Wednesday, July 24, 2024

Famliar sights, good things, and not-so-good things

Well, looks like we've got a sure sign that we're on the back half of the Summer. And that some things are still normal.

Also things weren't so bad south of the border.

But then we also get reminded not to get too happy-clappy, and that things will never be as easy as they seem.

Just keep finding a way, Crew. Find a way.

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Tuesday, July 23, 2024

Wisconsin Number 1 for wage growth in the last year?

I had mentioned that things are going well in Wisconsin's job market. But I didn't know that we were having the best wage growth in America?
Gov. Tony Evers, together with the Wisconsin Department of Workforce Development (DWD), today announced Wisconsin ranked first in the nation for inflation-adjusted hourly earnings growth during February, March, and May 2024, and second in the nation during April, according to the preliminary data on private sector worker earnings released by the U.S. Bureau of Labor Statistics. The news comes as, last week, Gov. Evers and DWD announced preliminary data show Wisconsin hit its second consecutive monthly record for employment.

“Whether we’re looking at our nationally top-ranked wage growth, our record-high employment, or our strong workforce participation, it’s clear that Wisconsinites are working and working hard, and our economy continues to have positive momentum,” said Gov. Evers. “We’ve made it a priority to build a strong 21st-century workforce to support a strong 21st-century economy, and it’s making a difference for working families across our state. This accomplishment reflects not only the dedication and resilience of our employers and our workforce, but it also shows that together we’re building a more prosperous future for our state.”

For February, March, April, and May, year-over-year statewide earnings growth totaled 7.9 percent, 6.4 percent, 4.4 percent, and 6.2 percent, respectively, based on data from the U.S. Bureau of Labor Statistics’ Current Employment Statistics (CES) program and the Consumer Price Index. The CES survey covers hourly earnings by workers at private sector establishments.

Statewide, the average hourly earnings for May 2024 totaled $33.76. The Milwaukee-Waukesha-West Allis area led the state with average hourly earnings of $34.97, followed by Madison at $34.48 per hour and Eau Claire at $31.63 per hour.
I'm trying to find the data table, which seems to be derived from the Occupational Employment and Wage Statistics (OEWS), which get compiled by the Bureau of Labor Statistics. But the last thing they have published is from May 2023 for Wisconsin's metro areas and the state as a whole.

UW-Madison Professor Menzie Chinn has a similar story up on Econbrowser, but it's got a longer-range view, which shows that inflation-adjusted average wages had slipped after the end of the COVID pandemic, and only the rally in the last year has allowed real wages to exceed pre-COVID levels.

You wish the early 2020s hadn't seen the erosion that it did. But there's no doubt that as inflation has gotten under control in the last 12-18 months, Wisconsin's workers are seeing gains in their pay, and it seems like we should try to keep these good times going as best we can.
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Sunday, July 21, 2024

Thank you Mr. President. Now LET'S BEAT THE BAD GUYS

Well, there is this.

And then this.

That's what had to be done, Mr. President. It's not fair, but sometimes the voters aren't going to reward good results, and aren't going to latch onto you no matter what you say or do. And to be honest, Jpe Biden only got nominated in 2020 because calls from the big wigs were made telling many of the other Dem candidates to drop out endorse him (including Kamala Harris), Most Dem voters went along with it so we could get on with the business of beating Trump.

So the shoe went on the other foot here, where the big wigs and insiders told Biden to get out to improve the chances of beating Trump. And I assume Biden's immediate endorsement of VP Harris was part of the deal that was made. Don't fuck around in Chicago, just do the right thing and agree to back Harris, pick a good running mate, and get back to the mission at hand.

Do that, and the whole "senile old white man who is cringy to watch" factor now lies with Trump. MAGAts may not care about that, but the other 2/3 of America likely will, and have it be part of their voting calculations. Throw in a heavy dose of Project 2025 talk, and the inevitable racist/misogynist BS that will tick off anyone with a drop of decency, and I think the Dems chances of winning at all levels in November just went up by quite a bit.

LET'S DO THIS.
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Friday, July 19, 2024

June Wis jobs report - things are really good

Right before Donald Trump spoke in Milwaukee on Thursday night, we got a big Wisconsin jobs report for June.
Place of Residence Data: Wisconsin’s unemployment rate remained at 2.9 percent in June, 1.2 percentage points below the national rate of 4.1 percent. Wisconsin’s labor force decreased 100 over the month and increased 4,000 over the year. The number of people employed increased 600 over the month to a record-high 3,048,600 employed.

Place of Work Data: Total nonfarm jobs increased 9,400 over the month and increased 30,900 over the year to a record 3,048,000 jobs. Private sector jobs also increased, adding 6,700 over the month and 25,100 over the year to a record-high 2,639,000 private jobs.
In addition, 1,200 of the seasonally-adjusted loss of 1,500 jobs in May was revised away, so this is a net gain of 10,600 jobs over the last state jobs report.

And it was largely good news throughout the report. Construction gained 900 jobs and 500 were added in manufacturing, meaning there was even more people added in those sectors than you usually get in June. Professional and Business Services had a large increase of 4,100, and leisure and hospitality also had higher than normal Summer hiring (+1,600 on a seasonally adjusted basis, and +17,200 in raw numbers).

State government also contributed 3,800 jobs to the June gains, but that comes after 4,600 jobs in that same sector were lost in May. Both seem related to the fact that UW schools let out earlier than normal, meaning jobs were “lost” earlier than the models would anticipate, and then come back as “gains” as June. Still a net loss of 800 in state government over the 2 months, but no biggie either way.

For the household survey, it continued a trend we’ve seen for the last three months – labor force staying around the same, and a slight increase of Wisconsinites listing themselves as “employed”.

That’s a good combination to have, but also shows a state that is likely near its capacity, and continues the challenge of attracting people to our state.

One way is through better wages, which does seem to have been happening in the last 12 months in our state, to a point where inflation-adjusted wages are well above where we were before the COVID pandemic.

I don't think we're going to continue at a pace of 9,400 jobs gained a month. But it's undeniable that Wisconsin's jobs market is in a great place, and if anything, it's gotten better in 2024, in contrast to the slowing down that we've seen in the national jobs stats. ).

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Wednesday, July 17, 2024

Retail sales, home building shows more proof of a moderate economy

With the case for interest rate cuts growing in the last couple of weeks, we looked to Tuesday's retail sales report for June to see if a Springtime slump in consumer spending was continuing as Summer began.

Pretty good, all things considered. And the drop in auto sales seems to be related to a wave of cyberattacks that hit car dealers last month, so expect a rebound there once things return to normal.

But those numbers also aren't so strong that it should re-fire inflation. In addition, note that part about home building being "softish". That got reiterated on Wednesday with a report that showed home building was up in June, but still down from the month before.
Building Permits
Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,446,000. This is 3.4 percent above the revised May rate of 1,399,000, but is 3.1 percent below the June 2023 rate of 1,493,000. Single-family authorizations in June were at a rate of 934,000; this is 2.3 percent below the revised May figure of 956,000. Authorizations of units in buildings with five units or more were at a rate of 460,000 in June.

Housing Starts
Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,353,000. This is 3.0 percent (±10.5 percent)* above the revised May estimate of 1,314,000, but is 4.4 percent (±12.7 percent)* below the June 2023 rate of 1,415,000. Single-family housing starts in June were at a rate of 980,000; this is 2.2 percent (±12.1 percent)* below the revised May figure of 1,002,000. The June rate for units in buildings with five units or more was 360,000.

Housing Completions
Privately-owned housing completions in June were at a seasonally adjusted annual rate of 1,710,000. This is 10.1 percent (±10.6 percent)* above the revised May estimate of 1,553,000 and is 15.5 percent (±12.6 percent) above the June 2023 rate of 1,480,000. Single-family housing completions in June were at a rate of 1,037,000; this is 1.8 percent (±10.3 percent)* above the revised May rate of 1,019,000. The June rate for units in buildings with five units or more was 656,000.
The completions are especially interesting to me, as those numbers have been consistently higher in 2024, which could eventually play a role in reducing the lack of inventory that has caused much of the affordability issues in the housing market.

Conversely, permits are significantly lower than where they were at the start of 2022, and while they rose in June, that came after 3 straight months of declines, and the overall trend is still down.

This is yet another reason that I believe the higher interest rates are holding back the economy. And while I think the Fed wants some of that, I think the plan was for that lack of activity to drop home prices due to a lack of demand. Instead, I'd argue that the higher rates are preventing people from wanting to put homes on the market, and the lower amount of permits in 2023 and 2024 will mean lower inventory in the future, and can keep home prices higher than they should be.

I'd hope the Fed would cut rates when they meet in 2 weeks, to get in line with an economy whose GDP and inflation are both running around 2.5%. But sadly I think we are waiting until September for that, assuming things stay on the same trajectory. I just hope it's not caused unnecessary strain on a consumer that has helped keep the economy moving long past what the "experts" have thought.
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Monday, July 15, 2024

A few thoughts on July's Republican get-togethers in Penn and Milwaukee

Needless to say, I’m not going within 75 miles of that cesspool in Milwaukee in the next few days. Especially given that a Walker/WisGOP-era law allows for Meal Team Six types to walk down the streets a few blocks from the FiServ Forum with guns in this time of elevated tension.

Plus, while I still despise Republicans in general, I’m more disgusted with the pathetic people in the DC media and their vapid Insider Club that thinks politics is all a game and that somehow they will be spared from the disastrousness of another lawless Trump presidency - this time with more competent and fascist dweebs in charge! I’d be more likely to want to berate those soulless elitists in alleged political journalism than I would for a lot of the GOP politicians that will be walking around town.

Not that many Republican politicians aren't soulless, mind you, but many are also weak, whiny trash in over their heads, with no skill beyond shamelessness. It's the media that gives legitimacy to GOP idiocy and repression, because you gotta get that access (to the cocktail parties) somehow.

I’ll move over to the shooting in Pennsylvania at a Trump rally over the weekend. I don’t view it as anything different than when some young white guy shoots up a grocery store parking lot, or a school, or shoots into a crowd at other public gatherings. It could have been a Biden rally or a local high school football game, and this guy would have been fine with using the event to take his AR-15 and become (in)famous on his way off this earth.

I think the fact that this shooting happened at a political rally had a lot more to do with delusions of grandeur and “blaze of glory” BS from a 20-year-old guy living in Dad’s basement than any politics whatsoever. But that didn’t stop Republicans from trying to claim it was, including this far-too-quick response from Trump's VP candidate barely an hour after the shooting.

The real message that I take from that tweet is that GOPs want to use this incident to try to make Dems stop talking about the GOP agenda and Project 2025. Telling the truth about those things were clearly landing blows on Republicans at all levels, and Biden had shown signs of recovering any support he had lost in after his bad debate 2 ½ weeks ago.

Know what else Republicans aren't going to want to talk about after this? The fact that it's GOP laws and the GOP crooks on the Supreme Court that allowed this country to get to a place where a 20-year-old freak is able to walk around with an AR-15, just waiting to use it. Thoughts and prayers, guys.

Always know that when GOPs start pleading for “unity” in light of incidents like the shooting in Pennsylvania, it’s a one-way street to them. And New Republic editor Alex Shephard says it is no different this time.
…[W]e know how Donald Trump thinks America should be united: by reelecting him and allowing him and his cronies to ransack the country’s institutions. Indeed, Trump was back to his old tricks on Monday. After a loyalist federal judge threw out the case alleging that he illegally retained classified documents after leaving the White House, he posted this missive:
As we move forward in Uniting our Nation after the horrific events on Saturday, this dismissal of the Lawless Indictment in Florida should be just the first step, followed quickly by the dismissal of ALL the Witch Hunts — The January 6th Hoax in Washington, D.C., the Manhattan D.A.’s Zombie Case, the New York A.G. Scam, Fake Claims about a woman I never met (a decades old photo in a line with her then husband does not count), and the Georgia “Perfect” Phone Call charges. The Democrat Justice Department coordinated ALL of these Political Attacks, which are an Election Interference conspiracy against Joe Biden’s Political Opponent, ME. Let us come together to END all Weaponization of our Justice System, and Make America Great Again!
This brief statement contains an attack on the legal system, a defense of insurrectionists, and the suggestion that his political opponent is leading a sinister plot to destroy him. It is vintage Trump.

That’s the real (and really depressing) takeaway from Saturday’s events. Nothing has changed. Trump remains the biggest threat to democracy in this country. He will continue to encourage political violence in service of his political project, which is built on hatred and retribution. The attempted assassination has left him and his devotees emboldened as they attack their rivals and attempt to shut down dissent. There is no effort to lower the temperature—only to justify one side’s political attacks while silencing the other’s. And the longer Democrats cower in the wake of Saturday’s shooting, the stronger the autocrat becomes.
And how dare the GOP start complaining about tone after the last 15 years of their winks, nods, and outright support of violence against Democrats and anyone else that opposed them. There is a great post on Daily Kos that goes over 40 times Donald Trump encouraged others to physically hurt and/or kill others as a way of resolving issues.

In addition, Republicans in Congress sure like to pose with guns and call Democrats Satan in order to show how they will "fight” against….national health care and equal rights?

When it comes to acceptance and encouragement of violence, it ain’t close to the same galaxy between the two parties.

And Dems cannot listen to “concerns” given by pro-Trump corporate media, and instead should ask why media is even trying to “both sides” a tone debate. In this case, I’d argue Dems have not been nearly harsh enough on GOPs, given the horrible stuff Trump and GOPs would like to do, while GOPs are allowed to get away with (in some cases literally) condoning/encouraging violence and murder.

If I hear GOPs shed crocodile tears and say “We need to calm things down”, the Dems response should be “Oh yeah, GOP? You first.” And Dems cannot back down from telling the TRUTH about the repression and fascism that is associated with Project 2025 and the retribution that Trump promises to impose on those who called out his crookedness and hateful garbage. Dems need to be doing this today, all throughout this week, and for the next 3 ½ months, non-stop.

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Saturday, July 13, 2024

As the RNC comes to SE Wis, never forget Foxconn

Excellent segment by Ronny Chieng on The Daily Show reminding us of the epic scam and failure that Republicans pushed on this state 7 years ago. And how I bet no one else in national media will mention this debacle when Donald Trump gets renominated on Thursday, and talks about "making things in America."

Props to The Daily Show for keeping the part where local anti-Foxconn activist Kelly Gallaher mentions that the land and highways and related infrastructure was given to Foxconn, at a cost of significant debt for the local yokels in Mount Pleasant along with the relocation of homes to clear the way for this white elephant. And how the segment goes into how Foxconn kept changing their plans as to what they were going to allegedly build in Racine County.

Which tells you that both Foxconn and the WisGOPs that allowed this deal to go through had nothing to begin with, and that Scott Walker and Paul Ryan and Robbin' Vos and Donald Trump didn't care about that reality, as long as they got a headline and media event out of it.

There's another great part where Chieng is interviewing former Foxconn exec/grifter Alan Yeung, where Yeung basically says there was no real plan for Foxconn in SE Wisconsin (well, beyond "get the money, the land, and the PR"), but wants credit for....trying?
YEUNG: It really is trailblazing and making pioneering decisions, even though it might not make sense...

CHIENG: Even though it makes absolutely no sense.

YEUNG: Well, OK, absolutely no sense. But right now, I think we're in chapter two or chapter three of the whole thing.

CHIENG: Chapter 11 of the thing, right?
Yeung also follows with a line where he says "you really shouldn't care if you build potato chips or microchips." Ummmm, I think it does matter, Alan. I don't think we'd have given billions and golden shovels to process potato chips and claim it was the "eighth wonder of the world", like Trump did.

Gallaher later brings up the new multi-billion dollar development in Mount Pleasant, a massive Microsoft data center, which doesn't have as much in subsidies as the Fox-con did. And let's just say Chieng is skeptical about the long-term benefit of that.
GALLAHER: It's going to be an AI data center.

CHIENG: Wait, an AI Center is going to take jobs. They're going to replace workers. You're going to end up with less jobs than before.

GALLAHER: Well, it's better than nothing.

CHIENG: Actually, no. Because no jobs would be zero. This will be negative jobs because it'll be taking other people's jobs. GALLAHER: All I know is that these are 2,000 real jobs.

CHIENG: Oh these goddam villagers and their "jobs", man! You guys talk about anything else here? (theatrically walks away).
Given that I am fast going into the "AI is just another scam by grifting tech bros intended to grab profit and add nothing useful" camp, I hear ya Ronnie.

The giveaways and look even worse in the 2020s, now that there has been a real industrial policy put in place for modern manufacturing under President Biden, with a boom in construction of new factories.

And hey, it's a strategy that doesn't rely on giving away entire townships to companies in exchange for empty promises to desperate communities and doesn't give massive tax cuts (beyond some investment incentives) to corporations! Seems like a better plan that what Repiublicans cooked up 7 years ago, isn't it?
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INFLATION WATCH out, RATE CUT watch in?

After a drop in the rate of inflation in May and evidence of the economy softening in recent weeks, many were looking at Thursday's update of the Consumer Price Index to see if US central bankers would be given more reasons to loosen their tight monetary policy.

They sure did.

And if you dig into the actual CPI report, there's good news all around. The "core" inflation rate also moderated, transportation prices dropped, and we even saw a long-awaited moderation in rent prices in this CPI report.
The index for all items less food and energy rose 0.1 percent in June, the smallest increase in this index since August 2021. The shelter index increased 0.2 percent in June. The index for rent rose 0.3 percent over the month, as did the index for owners’ equivalent rent; these were also the smallest increases in these indexes since August 2021. The lodging away from home index decreased 2.0 percent in June, after falling 0.1 percent in May….

The index for airline fares fell 5.0 percent in June, following a 3.6-percent decrease in May. Over the month, the used cars and trucks index fell 1.5 percent, the communication index decreased 0.2 percent, and the new vehicles index declined 0.2 percent.
The drop in prices last month also means that real wages had a solid rise for June, more than reversing the declines we saw earlier in the year. Inflation-adjusted wages are now at their highest level since the end of 2021, a time when many low-wage food service and retail jobs had yet to return from their eradication during the COVID pandemic (which skewed average hourly wages higher in 2020 and 2021).

Inflation-adjusted wages are also now more than 1% ahead of where we were in Feb 2020, right before the pandemic broke out (aka the time that Donald Trump claims was the “greatest economy ever”).

Not a bad spot to be in. And then on Friday, we saw producers dealt with slightly higher prices in June, but nothing that is worth pancking over.

But that increase was largely driven by business-to-business sales and services related to machinery and information technology. In fact, producer-level prices for foods aznd energy continued to fall in June.

Wall Street traders took those two inflation reports, and ran with it on Friday.

I know the "experts" are all forecasting a September rate cut, but there's zero reason for the Fed not to cut at their next meeting in 2 1/2 weeks. With evidence of a slowing consumer (and watch to see if that continues in next week's retail sales report), and slowing home construction, people have had enougb of interest rates that punish borrowers with Fed Funds rates that are double the rate of inflation.

And it also wouldn't be a bad time for President Biden and the Dems in DC to start laying some pressure down on the central bankers to point people's rightful frustration in the right direction. After all, then-President Trump did the same thing from a much lower interest rate environment 5 years ago.
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Wednesday, July 10, 2024

Contradictory messages from the Fed Chair. But maybe a corner being turned?

With June’s CPI report looming for (Thursday), the head of the US’s central bank was at the Capitol giving his breakdown of where things stand. And on Tuesday, he seemed determined to stay on the Fed’s current course, no matter how much it hampers some people.
Aspiring homeowners in the U.S. face one of the most challenging periods to buy a home. Home prices are at a record high and mortgage rates are over 7%.

And there is no respite for the time being. Federal Reserve Chair Jerome Powell told Congress on Tuesday that he was committed to keeping interest rates high enough to fight inflation in the broader U.S economy.

“There’s no question that higher interest rates are making it harder to buy homes in the short term,” Powell said. “But in the longer term, this is the best thing, particularly for younger people who are not yet in the housing market.”

via GIPHY

Oh? Comfortable Acela corridor bankers know that prospective homeowners should be prevented from being able to afford a house, because they need to take this yucky medicine? That’s the “problem” that needs to be solved?

I’d argue that higher interest rates are a big reason why homes continue to be unaffordable for many Americans. Few home owners will want to sell their current homes when there’s a lot more risk and cost in having to live in another home. As I’ve said before, my wife and I have a 3% interest rate on a lower-cost mortgage. Why would I look for another house, pay more, and have to pay 7% on money that we borrow?

Powell went on to claim that keeping the higher rates will continue to bring the housing market and other prices into balance.
The goal of higher rates is to “get back to 2% inflation for the whole economy,” Powell added, “so that the housing market can be on a better foundation.”

Hence, higher rates are “the absolute best thing we can do for the housing market and for the economy [so as] to sustainably bring inflation back down, so that people aren’t talking about it anymore,” he stated.
Again, the housing affordability issue is a SUPPLY PROBLEM, and that’s largely due to people not being willing to put their existing homes on the market because it means they stop reaping the benefits from a lower, locked-in interest rate. We've also seen a leveling off in home construction in recent months, as the higher rates may be making people back off from building more.

I don’t see how a lower amount of consumer inflation for food, gasoline, or other everyday items would do anything to change that reality (and it may make it worse if “lower inflation” also means lower wage gains).

There’s another reason that Powell’s comment about how lower inflation lets the “housing market [be] on a better foundation.” is a really bad take. When the casual person thinks “inflation”, they often are thinking “these things cost more than it used to”. And they care if that higher costconstrains them from doing what they want…especially when it comes to major purchases like a home or a car.

While I think inflation talk is intentionally overblown for political reasons, an arbitrary difference of 1% in CPI between 2% and 3% isn’t going to stop people from being frustrated with the cost of certain things.

What will make them feel better is the ability to make more money and opportunity at their jobs, and being able to afford houses and jobs. And keeping interest rates at a 23-year high is making it more difficult to be able to do so, while also handcuffing earlier owners of homes and autos from moving on from the low interest rate they are currently enjoying on their asset.

That might not be what they teach in the econ books, but I sure think that applies to our situation in the Summer of 2024. And the Federal Reserve needs to deal with that reality sooner than later, and get rates down to a more reasonable level. If not, the current annoyance over higher prices will be made worse if an economy that currently is only in “decent growth” mode downshifts further, and the slowdown in spending and job growth starts to become outright cutbacks.

But then today, Powell seemed to admit that maybe jobs and economic growth are important.
“I think for a long time, we've had to focus heavily on the inflation mandate," Powell told House lawmakers, referring to one side of the central bank's dual charge to maintain both stable prices and maximum employment. "But I think now we're getting to the place where the labor market is getting pretty much in balance to where it needs to be, and so we're looking at both sides.”…

Powell's acknowledgment of those risks in the labor market is a sign to Fed watchers that a rate cut is nearing, perhaps as early as September.

Yet the central bank head stopped short Wednesday of being specific about when any cuts could begin, making it clear that more data about cooling inflation is still needed.

Powell said he has some confidence that inflation is on its way down to target, but it’s more a question now of whether the central bank is sufficiently confident inflation is coming back to the goal of 2%.
And Wall Street ran with that admission of reality from the Fed Chair, with most of today's big gain happening in the final hour of trading after Powell’s comments to Congress.

The S&P 500 (^GSPC) rose 1% for a 37th record close this year, breaching 5,600 for the first time. The Dow Jones Industrial Average (^DJI) jumped 1.1%, while the tech-heavy Nasdaq Composite (^IXIC) gained 1.2%. The S&P and Nasdaq were each higher for the seventh straight session.

Tech's biggest names continued to rise, powering the gains of the broader market. The AI darling Nvidia (NVDA) advanced more than 2%, while Apple, (AAPL), Microsoft (MSFT), and Google (GOOG, GOOGL) each gained more than 1%.

Bets on interest rate cuts have helped keep stocks roaring as signs of slowing in the US economy pile up.

Wall Street also looked to Washington for more optimism. In his semiannual testimony to Congress, Powell hinted the stage is almost set for lowering interest rates from two-decade highs, pointing to a cooling in inflation and in the jobs market. He also cautioned that keeping rates elevated for too long could weaken the economy, giving hope to rate-cut-hungry investors.

But a key test for stocks and rate-easing prospects lies ahead in the crucial consumer inflation report due Thursday. While a cooler reading will cement the likelihood of a Fed policy shift in September, a too-cool print could revive concerns about a recession and the labor market.
Oh, now we don’t want inflation in the June CPI because it might mean recession? You just can't win with some people.

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Monday, July 8, 2024

New Orders, construction take a step back in May

In addition to a "meh" June jobs report, we also got more evidence last week of slower growth for Q2 when we found out construction spending took a step back in May.
Construction spending during May 2024 was estimated at a seasonally adjusted annual rate of $2,139.8 billion, 0.1 percent (±1.0 percent)* below the revised April estimate of $2,142.1 billion. The May figure is 6.4 percent (±1.6 percent) above the May 2023 estimate of $2,011.8 billion. During the first five months of this year, construction spending amounted to $836.3 billion, 8.8 percent (±1.2 percent) above the $768.6 billion for the same period in 2023.

Private Construction Spending on private construction was at a seasonally adjusted annual rate of $1,652.1 billion, 0.3 percent (±0.7 percent)* below the revised April estimate of $1,656.7 billion. Residential construction was at a seasonally adjusted annual rate of $918.2 billion in May, 0.2 percent (±1.3 percent)* below the revised April estimate of $920.3 billion. Nonresidential construction was at a seasonally adjusted annual rate of $733.9 billion in May, 0.3 percent (±0.7 percent)* below the revised April estimate of $736.5 billion.
After strong runups over the last year or so since the end of 2022, we've seen some recently leveling for both residential construction, and the sector in general.

In addition, the Census Bureau reported that new orders in manufacturing also dropped.
Summary
New orders for manufactured goods in May, down following three consecutive monthly increases, decreased $3.0 billion or 0.5 percent to $583.1 billion, the U.S. Census Bureau reported today. This followed a 0.4 percent April increase. Shipments, also down following three consecutive monthly increases, decreased $4.2 billion or 0.7 percent to $584.8 billion. This followed a 0.8 percent April increase. Unfilled orders, up forty-six consecutive months, increased $3.1 billion or 0.2 percent to $1,402.8 billion. This followed a 0.1 percent April increase. The unfilled orders-to-shipments ratio was 7.18, up from 7.11 in April. Inventories, up five of the last six months, increased $1.8 billion or 0.2 percent to $860.1 billion. This followed a 0.1 percent April increase. The inventories-to-shipments ratio was 1.47, up from 1.46 in April.
And in Friday's jobs report, a gain in manufacturing jobs for May was revised away, and 8,000 manufacturing jobs were lost on a seasonally-adjusted basis in June. It continued a flatlining in jobs for that sector since late 2022, in contrast with a construction sector that still keeps hiring.

The good news is that wage growth in both manufacturing and construction has been well above the rate of inflation, and the jobs market overall (as I pointed out in this post), but there does seem to be some softness sinking in to both sectors, and it gives more evidence to me that if the Federal Reserve wants to keep the economy nmoving forward, it needs to cuts rates sooner than later.

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Friday, July 5, 2024

"Meh" for a June jobs report, as we settle into our new post-COVID normal

With some evidence of weaker economic data in recent weeks, a new US jobs report came out on Friday. And it was....meh

I'll point out that given that this is from June, and that the seasonal adjustment deflates the number of jobs added in a lot of sectors. This includes leisure and hospitality, which had 436,000 more jobs overall in that sector, but because it is expected to have 429,000 jobs added in June, that's not very special. No biggie either way.

Yes, unemployment went up again (although the “4.1%” is really 4.05%, which makes me wonder what would have been the meme if the number was 4.04%), and it’s more evidence that we are in a balanced jobs market where any COVID-era adjustments have been absorbed into a new normal for the mid-2020s. The Biden Boom in the both the economy and the jobs market is over, and we are merely in a solid growth mode.

Still, that “new normal” is a better place than we had before COVID became a thing.

Not only that, but I also wanted to look at what things looked like after both President Trump and Biden were able to get their signature economic policies in place, and after the COVID-related job losses of 2020 had been largely recovered. So I did a comparison of what 3-month job growth was starting from January 2018 (when the unemployment rate of 4.0%) and January 2023 (unemployment rate 3.4%).

As you can see, we’ve generally been adding more jobs under Biden than Trump, even starting from a lower unemployment rate in 2023.

I also note that the jobs report indicates that wage growth kept up in June, 0.3% increases in overall average hourly wages, and in non-supervisory positions. With food and gas prices staying stable over the last month (if not outright falling), I would think this translate into another month of real wage growth in June.

The wage growth is especially impressive in the construction and manufacturing sectors, where the 12-month increase in wages is above the 3.9% average rate for all private sector jobs, and the work week has also increased since June 2023.

Average hourly wage, June 2024 vs June 2023
Construction +4.9%
Manufacturing +4.8%

Average weekly wage, June 2024 vs June 2023
Construction +5.7%
Manufacturing +5.1%

At the same time, the annualized rate of wage growth for both the last 3 months and last 12 months is now in the high 3%s. This is a “Goldilocks” scenario where wage growth above almost any time in the Trump era, but also not so high that it would fire any kind of cycle of high inflation.

So what the hell is the Fed waiting for when it comes to lowering interest rates like they did from a much lower level in 2019? Back then, Trump was ramping up for his re-relection campaign and started screeching about Fed policy, despite wage growth and inflation that wasn’t much less than we have today, and with unemployment 0.5% below what we have today.

The Fed caved to Trump’s public pressure back then, but seems to be set on keeping rates at these punitive levels ahead of our 2024 election. To be fair, Biden hasn’t been putting pressure on them to do so, and I think he and other Dems have been wrong to stay silent, because I definitely see a different standard at play here.

That said, even if job growth stays at a decelerated rate of 175,000 that we have been at for the last 3 months, that’s a lot like what we had in the 6 years before COVID.

So when you hear complaints about a “softening” job market, know that it’s merely slowing from the best growth we had in decades over the first 3 years of the Biden Administration. We’re still adding jobs at a good pace, and unemployment is still historically low. I’ll take it.

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Thursday, July 4, 2024

Happy 4th! Can we fight the bad guys like we did in 1776?

After a few days in Colorado for sightseeing and baseball, I'm back in Wisconsin for our country's birthday. And so (as is my tradition in this blog), it seems to be a good time to go back to the text of our country's Declaration of Independence, and see what were part of the "long train of abuses" that King George imposed on the American Colonies, which led to the point of breaking away that we celebrate today.
He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
Oh? The King put himself above the law, and ignored large swaths of the country? Sounds like an Orange Blob that we know well in 2024.
He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.
Ignoring the results of elections? Limiting immigration for political purposes? That tracks.

Oh, and here's the Project 2025/Crooked SCOTUS part of our country's Declaration!
He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.

He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.

He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.

He has affected to render the Military independent of and superior to the Civil power.

He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:

This is what makes it all the more ridiculous when you see MAGAts call back to the Founding Fathers as a shield for their "reasoning". Because in 1776, the MAGAs would be working for the British Crown, to put those liberals to heel, and ignore the desires of everyday people in favor of an elite few who impose the rules onto everyone else.

In response to what was going on, America's political leaders stepped to the forefront in the Summer of 1776 to lead with action against those arrogant tyrants. We now need political leaders to be fighting the bad guys every bit as hard now as they did 248 years ago, instead of laying back and hoping the people do their job for them at the ballot box in November. Dems need to rise to the challenge over the next 4 months, or else I'm not sure we make it to 250 intact.

As another Madison native well-put it.

So, Happy 4th? Well, at least most of us don't have to work today, right?
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