Sunday, October 29, 2023

Brewers action not over yet for 2023. Stadium bill has lots of work left

As the MLB season wraps up this week, I wanted to drop in an update on the bill to pay for the ballpark for the state's own MLB team. The bill to help the Milwaukee Brewers pay for hundreds of millions of dollars in upkeep and maintenance for AmFam Field got through the State Assembly earlier this month, and it appeared that this thing may be able to get done sooner than later.

But it looks to be a harder sell in the State Senate, which hosted a public hearing on the Brewers bill last week. The Majority Leader of that house indicated that he and his fellow Republicans can't pass the Assembly's version of the bill, and will have to change it.

We got an answer about how many Dems are in support of the bill after this comment from my State Senator this weekend.

Given that less than 1/3 of the Democrats in the Assembly voted against the Brewers bill, it surprises me that it would be 0 for 11 in the Senate. But perhaps this is simple negotiations, and the Dems recognize that if they are needed to get this bill through, then they'd better get more of what they want out of that bill.

As alluded to by Channel 58's Fannon, one item that seems certain to be added to the final Brewers deal is ticket tax on concerts and other one-off events at the ballpark. Bill sponsor Rep. Rob Brooks said such a ticket tax could be used to cut the amount of general taxes that would be used toward the ballpark.
Brooks said he thought that a lower state contribution could be achieved by implementing a ticket tax on non-Brewer events.

Brooks said that a ticket tax on Brewers events are a “nonstarter” for the team, but that a ticket tax on other events at the stadium is a possibility. He said the team wants to keep ticket costs low for Brewers fans.

“Do I think we’re going to get a ticket tax for Brewers games?” Brooks said. “No. Because the Brewers have said we would rather pony up with some additional money and they have, to the tune of $100 million.”
However, it does look like others want to see the Brewers games be the direct contributor, much like how Bucks games have a ticket tax to help pay for FiServ Forum.

I'm with Sen Roys in that I would prefer the ticket tax to be levied on each of the Brewers' 2 million+ admissions a year, as a way to make sure users from out-of-town pay towards the stadium upkeep. But I understand where the Brewers are coming from on that (they don't want to be seen as raising ticket prices), and that they'd rather pay the money out of their own pockets. As long as it takes some of the burden off of Milwaukee and statewide taxpayers, I'm relatively indifferent as to how that gets done.

Another complaint brought up by Democrats during the stadium bill debate is the fact that there are no representatives of either the City of Milwaukee or Milwaukee County on the Stadium Board, even though those local governments are slated to send a total of $135 million. Brewers president of Business Operations Rick Schlesinger was asked about that at the hearing, and said he was sensitive to that complaint (he made a historical reference to "no taxation without representation"), and it does look like this will at least be a topic of discussion.
Brooks said that the board composition has gone through several iterations, and they are prepared to amend the bill.

“If it’s adding a city and county representative or something, I think we can certainly look at that,” Brooks said. “It was anticipated all along that that’s what it would look like, but I wasn’t about to put it in the bill until I had a commitment on the money.”“If it’s adding a city and county representative or something, I think we can certainly look at that,” Brooks said. “It was anticipated all along that that’s what it would look like, but I wasn’t about to put it in the bill until I had a commitment on the money.”
I get that, although I don't get why it wouldn't be the other way around, where the locals get to help decide what to do about the money, and then they agree to chip in funds toward the upkeep.

I don't see an Executive Session scheduled in the Senate committee discussing the Brewers bill, which is the place where the bill could be amended and then voted on. That could change quickly, depending on how things work out behind the scenes, but I also think there are enough moving parts that it could take a while to figure all of this out.

And I do think events involving the on-field product will have an effect, particularly with this story that came out last week.

If the Brewers aren't going to use the benefit of these public funds to pay to keep the Wisconsin-raised manager that has overseen the best run of success this franchise has had, some might ask "What's the point of paying in for this if the team isn't going to use those funds to adequately compete in the Big Leagues?" Conversely, will the debate at the Capitol encourage Mark Attanasio and the rest of the ownership group to shell out to keep Counsell to keep that criticism from happening? (I hope so, but I am very skeptical of that).

And I wonder if this gets done at all in this session, given the uncertainites with redistricting and the 2024 elections. Would everyone roll the dice for a new Legislature and a better deal? The Brewers wouldn't be leaving for at least a couple of years (and their current lease runs for another 7). Lots to look out for in the coming weeks and months.
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Saturday, October 28, 2023

Great spending numbers exceeding decent income figures. So which wins out?

This wasn't surprising after Thursday's blowout GDP Report, but Americans finished out Q3 with strong spending numbers.
U.S. consumer spending surged in September as households boosted purchases of motor vehicles and traveled, keeping spending on a higher growth path heading into the fourth quarter....

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, accelerated 0.7% last month after an unrevised 0.4% rise in August, the Commerce Department's Bureau of Economic Analysis reported. Economists polled by Reuters had forecast spending gaining 0.5%.

The increase in spending was spread across goods and services. Outlays on goods increased 0.7%, led by prescription medication, new light trucks, food and beverages as well as recreational goods and vehicles. Spending on services shot up 0.8%, boosted by international travel, housing and utilities, healthcare and airline transportation services.

The data was included in the advance gross domestic product report for the third quarter published on Thursday, which showed consumer spending accelerating sharply, contributing to the fastest pace of economic growth in nearly two years.

Adjusting for inflation, consumer spending rose a solid 0.4% in September after ticking up 0.1% in August, a strong hand-off from the April-June quarter that bodes well for consumption and overall economic growth in the fourth quarter.
Inflation-adjusted consumer spending has increase by more than $375 billion in 2023, and continues the mostly steady growth that this country has had since most Americans were able to get COVID vaccinations in early 2021.

On the income side of the report, total income went up by nearly $78 billion (annual rate), and disposable income was up by more than $56 billion. But that wasn't nearly as much as the increase in spending, which was nearly $139 billion. And that meant the US savings rate dropped to a measly 3.4%, back to the inflation-influenced low levels of 2022.

On a related note, inflation-adjusted disposable income fell in September. This was the 4th straight month real disposable income has gone down in the US, and while we're still well above the inflation-peak depths of June 2022, it's no different than what we had in May 2021.

Which means we enter Q4 in an odd spot. Consumers are clearly better off than they were a year ago, and are freely spending and lifting the economy. The jobs market is staying strong, although income growth has leveled off, which helps the inflation outlook, but keeps pocketbooks from getting fat. The question now is if the strong output figures lead to higher incomes, or if the lack of incomes cause spending and economic growth to level off.

The first bits of October data start to roll in next week, and it does feel that the next few weeks tell us a lot about where this economy is heading for the election year of 2024.
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Thursday, October 26, 2023

A big GDP number for Q3. Keep it ROLLIN'

Most of the economic data had been pretty good for the last few months, and it was expected that today's GDP report would show a good number. But I'm not sure a lot of people saw this number coming.

And when you dig into the report, you see that along with consumer spending being impressive between July and September, most other parts of the economy also improved.
The increase in consumer spending reflected increases in both services and goods. Within services, the leading contributors were housing and utilities, health care, financial services and insurance, and foodservices and accommodations. Within goods, the leading contributors to the increase were other nondurable goods (led by prescription drugs) as well as recreational goods and vehicles. The increase in private inventory investment reflected increases in manufacturing and retail trade. Within nonresidential fixed investment, a decrease in equipment was partly offset by increases in intellectual property products and structures.

Compared to the second quarter, the acceleration in real GDP in the third quarter reflected accelerations in consumer spending, private inventory investment, and federal government spending and upturns in exports and residential fixed investment. These movements were partly offset by a downturn in nonresidential fixed investment and a deceleration in state and local government spending. Imports turned up.

See that small green bar going above zero for the last quarter? That's the first increase in residential fixed investment (aka - new home building) in 2 1/2 years, indicating that the decline in that part of our economy may have bottomed out, even in the face of high interest rates.

And if you ask "what about inflation"? That also continues to trend the right way in Q3, especially in the "core" measure that takes out food and energy prices.

Let's also remember that gasoline prices have dropped by 30 cents a gallon nationwide over the last month, which portends for inflation levels to continue lower for October, and possibly for the Holiday shopping season. It is worth noting that disposable income growth didn't keep up with the torrid spending pace, which fell by 1.0% after inflation for Q3 while inflation-adjusted spending was increasing by 4.0%. This resulted in a drop in the savings rate for Q3 from 5.2% to 3.8%, which isn't a great sign. But due to strong disposable income growth in the first half of 2023, Americans are still saving above the 3.2% rate we saw for the last half of 2022, and the 3.3% average for last year. So Q4 seems crucial in seeing which way things go for both disposable incomes and savings, and the resulting prospects for growth in 2024.

But for now, things are still in a very good place. Real GDP growth is up nearly 3% compared to a year ago, and unemployment and inflation both are below 4%. Instead of aiming for an arbitrary 2% level of inflation, and costing us jobs and billions in unnecessariltyhigh interest rates, our policymakers should be trying to have the economy keep performing like it did in Q3 2023.

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Monday, October 23, 2023

GIANNIS will be sticking around here a bit longer

There are some things going on that can bring a guy down this time of year. Both in the world at large, and with tragedies striking far too many family and friends in recent weeks.

But there are other things that can raise spirits, and make you realize that there is still a chance for decency and goodness to work out, even in 2023.

This is everything right with professional sports. A top-level athlete who cares most about winning and being in a place where he and his young family can be comfortable. And now he's staying in our state for another 5 years.

And I also concur with this statement.

It's hilarious how Coastal Media thinks they are somehow "entitled" to these great players, and that it's somehow more important that they be successful in the big markets compared to other places. They don't understand that it doesn't matter at all in 2023. The NBA is a international sport where individual stars and their personalities matter. Where they play doesn't, and all of the owners are absurdly rich and making money. So why wouldn't Giannis have stayed in the place he could (by NBA rule) make the most money, and continue to have a great chance of winning?

It's not like Giannis lacks for endorsement dollars, even if he plays in one smallest markets in the League.

Heck, Giannis' new teammate had huge amounts of national ads and exposure while he was playing for a bad team in even-smaller and more remote Portland.

Got the people in place, and the franchise guy locked up through 2028. Now time to start the season and bring back another title to the Brew City. Being able to witness a great performer like Giannis on a daily basis is something we should never take for granted, and the fact that he sees the bigger picture and wants to thrive in our state is something that's even better.
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Sunday, October 22, 2023

In construction - more apartments now, more single homes coming.

Wanted to go over a few observations on the housing market, in light of last week's release on residential construction from the Census Bureau.

One item that’s an important difference over the last year is that more single-family homes have had permits taken out for them in the last 12 months, but multi-unit housing units have declined by a larger amount, meaning total housing permits are down.

But the homes under construction and being completed have become more likely to be multi-units over single-family.

And even as home starts have risen and fallen since 2020, the rate of completions haven’t changed all that much. That indicates to me that construction work fell behind demand in 2021 and 2022, and now has caught up. So even though there may be concerns over a lack of housing starts, I’m not sure that’s translating into a lack of home construction activity, which likely means that there will be little to no impact when it comes to jobs and business activity in that sector.

Where there is a clear decline is in the amount of homes being sold in America.
U.S. existing home sales dropped to a 13-year low in September as surging mortgage rates and tight supply combined to reduce affordability for many first-time buyers.

Existing home sales fell 2.0% last month to a seasonally adjusted annual rate of 3.96 million units, the lowest level since October 2010, the National Association of Realtors said on Thursday. They are counted at the closing of a contract and last month's sales likely reflected contracts signed in August, when the rate on the popular 30-year fixed mortgage vaulted above 7%.

Economists polled by Reuters had forecast home sales slipping to a rate of 3.89 million units. Sales dropped 1.1% in the South and decreased 4.1% in the Midwest. They rose 4.2% in the Northeast and slumped 5.3% in the West.

Home resales, which account for a big chunk of U.S. housing sales, declined 15.4% on a year-on-year basis in September.
And this makes sense. If you have a home, you might have a fixed-rate mortgage that is well below anything you might get with a new loan today, so there’s an added cost to changing homes. Likewise, if you don’t own a home and want to, the costs to buy a home have gone up, not only because of higher asking prices, but because of higher mortgage rates.

So we have very disparate impacts on our housing market, and on Americans in general. If you’re facing higher rents and have higher interest rates get in the way of your plans of buying a house, these are tough and frustrating times. If you’re a realtor and rely on more home sale activity for more income, this is not good.

On the flip side, if you own your home and are locked into a low-rate mortgage, you are somewhat immunized from the higher shelter costs we see in the monthly CPI reports. That means you are likely not being hurt as much by inflation, and it means your wealth continues to increase in most parts of the country as your home appreciates in value.

It's that appreciation in wealth that led to a somewhat surprising finding by the Federal Reserve in recent days.

Net worth surged for the typical family during the pandemic era, largely on the back on higher home and stock prices and government stimulus measures, the Federal Reserve reported Wednesday in its triennial Survey of Consumer Finances.

Net worth is a measure of household assets after accounting for liabilities. After accounting for inflation, median net worth jumped to $192,900, a 37% increase from 2019-22, the Fed found.

That percentage growth was the largest since the Fed started its modern survey in 1989. It was also more than double the next-largest increase on record: Between 2004 and 2007, right before the Great Recession, real median net worth rose 18%....
But this is also something where some groups benefitted much more than others from this pandemic-era wealth growth.
Of course, not everyone benefited equally: Assets like homes and stocks are generally not held by families in the bottom 20% by income, for example, the Fed said.

And wealth gaps are still big: Families in the bottom 25% by wealth had a median net worth of $3,500 in 2022. The top 10% had $3.8 million.
So this is why we need to throw out some of our priors when it comes to looking at what data tells us might happen with both the home market and the economy in the coming months. We have a widely varied situation where many are better off than they were 4 years ago, and jobs are continuing to grow. But others haven't seen the same benefits, and are now growing their credit card balances to record levels, with higher interest rates compounding that debt.

And our policymakers and central bankers need to realize that with inflation is ebbing but debt rising, and we should get our monetary and fiscal policies back into balance. And it needs to be soon, before those who haven't seen much of a boost in recent years start to feel significant economic pain, and drag our currently growing economy down with it.
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Thursday, October 19, 2023

Sept Wis jobs report - more jobs, more in labor force, but more unemployed

This afternoon featured the release of another monthly jobs report for Wisconsin, which showed September to be another month that had more jobs, and higher unemployment.
The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) job totals for the month of September 2023, which showed Wisconsin's total non-farm jobs hit another record high of 3,017,800. This is 34,500 more jobs than a year ago and an increase of 8,300 over the previous month.

Preliminary employment estimates for September 2023 showed Wisconsin's seasonally adjusted unemployment rate was 3.1%. The total labor force grew by 5,400 and employment decreased by 1,800 over the month. The state's total labor force participation rate increased to 65.8% during that time.
The good news is that Wisconsin continues to add jobs, with its 6th straight month of total jobs exceeding 3 million.

That report also said construction jobs continue to be added in Wisconsin, and even manufacturing had more jobs in September for the first time since February.

But it’s also the first month in 2023 that where Wisconsin’s unemployment rate has gone back above 3%, so that seems worthy to keep an eye on. It goes along with information we got on the state-level JOLTS report, where (seasonally adjusted) layoffs and discharges increased from 25,000 in July to 47,000 in August. We did see another month of a higher labor force in September, and we now have more people in the work force than we’ve had in nearly 6 years.

This leaves us back to a similar percentage of Wisconsinites working that we had when the COVID pandemic first broke out in early 2020. And it underscores the bigger picture with this Wisconsin jobs report - it's still a good spot to be in, near full employment, with a labor force that is finally growing again.
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Monday, October 16, 2023

On Child Care - Senate WisGOP plays tax cut games, so Evers goes out on his own

We already knew that there was a lot of money still left in the state's bank account even after Governor Evers signed the state budget back in July. And we found out today that there will be even more funds available to pay for child care costs, tax cuts, or other needs, if we so choose.

It's nearly $200 million above the $6.877 billion that we were projected to start the 2023-25 biennium with, as General Fund expenses turned out to be below budgeted and projected amounts.

Evers had asked to use more than $1.078 billion of those funds to pay for a number of workforce initiatives in a special session last week. And among those items were a state-funded family leave program, and $304 million in state funds to continue the Child Care Counts program that was funded by the Feds during the COVID pandemic.

The State Senate held a hearing on that package of bills last week, but in typical WisGOP fashion, they used it as a pretense to play games with Evers' plans.

The Wisconsin Senate’s Republican leader put out a top-to-bottom rewrite Friday afternoon of the workforce bill Gov. Tony Evers proposed in August that replaces every item in the original $1 billion package with a $2.5 billion tax cut that Evers has already vetoed once....

The centerpiece of the substitute amendment to the original bill is another attempt to cut the state’s second-highest tax rate to 4.4% from 5.3%. According to the Wisconsin Department of Revenue, the incomes of taxpayers in that bracket range from $27,000 to $304,000 for single filers.

“Governor Evers has said that he would provide tax relief for the middle class in exchange for state-level investments in the child care industry,” LeMahieu said. “We hope he keeps his word.”

Calculations from the Institute on Taxation and Economic Policy in Washington, D.C., on an identical tax cut that Republicans proposed in August found that nearly two-thirds of the savings would go to the highest paid 20% of Wisconsin taxpayers with average incomes of $304,000. Along with the tax cut, this package of GOP Senate changes is generally a bunch of regressive junk that will be an immediate veto from the Governor (and anyone else with a fiscal clue and/or a drop of empathy), I do note that it includes a sizable increase in a tax break for child care.
Under current law, an individual who is eligible to claim the federal child and dependent care tax credit may claim a state income tax credit equal to 50 percent of the amount the individual may claim as a federal income tax credit. However, the amount of employment-related expenses that an individual may claim to determine the amount of the federal credit is limited to $3,000 if the individual has only one qualifying dependent, and $6,000 if the individual has two or more qualifying dependents.

The bill increases the amount of the state credit that an individual may claim by increasing the employment-related expense limitation to $10,000 for one qualifying dependent and $20,000 for two or more qualifying dependents, and by allowing an individual to claim a state income tax credit equal to the full amount that the individual could claim for the federal child and dependent care credit determined using the individual's employment-related expenses.
However, let's also note that this is something that wouldn't benefit lower-income Wisconsin parents as much (since they have less state tax to write off). And getting a tax writeoff for child care costs when you file in early Spring doesn't do much to pay the bills associated with child care today.

After the developments of the last few days, Governor Evers has made a counter move, saying that he is going to fund Child Care Counts on his own with left-over COVID funds.

Democratic Gov. Tony Evers authorized spending $170 million Monday to continue providing subsidies for child care providers in Wisconsin after Republicans repeatedly rejected his attempts to fund the program.

The federal funds Evers put into the program Monday represent about half the amount he asked the Legislature to spend to continue the pandemic-era Child Care Counts. The program has distributed around $600 million to over 4,900 child care providers in the state, according to the state Department of Children and Families.

"I promised I’d do everything I could to stabilize our child care industry, support kids and working families, and reduce barriers to work to ensure our workforce can meet the needs of the 21st Century,” Evers said in a statement.

Evers added that "this stopgap measure isn’t a permanent solution to the looming child care crisis facing our state," encouraging Republicans to fund the program permanently.
That'll at least keep us from going over a cliff in the next year or so. But I'm not counting on Republicans stepping up to keep Child Care Counts whole for the near future, given that they believe in outdated crap like this.

But maybe we have new maps and a new Legislature in 2025 that recognizes the realities of what working parents and businesses are dealing with, and this state doesn't have to be held back by Republicans that continue to try to jam 20th Century ideas into the reality of 2023.
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