October, the number of new cases reported has gone down for each of the last 4 weeks.
And the trend of fewer cases seems to be showing up throughout the state. The 3 largest counties are still at elevated levels, but are definitely going down.
Northeastern Wisconsin and the I-41 corridor had some of the worst COVID outbreaks in the country last month, but the numbers are finally seeming to subside.
And counties with large UW on-campus populations are also seeing the numbers go down as the semester winds down.
BUT, there's a big caveat in all of these numbers, which is that testing totals have gone down. Maybe that reflects people not showing symptoms and not feeling they need to take a test, but the number of people being tested has also plummeted in the last month. This means that the rate of tests turning up positive aren't much lower at all.
And the major spike in cases for November continues to be reflected in a higher number of deaths, which are still happening at a rate of 60-70 a day in Wisconsin, with a record of 120 reported on Tuesday (which is the after the time period of this chart).
You put this together, and it tells me that by mid-January, we'll get a better idea if the COVID situation actually is improving in Wisconsin. If people are smart over the Holiday season, and cases keep falling, then we might be coming out the other side in a good way. But if deaths don't fall like the new cases numbers have in the last month, then it seems more likely that the decline in cases reflects a lack of testing more than a lack of infections, and an already-dreary COVID Winter will become even darker.
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Can we get leaders that actually care about details and lawmaking?

Here's something you should remember when you hear Trump/GOP start crying about the level of foreign aid that's in the budget/stimulus bill. This is why it's a bad idea to have a President who's never held a "job" that went beyond giving orders and doing PR stunts. And by the way, there might be no real policy reason Trump is throwing a monkey-wrench into the budget/stimulus bill. Like most things, it may be simple spite. And as Trump hides in his bunker and then runs off to Florida vs doing the actual work of legislatin', millions of Americans are seeing their unemployment benefits expire on Saturday. Happy Holidays, all!

Knowing policy might not get you much air time on AM radio or cable news, but it's kind of important if you're in the lawmaking business. Maybe we should care about that when we consider our votes. Just a thought.
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Wednesday, December 23, 2020

As 2020 ends, Wisconsin's jobs recovery has stalled out, and there's a huge hole to fill

I was going to give a mention to how the jobs situation has developed in Wisconsin as the COVID Winter has closed in. And then the Journal-Sentinel beat me to it.
"The recovery has been losing steam over the past several months; employment increased by over 170,000 during May and June but we've only gotten back another 75,000 since then," Ryan Long, labor market economist for the state Department of Workforce Development, said in an email. "Total employment in the state is actually down by 16,000 since September."
And while, you may have heard that unemployment dropped from 6.0% to 5.0%, I’m not going to buy that large drop over the courswe of one month. Especially since the drop was driven by a 22,700 decline in the labor force, which covered for a decline in employed Wisconsinites by nearly 10,000.
Now, the decline in Wisconsin's unemployment rate from 5.4% to 5.0% between September and November might reflect reality, because it seems to represent a normality that levels out a big labor force increase in late Summer. It also indicates that there's still a lot of slack in the work force, with unemployment rate is far worse in some parts of the economy compared to others.

In Wisconsin, the two-sided nature of the economy is even more apparent. There actually has been job growth in construction in our state over the last year, and about half of the state’s manufacturing’s losses in the early part of 2020 have been recovered, with a sizable jump of 4,200 jobs recorded in November.
But the state has seen heavy losses in bars and restaurants, and state and local governments have also seen cutbacks.
November already indicated that the jobs market was stalling out, but the next jobs report that drops in a couple of weeks will likely be more alarming.
"The bulk of the impact from the most recent spike in COVID cases will show up in the December data, which will likely be dragged down further by the lack of hiring at retailers and renewed shutdowns at restaurants and entertainment venues," [Marquette econ professor Abdur] Chowdhury said. Concerns are widespread. “Before trends improve on both the pandemic and the economy, we’re in for a rocky ride," said Mark Hamrick, a senior economic analyst at bankrate.com. "Data on jobless claims and retail sales raise alarm about the near-term outlook."
While new jobless claims did fall by a seasonally adjusted 89,000 last week, the figure was still above 800,000 for the 3rd straight week after being below 800K for the 7 weeks before that. And a decline in both incomes and consumer spending for November gives serious warning signs about the Holiday shopping season in sectors that have already taken a lot of hits in 2020.

This is why I think we're in an arguably more dangerous economic situation than we were in as COVID first broke out this Spring. We could comprehend a lockdown of 6-8 weeks, save money, and then rely on a good amount of the jobs coming back as stimulus kicked in and people headed back out to spend money.

But in Winter 2020, we're now seeing that many jobs in certain service sectors are never coming back, people are still social distancing, the stimulus is much less (if it even happens at all), and COVID is as pervasive as ever. So how does Wisconsin get back the 227,000 jobs that we are still down compared to where we were in February?
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Monday, December 21, 2020

A few notes on the stimulus/survival bill

I took a look at the summary of the stimulus part's provisions, but I am NOT going to read the 5,600-page total bill (you can click here if you feel the motivation to check it out).

As unemployment claims continue to pile up and increase as Winter comes, the bill has a $300 a week enhancement would begin next week. But it is NOT retroactive, and would only go through March 14. That might get some people through the next 3 months, but as the Washington Post's economics writer notes, there will still likely be many people yet to vaccinated by that point, and many still out of work when that bonus runs out.

But at least millions of Americans won't be cut off, as the bill continues unemployment programs that were slated to end on Saturday.
Extends Pandemic Unemployment Assistance (PUA) to March 14, 2021 and allows individuals receiving benefits as of March 14, 2021 to continue through April 5, 2021, as long as the individual has not reached the maximum number of weeks.
•Increases the number of weeks of benefits an individual may claim from 39 to 50.
•Provides for appeals to be at the state level.
•Provides states authority to waive overpayments made without fault on the part of the individual or when such repayment would violate equity and good conscience.
•Provides a transition rule for certain individuals transitioning between PUA and the Pandemic Emergency Unemployment Compensation program.
•Limits payment of retroactive PUA benefits to weeks of unemployment after December 1, 2020.
However, there's a provision about PUA that's likely to cause even more barriers to benefits for applicants, and paperwork for workers at the Wisconsin DWD. You're also likely aware of the $600 payments, which are per person (so $1,200 for a couple), and then another $600 for each "qualifying" child. Not exactly enough to pay the rent, and nothing compared to what we could be doing for people in need (and others), but I'm not going to turn it down.

But hey, unlike unemployment, at least you don't have to apply to get the checks! On the spending side, here's a good summary of the big toplines, and then I'll go into a few more. While there isn't a formal pot of money being given to state and local governments, the money for child care providers is a block grant, and the $25 billion in rental assistance is intended for state and local agencies. renters, and the CDC's eviction moratorium is extended to January 31.

On the education side, CARES programs that assist schools are going to continue, with about half of this $163 billion being in the form of "flexible funding" to governors and other non-federal officials to help schools cope with the COVID World, and the other half being set aside in specific programs for K-12 schools and higher education.

With hunger becoming an increasing concern, this stimulus gives $11 billion in additional farm supports, a bump of 15% in SNAP benefits through June 30, $400 million to pay dairy businesses to send products sent to food banks and other hunger programs (seems noteworthy to bring that up in Wisconsin) and more money for other smaller agriculture and nutrition programs.

As to aid to businesses, there's a provision that mirrors one that Gov Evers did at the state level in Wisconsin, targeting funds for entertainment businesses that have been especially hammered in the COVID World.
Authorizes $15 billion for the SBA to make grants to eligible live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, or talent representatives who demonstrate a 25 percent reduction in revenues.
In addition to the transit aid, there's also $15 billion in extra aid for airline workers (which are passed through by the airlines), and $1 billion for airline contractors. It looks like the airline aid requires them to call back employees that had been furloughed and/or not laid off through the COVID-related slowdown in travel, and keep the same amount of service that they had before COVID drilled the industry.

But one hard-hit sector that isn't getting anything is bars and restaurants, who will now have to try to survive a COVID Winter without specific aid. Instead, those businesses and others will be pushed into applying for a second round of PPP funds. On a positive note, small businesses that already got PPP to be able to get another loan of up to $2 million if they lost 25% of business in 2020.

And there is also an expansion of what business owners can write off, including additional software, PPE to meet new regulations, supplier costs, and "property damage due to public disturbances that occurred during 2020 that are not covered by insurance" (which one of these is not like the other?). But that's only going to go so far, and will take a while to get out to the people that need the PPP help.

So at first glance, it at least is something in a time when tens of millions of Americans are still suffering. But the short time frame of many of the programs along with one-time checks of $600 aren't going to be enough to get us out to a post-COVID World. Which means more is going to be done in order to keep any growth going, or to stop us from falling (further?) into recession before Spring.

There's more to break down as we go along, but that's the main stuff that jumped out at me, and feel free to chew on plenty more as this 5600-page bill flies its way through Congress.
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Saturday, December 19, 2020

Sen Johnson's fiscal (Mo)Ronity says $1,200 is too much for us

Ron Johnson at it again, folks.
Johnson objected to the vote. Under Senate rules, one senator objecting to Hawley’s motion, which required unanimous consent, is enough to block the vote from moving forward.

The Wisconsin senator cited rising deficit concerns and criticized Hawley and Sander’s bill for repeating stimulus checks under the CARES Act, which were sent out when the job market was in worse shape. Millions of jobs have since recovered, he noted.
And almost just as many millions of jobs have not been recovered, RoJo.
Side note - why do we have these idiotic rules in the Senate where 1 dimwit can hold up a bill for days? And where the "districts" are based out of boundaries that were set 200-250 years ago in random places, with no accounting for how many PEOPLE might live there? But I digress...

Here's more of why Sen. Johnson blocked a vote on the $1,200 payments.
Under the CARES Act, around 160 million Americans received a stimulus payment, totaling over $270 billion out of the $2.2 trillion relief package passed in March.

“Anything we consider for this additional package [...] ought to be far more targeted,” Johnson said from the Senate floor on Friday. “We are mortgaging our children's future. I think we need to be very careful about mortgaging it further when we aren't doing it in a targeted fashion.”
This is where I remind you that Ron Johnson had no problem with "mortgaging our children's future" when he backed the GOP Tax Scam of 2017. Not only did Johnson vote for the Tax Scam, he insisted on adding a provision that gave a huge write-off to companies like the plastics business his father-in-law gave to him. Then put it another grift gift to himself when he sold off some of that business a few months later.


A US Senator that actually knows something about economics and the US budget called out (Mo)Ron's idiocy on the Senate floor right after RoJo shot his mouth off.
Hey WisDems, you taking notes on this? You might want to spend a few of those millions you got in 2020 to remind the typical low-info Wisconsin voter about what a callous fool their Senior Senator is.
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Friday, December 18, 2020

More evidence that a lot of sectors still haven't come back in the COVID World

It’s a relatively mundane report from the Census Bureau, but I think the list of “Selected Services Revenue” tells you just how much we’ve lost in 2020, and how widely different the effects of the COVID World has been in certain sectors of our economy. As you can see, there are industries that still had revenues be down 30-70% in September 2020, before COVID made its most recent surge which led to further shutdowns and limitations. But if you're in software and delivery services, things are better than ever.
You can also see these disparities in November's retail sales report, which dropped on Thursday and showed that an already-shaky situation in brick-and-mortar retail was getting worse.
Advance estimates of U.S. retail and food services sales for November 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $546.5 billion, a decrease of 1.1 percent (±0.5 percent) from the previous month, but 4.1 percent (±0.7 percent) above November 2019. Total sales for the September 2020 through November 2020 period were up 5.2 percent (±0.5 percent) from the same period a year ago. The September 2020 to October 2020 percent change was revised from up 0.3 percent (±0.5 percent) to down 0.1 percent (±0.2 percent).
Very bad sign for the Holiday shopping season that so many brick-and-mortar types of stores rely on. The declines in the last 2 months were especially severe in the types of stores that used to be the places where people would do their Holiday shopping at the mall.
And while overall retail sales are higher from where we were this time last year, a retail sector may be much worse or better than they were in late 2019, because of how buying habits have changed in the COVID World.
But you know what's going gangbusters as 2020 ends? Stuff that richer people can buy to enhance their wealth. While many retail areas flail, we're in a Bubbly home construction boom.
Housing starts rose 1.2% to a seasonally adjusted annual rate of 1.547 million units last month, the Commerce Department said on Thursday. That lifted homebuilding closer to its pace of 1.567 million units in February. Economists polled by Reuters had forecast starts holding steady at a rate of 1.530 million units in November. Homebuilding surged 12.8% on a year-on-year basis.

Permits for future homebuilding raced 6.2% to a rate of 1.639 million units in November. Permits typically lead starts by one to two months.

Single-family homebuilding, the largest share of the housing market, rose 0.4% to a seasonally adjusted annual rate of 1.186 million units, the highest level since April 2007.

Single-family starts have increased for seven straight months. The housing market is defying slowing economic growth, thanks to pent-up demand and historically low mortgage rates. Recent data have shown a moderation in the labor market and consumer spending half-way through the fourth quarter as the country battles a fresh wave of Covid-19 cases.
And while jobless claims reached their highest levels in 3 months on Thursday, main indexes of the stock market reached record highs on "optimism" regarding a (pared-back) stimulus and hopes that things will recover in 2021 after Americans get vaccinated.
This situation feels ominous for 2021. Not only will the reduced spending and increased layoffs in several service sectors be a significant headwind, but you gotta think that at some point eveyrone will have gone into their new home, with little demand left to keep up this level of production. And any confidence boost from a COVID vaccine is likely to be counteracted by the fact that A LOT OF PEOPLE HAVE NO MONEY AND NO SECURITY.

We can't continue with a country where the economic realities are so different for groups of tens of millions Americans. You can already sense the seething anger as stimulus talks drag on, and many are going to (rightfully) demand for those who have thrived in COVID World to give redirect some of the gains they've been able to grab while so much of the country has been suffering.
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Thursday, December 17, 2020

Unemployment claims make a comeback while stimulus stagnates

As Congress continues to discuss stimulus possibilities, more Americans are getting laid off as Winter deepens. One week after a jump in new unemployment claims by a seasonally-adjusted 144,000 (and 238,000 overall), the number went even higher in the 2nd week of December.
The number of Americans applying for unemployment benefits rose again last week to 885,000, the highest weekly total since September, as a resurgence of coronavirus cases threatens the economy’s recovery from its springtime collapse.

The Labor Department said Thursday that the number of applications increased from 862,000 the previous week. It showed that nine months after the virus paralyzed the economy, many employers are still slashing jobs as the pandemic forces more business restrictions and leads many consumers to stay home. The number of claims was much higher than the 800,000 that economists had expected.

Before the coronavirus erupted in March, weekly jobless claims had typically numbered only about 225,000. The far-higher current pace reflects an employment market under stress and diminished job security for many.
We also saw a rise of 40,000 in new claims under the PUA program, which is intended for gig workers and others who can’t get “regular” unemployment benefits. Put that together, and there are a whole lot of Americans that were filing claims last week. It’s especially alarming to see PUA rise, because that program is schedule to expire after next week unless an extension can be agreed to in a stimulus package (which still hasn’t been formally released as of Thursday night). Another 5.5 million that were receiving regular unemployment benefits for more than 26 weeks are also in danger of being cut off.

This chart reflects the number as of the end of November, the last date for continuing claims data for all of the large-scale unemployment programs. And you can see a jump of 1.3 million people that were receiving benefits in the week of Thanksgiving.
Interestingly, Wisconsin had an improvement in its figures last week, as new unemployment claims in our parts dropped back to 14,478 after jumping to 21,700 the week before. Continuing “regular” claims also went back below 100,000, declining by more than 7,400 and getting under 97,000.

But we also found out that Wisconsin has more people at risk of being cut off in 9 days, including more than 4,000 additional Sconnies filing PUA claims, and more than 5,000 individuals going on the 26-39 week PEUC program. Most shockingly, the number of Extended Benefits (EB) claims in Wisconsin rose from 21 to more than 10,800 in 1 week, reflecting those receiving benefits for more than 39 weeks.

That jump in EB came in the last week in November, and seems to coincide with the Wisconsin Department of Workforce Development notifying the public that long-term unemployed individuals could file for EB. The problem is that Wisconsin fell off the EB program last month, which means that these claims only reflect weeks up to the start of November. And if no stimulus gets through, you're looking at 111,000 claims that would not get paid after next week. Combine that with the end of expanded food assistance benefits, and the prospect of plans changing if those individuals got their insurance through Obamacare, and it’s a scary time for a whole lot of people in the state.

While a large number of his constituents are in peril, what is Wisconsin’s Senior Senator concentrating on? And what are the members of our gerrymandered State Legislature up to at the same time, when the states are facing extra burdens and costs to keep their residents afloat? Way to have things in perspective during the Holiday season, guys.
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Wednesday, December 16, 2020

Unemployment audit shows Wisconsinites deserve better. Both WisGOP and Evers need to do better

Today featured a hearing at the state's Joint Audit Committee on how the Department of Workforce Development handled the huge jump in unemployment claims that came with the outbreak of COVID-19. Given that many Wisconsinites had to wait several weeks to receive their unemployment benefits, there was plenty for legislators (especially GOP legislators) to complain about.
Department of Workforce Development Transition Director Amy Pechacek sat before the Joint Legislative Audit Committee, in regard to this week's audit and two others that probed the department's operations...

"It is clear to me that the operational challenges at UI (unemployment insurance) have grown over time," she said in a prepared statement. "While the dedicated staff were able to work around these issues during times of stability, the impact of the COVID-19 pandemic on our state has exposed long-standing challenges that proved too much to overcome in the timeframe needed to best serve the people of Wisconsin."

Pechacek took over the DWD in late September after then-Secretary Caleb Frostman was fired by Gov. Tony Evers.

The audit this week found the department sent the majority of unemployment claims into adjudication, while they determined each applicant's eligibility. In most of those cases, the department either had the information needed to process the claim or failed to request it from the previous employer or the applicant themselves.
No, not good. And even though the LAB audit on unemployment claims says that the huge backlog that started in March has gone down, there are still people waiting weeks if not months for their funds, and some are appealing their denial of benefits.
We determined the average number of days that DWD took to pay initial claims for regular program benefits that individuals filed from the week of March 15, 2020, through the week of August 30, 2020. We excluded claims filed in subsequent weeks because it is likely that insufficient time had lapsed for DWD to pay a number of these claims. Our analysis includes only those claims that DWD had paid as of October 10, 2020. As of October 10, 2020, DWD had paid 493,504 of the 662,731 individuals (74.5 percent) who had filed initial claims for regular program benefits since March 15, 2020. DWD paid 53.2 percent of initial claims in two calendar weeks or less, but it took more than five weeks to pay 24.7 percent of these claims.

As shown in Figure 2, the average amount of time that DWD took to pay regular program benefits for initial claims filed in August 2020 was considerably less than the average amount of time it took to pay benefits for claims filed in March 2020. DWD took an average of 39.5 days to pay benefits for initial claims filed during the week of March 29, 2020, and an average of 8.5 days to pay benefits for initial claims filed during the week of August 30, 2020.
We found that DWD placed into adjudication the initial claims of 514,026 of the 662,731 individuals (77.6 percent) who filed claims from March 15, 2020, through October 10, 2020. DWD may place a given claim into adjudication because of multiple issues. As of October 10, 2020, 96,623 of the 514,026 individuals (18.8 percent) still had initial claims in adjudication….

DWD’s program adjudicators resolve claims placed into adjudication. To help resolve the large number of claims placed into adjudication beginning in mid-March 2020, DWD hired additional adjudicators, temporarily reassigned staff from other DWD divisions and other state agencies to work as adjudicators, and contracted with a firm to provide staff to work as adjudicators. As shown in Figure 3, the total number of adjudicators increased from 175 during the week of March 15, 2020, to 563 during the week of September 20, 2020.
While acknowledging the increased staff, LAB pointed directly at DWD as being at fault for why Wisconsin workers did not receive benefits in a timely manner. LAB looked at a sample of 268 Wisconsinites that filed their first claims in March or April 2020, but hadn't been paid as of late June. The LAB said that 250 of those cases had been resolved as of November, but that a lot of the reason for the delays were that DWD workers and officials didn't make decisions and act on unemployment claims when they had a chance to do so.
We estimate that DWD was responsible for 11.0 of the 13.0 weeks (84.6 percent) that it took, on average, to resolve the initial claims of the 250 individuals. For example, DWD was responsible for time that elapsed before it requested information it needed from individuals and employers, and for time that elapsed after it had the information necessary to pay or deny program benefits but did not do so. In contrast, DWD was not responsible for time that elapsed while it waited for individuals and employers to provide information it had requested....

DWD had not resolved issues even though it had the information to do so, and an average of 5.5 weeks elapsed for each such instance;
DWD had not requested information it needed from individuals, and an average of 6.5 weeks elapsed for each such instance; and
DWD had not requested information it needed from employers, and an average of 8.5 weeks elapsed for each such instance.
This gave legislative Republicans the opportunity to hammer on Governor Evers, as the guy ultimately in charge of state operations. For that last one, Bertie DAHHH-ling might not be the best authority on what was going on at DWD. But I digress. Part of the reason for the backlog is that there was a mountain of new unemployment claims that started to hit in March, and they are still quite a bit higher at the end of 2020 than what we had at the start of 2020.
And DWD did ultimately hire up, which helps explain the drop in the amount of time that it took for Wisconsinites to get benefits.
It's still not great, but it's helping. And let's be honest here - WisGOPs would never have accepted a large increase in DWD staffing or investment in technology until so many of their (white) constituents started to be put in dire straits because they couldn't get their benefits.

Of course, let’s not forget that as the unprecedented levels of claims were being filed online and followed up on via phone,and new programs like PUA and the 26+ week unemployment benefit package were getting rolled out, DWD was getting slammed with calls before they had the time to staff up to deal with all of these sudden demands. And they weren't getting much guidance given from the Feds, or time to carry them out.

While DWD and out-of-work Wisconsinites continued to struggle, the gerrymandered State Legislature didn’t lift a finger to actually try to pass anything that might remove barriers or speed the process along, and instead chose to go on an 8-month paid vacation. In fact, it was the WisGOPs who put numerous barriers in place to make applicants jump through hoops to get benefits and DWD staff have to do extra investigation and follow-up instead of merely handing the money out first and then checking back later if the details were sketchy and/or didn't add up.

That’s not to say that there weren’t serious lapses at DWD – it's not acceptable to wait that many weeks to get benefits, regardless of the situation. Once hundreds of thousands of Wisconsinites were getting laid off each week, getting the money out the door on routine cases should have become the first priority over wasting time on paperwork where boxes were checked as proof certain safeguards were made. It also illustrates the difficulty of having to put a number of specific circumstances into figuring out how it fits under a blanket of rules.

The buck ultimately stops with Evers, and while I think he has handled some parts of the response to the COVID recession very well (particularly in saving funds for later so that they could be used in Fall and Winter as the Feds dithered, and then giving aid to hard-hit industries like restaurants, hotels, and live music venues), keeping large numbers of Wisconsinites from benefits was a mess that needed to be mitigated sooner than it was.

But let's also admit that many of those delays were the direct result of WisGOPs putting in rules against unemployment "fraud" in a transparent racially-tinged attempt to stir up resentment among rubes. Which is why I found myself viscerally angry at the cheap shots being levied by dishonest WisGOPs today.

Because WisGOPs don't really care about fixing the problem, or in running government more efficiently or effectively. They just want to make Evers take the blame for the pain that their bad policies of the 2010s led to in 2020. And I don't expect them to put out any kind of solution in the next 2 years that will make things easier for laid-off Wisconsinites to get the benefits they are entitled to.
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Tuesday, December 15, 2020

Giannis will keep getting his Freak on in MKE

I was planning to go into economic/policy stuff today, but around 12:30, something big happened in Wisconsin. 5 years, $228 million to stay in Wisconsin, between the ages of 27 and 31. Wow.

It's a game-changing move for the Bucks to keep 2-time league MVP Giannis Antetokounmpo, and not just for the NBA (many teams based their plans and salaries in the hope the Bucks could not sign Giannis, making him become a free agent in Summer 2021). It also feels like a big boost for the Bucks franchise and the City of Milwaukee, as both were frequently shrugged off by Coastal media as "small-market", which media said would somehow lessen the team's chances of keeping Antetokounpo because it allegedly wasn't as glamorous to play in the Cream City as other places.

But this ignored some realities. The first being that the Greek Freak didn't go through the AAU-and-college circuit that the typical American superstar basketball player does. Milwaukee is the city that hosted Giannis when he came to America as a 19-year-old draft pick, so I don't think the thought of "greener pastures in NYC/LA/Chicago/Miami" is as relevant to him.

Maybe this is being naive, but Giannis legitimately seems to be the kind of guy who just wants to play ball and WIN. And be able to be around his family without a lot of hassle. In a way, I think Milwaukee's smaller-city status worked in its favor here. There aren't TMZ-style tabloid photogrpahers around every street corner, and a major athlete can get around town without having mobs of people running up to him. Obviously, a 7-foot Black man isn't going to able to be anonymous walking down the street, but it's never seemed like superstars such as Ryan Braun, Christian Yelich, or Aaron Rodgers have had to deal with the type of craziness that kept Michael Jordan in his hotel room in most cities in the 1990s (if you watched "The Last Dance", you know what I'm referring to).

And it's not like Giannis is lacking for major endorsement dollars playing in Milwaukee, given the national/international way that NBA stars are marketed. He earned a reported $28 million in endorsements in 2019, and Nike has given Giannis his own campaign and shoe line.

In 2019, Antetokounmpo made more from endorsements than he did under his Bucks contract. That's not going to be the case in the future, as Giannis is going to get a significant pay increase under the league's Designated Veteran Player Extension (DVPE, aka a "supermax contract"). Under this rule, Milwaukee had an edge on other teams because Giannis could make the most money by staying with the Bucks, and he is one of only a handful of players to qualify for the supermax, as this greater explainer from The Athletic describes.
The DVPE enables the NBA’s best players to earn the league’s largest possible contract values earlier than usual. After 10 seasons, NBA players can earn 35 percent of their team’s salary cap with 8 percent yearly raises. Opposing teams can offer just 30 percent of their team’s salary cap with 5 percent raises. The DVPE allows teams to give their best player the 35 percent max with 8 percent raises after just eight seasons instead of 10 seasons, if the player has done each of the following things:

• Been named to an All-NBA team or defensive player of the year in either the most recent season or two of the three most recent seasons or won NBA MVP in any one of the prior three seasons.
• Completed seven or eight seasons when the extension is executed.
• Spent those years of service on the team he signed his first contract with or joined the current/offering team during the first four years he was under contract.

While teams can offer a variety of other extensions to their own players, the DVPE has a special set of rules that will become particularly important for this offseason. Antetokounmpo can only sign the DVPE between the start of the next fiscal season and the day before the start of the regular season, a detail wrote into the CBA to avoid the league’s best players getting subjected to constant badgering to sign the extension during the season.
And that deadline was what made the topic of "will Giannis sign an extension?" such a big topic this month, as the NBA season starts one week from tonight. Now that question is answered.

I also caught ESPN's Adrian Wojnarowski talking about how Giannis passed up the chance to have a higher rate of take-home pay if he had signed with teams in states like Texas and Florida that don't have a state income tax. But go back to those Supermax rules, and then project the "35% of salary cap and 8% raises" numbers, and look at what Antetokounmpo is going to make. Now compare that to "30% of $112.4 M salary cap and 5% raises, and it looks like this.

2021-22 $33.7 mil (-$5.6 mil vs MKE)
2022-23 $35.4 mil (-$7.1 mil)
2023-24 $37.2 mil (-$8.5 mil)
2024-25 $39.1 mil (-$9.7 mil)
2025-26 $41.0 mil (-$10.9 mil)

Wisconsin's top marginal income tax rate is 7.65%, and in reality, the actual % tax as a rate of income will likely be closer to 6% for the highest earners in Wisconsin. If you assume a 6% tax bill in year 1, that's $2.36 million, well below the $5.6 million in extra income that Giannis was able to get for staying in Milwaukee. Even take out 37% extra federal taxes on that amount, and that's still $3.5 million extra being taken home in year 1, with that gap growing higher in future years. So the argument of "lower taxes in other places" as an incentive doesn't fly in this situation.

But at a certain point, how much more money do you need? Which goes back to my earlier discussion about Giannis - what place would allow him the best chance to play ball, be with his family, and WIN? When you look at it that way, and combine it with the financial incentives, and it makes sense that Giannis chose to stay in Milwaukee.

I opposed the local and state subsidies that went into building the FiServ Forum for the Bucks a few years ago, and I'd still argue that there are many better uses for tax dollars in the state's largest city than pumping it into that development (especially in a year of over 200 homicides in Milwaukee).

But at the same time, it's unlikely that Antetokounmpo stays in Milwaukee if the enhanced money-making abilities of the FiServ aren't there. And it's going to be pretty damn cool to be seeing a lot of this in my state over the next 6 years.
So now that the Freak is locked up, it's time to get an NBA title back in Milwaukee for the first time in 50 years. With actual playoff games in Milwaukee this year as well!
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