Thursday, July 30, 2020

Q2 2020 economic collapse is one for the history books

Due to COVID-19-linked shutdowns in late March and April, and the slow reopening that followed, we knew the 2nd Quarter of 2020 was going to have a historic decline in the nation's Gross Domestic Product (GDP). Today we found out just how much bad it was. <

The big reason? Consumer spending collapsed, causing nearly 80% of that $1.8 trillion annualized decline, and dropping GDP by over 25%.

Even the largest increase you see in that chart reflects the lack of buying, because it's a large drop in imports that "grew" GDP by 10% last quarter.

There was quite a variation on how consumers' spending habits changed in the COVID World of Q2. Some sectors even had more spending, particularly the automotive sector. On the flip side, several other industries saw spending plummet, due to the lack of travel, lack of sports, lack of live shows, and lack of people going to the doctor if they didn't have COVID.

Remarkably, the official report from the Commerce Department says the drop in GDP is even larger in actual dollars, as deflation hit hard in the 2nd Quarter.
Current‑dollar GDP decreased 34.3 percent, or $2.15 trillion, in the second quarter to a level of $19.41 trillion. In the first quarter, GDP decreased 3.4 percent, or $186.3 billion (table 1 and table 3).

The price index for gross domestic purchases decreased 1.5 percent in the second quarter, in contrast to an increase of 1.4 percent in the first quarter (table 4). The PCE price index decreased 1.9 percent, in contrast to an increase of 1.3 percent. Excluding food and energy prices, the PCE price index decreased 1.1 percent, in contrast to an increase of 1.6 percent.
This fall in prices and economic activity happened despite a huge amount of money being pumped out to Americans due to stimulus checks and the higher amount of unemployment benefits, which was a much larger amount than the wages and salaries that were actually lost for the quarter.

That's an annualized bump of $1.4 trillion in income between these three sources. And we still had a massive decline in consumption with all that extra money floating around.

Now, the $600 weekly add-on for unemployment is going away as Ron Johnson and other Senate Republicans dither around, and wages and salaries won't come close to picking up that slack. Certainly not in a time when more than 1.4 million people are going (back) onto the unemployment rolls each week - a number that rises to more than 2.25 million when you add in the PUA program for the self-employed and gig workers.

So how are we going to see a bump in consumer spending that could get this economy back toward where it was at the start of 2020, if there is this huge drop in income, and people with jobs aren't going to be willing to go out as much with COVID-19 at record levels? And then the individuals losing their expanded unemployment benefit can't pay their bills, which means an even larger loss of business income.

Then throw in the reality that businesses don't have to keep people on the payroll to have their PPP loans forgiven? It feels like things could cascade.

Even if there is a cosmetic increase in GDP for Q3, we still seem likely to be in a bigger economic hole on Election Day than we saw at any time during the Great Recession. With not much coming down the pike to get us out of that hole.

Mask up Wisconsin! No matter what they say in WisGOP Bubble World

Here's the shot.

Personally, I'd rather eliminate the virus than to merely control it. Call me a dreamer if you must.

And now the chaser.

Guess which County Chris Kapenga "represents" in the Legislature. Yep, Waukesha County.

The big counties seem like they've started to get a handle on this thing, but it's Kapenga's constituents and other FREEDUM-loving parts of the state that can't seem to get it under control. That reality is holding back our economy and starting to put a strain on hospitals (DHS says 89% of hospital beds in Southeast Wisconsin were filled today).

So because certain local areas and individuals can't step up to do the right thing, Governor Evers finally decided to take action. That, and a certain timely change at the Wisconsin Supreme Court doesn't hurt either.

Naturally, the "leaders" of the gerrymandered WisGOP Legislature are squawking, but I found this statement by Speaker Robbin' Vos intriguing.

This is an obvious signal from Vos to have some Bradley Foundation or WMC-fronted BS group file the lawsuit instead. But it also tells me that Vos knows that filing another lawsuit is a political loser.

This was also humorous, as Senate GOP Leader Scott Fitzgerald used Evers' announcement appeal to the fringies that vote in GOP primaries.

Wait, you dimwits have done NOTHING for more than 100 days as this state sees COVID-19 resurge, through record amounts of unemployment claims and a 42% spike in evictions vs last year. But Evers wants to take on COVID by having people wear mask when they are in public and indoors, and NOW you want to end your multi-month paid vacation?

What a bunch of jokers. In the mean time, be an adult and mask up, so we might have a chance of not having the cloud of COVID hanging over the state for the rest of the year.

Wednesday, July 29, 2020

GOP "stimulus" would be a "W" recession with a lot of losers

I wanted to give a rundown on what the new stimulus bill that Moscow Mitch McConnell emerged with in the GOP-run Senate, which is being called HEALS.
McConnell, flanked by top GOP [Senate] chairs Monday at the Capitol, unveiled his long-awaited proposal. It provides some $105 billion to schools and colleges, the K-12 funds tilted toward campuses that reopen with in-person learning. There’s more money for virus testing, $15 billion for child care centers and benefits for businesses, including a fresh round of loans under the Paycheck Protection Program, tax breaks and a sweeping liability shield from COVID-19-related lawsuits.

The Republican proposal would also provide another round of $1,200 direct payments based on the same formula from the earlier aid bill. People making $75,000 or less would receive the full amount, with the benefit phased out for those earning above $99,000, or double for married couples filing joint taxes.
That's the parts of the bill that will give some stabilization and try to have the economy recover in a time when COVID-19 cases and related shutdowns continue to rise. It's something, but significantly smaller than what House Democrats passed in the HEROES Act.

Well, other than the "liability shield", which basically tries to let businesses off the hook for putting their employees at risk of catching COVID. And apparently that provision is what Moscow Mitch really cares about when it comes to HEALS.

Nice priorities, eh?

On the other end of the economic status spectrum, one of the biggest differences is in the amount that the tens of millions of unemployed Americans would receive. Instead of continuing the $600 add-on to what unemployment typically pays, Moscow Mitch's bill will cut that by $400 immediately, and it gets worse 2 months later.
Under the GOP proposal, the jobless boost would be reduced to $200 a week for two months through September and phased out to a new system that ensures no more than 70% of an employee’s previous pay. States could request an additional two months, if needed, to make the transition.

Democrats pointed to an assessment from economist Mark Zandi, who called it a “poor policy choice.” Zandi said that if the GOP proposal became law, nearly 1 million jobs would be lost by year’s end and the unemployment rate, now above 11%, would climb more than half a percentage point.
That’s going to cause a significant drop in income for a lot of Americans that are already struggling to pay the rent as it is. And forcing states to change the way unemployment benefits are calculated and how the programs are run is one of the reasons that people haven’t been able to get their unemployment checks in Wisconsin and other states.

In addition, Mitch's Senate bill has ZERO aid to state and local governments to help them carry out services that have become much more necessary during this recession and the mass layoffs that have come with it. This will also result in lost jobs, less security, and will prolong the recession if that ends up in the final bill.

I'll also add that the "70% wage replacement on unemployment" part is especially bad, because it would mean that states would have to put in another unemployment program with a new way of calculating benefits. The front page article on the Journal-Sentinel site today talks about how hard it has been for the Wisconsin Department of Workforce Development to set up the Pandemic Unemployment Assistance (PUA) program , which became law with the CARES Act in April.

Since the creation of the program, the state has received 91,077 applications and processed 40,573, said Ben Jedd, communications director for the department. The department processed about 10,873 PUA claims last week alone and they're being processed in the order that they came in.

The program was the last to be established in Wisconsin's system after the state removed its one-week waiting period before unemployment benefits can be applied for and then established the Federal Pandemic Unemployment Compensation program. Because of the software that Wisconsin utilizes, all of the unemployment programs had to be implemented one at a time.

Jedd also noted that as soon as the system was established and ready to take claims, about 40,000 people applied in the first week.

He said that by default, the determination process for PUA also takes longer because, while regular unemployment is mostly automated, PUA is entirely manual. That means all claims need to be handled and determined by an adjudicator, resulting in cases piling up.
With that experience in mind, can you imagine the clusterf*ck you'd see in trying to reprogram the maximum benefit for hundreds of thousands of Wisconsinites in October? It's almost like Moscow Mitch wanted unemployment to be FUBARed with this ridiculous plan. Almost.

Naturally, some Senate Republicans think that a pared-back aid package in a time of double-digit unemployment and 400,000+ new COVID cases each week is....too generous?
But conservative Republicans quickly broke ranks on McConnell’s plan, arguing the spending was too much and priorities misplaced. Half the Republican senators could vote against the bill, some warned, and their opposition leaves McConnell heading into negotiations with Pelosi without the full force of the Senate majority behind him.

“The focus of this legislation is wrong,” Sen. Ted Cruz, R-Texas, one of the bill’s most vocal opponents, told reporters at the Capitol. “Our priority, our objective, should be restarting the economy.”
Hey Ted, how are you going to restart the economy if a whole lot of people lose their incomes and can’t pay their bills, while a whole other group of Americans won’t go out and spend money because COVID-19 is still out of control?

What Cruz and Ron Johnson (who wants NO new money to be sent out to anyone) and other regressives really want is for people to be forced back into work, regardless of the danger involved. This would artificially push down the unemployment rate before the November elections, to give the appearance of normalcy, and GOPs would use that as an excuse to avoid having the deal with the real economic and public health problems that exist.

It's a head-in-the-sand mentality that should disqualify any GOP that buys into it, and it’s especially the wrong way to go about things right now, when the real problem is a lack of demand due to the health concerns brought on by COVID-19. Democrats in Congress should say that this bill is DEAD ON ARRIVAL, and there are already enough GOPs opposing the bill to kill it in the Senate, meaning Moscow Mitch has completely failed with this thing.

That being said, Dems shouldn't just relax and tell the Senate to pass HEROES. Instead Dems should counter the regressive GOPs by adding an increase in the minimum wage to any proposal that would cut the benefit amount for unemployment, putting the wage somewhere between $12 and $15 by October 1. They can also throw in a plan to pay employers a subsidy of $5/hour for every employee whose wages are raised by that amount (in the case of workers making less than minimum wage) in 2020, and a phased-down subsidy for employees making up to $30/hour.

That would say “You want people to get back to work, GOP? Then we’re going to make sure that work is worth going back to.” I’d also say unlocking health care from jobs would be part of these reforms, but that can get done after President Biden and a Dem Senate take over in 2021.

And Dems shouldn't be scared by the reality that this inaction will worsen the economy in the next month, because GOPs will rightfully be blamed for the relapse into recession due to their inability to deal with COVID and the related economic problems.

Given the ineptitude and idiotic economics of the Republican "stimulus" bill, it's not just going to stop any chance we have of a strong "V"-like recovery (that already likely sailed anyway). Moscow Mitch's scheme makes it likely that we end up with a "W", where we fall back into recession, stay mired in double-digit unemployment, and enters an ugly second phase with evictions, store closings, and chain reactions that can make our economy even worse than the garbage situation we have today.

Monday, July 27, 2020

On COVID, Dane County's spike is going away, but Waukesha is making up for it

I typically update my COVID figures for Wisconsin counties on Monday. And it tells me quite a bit.

In Dane County, COVID had a significant breakout in June, which then was followed by a mask mandate, indoor bars being closed, and capacities of other indoor businesses cut back. And it seems to be working.

Milwaukee also put in a mask mandate about 2 weeks ago, and we saw the amount of new cases in the County decline off of its peak, although there still have been more than 2,000 new COVID cases in the last week.

Brown County also had slightly fewer new cases in the last week compared to the week before. So why is Wisconsin seeing record amounts of new cases, with multiple days of more than 1,000 positive COVID tests? Because the largest areas of the 262 are now in a breakout, especially in Waukesha County, where new cases went from less than 300 in the first week of July to nearly 900 in the last week of the month.

Waukesha County was also the place where a pastor told local officials that mask mandates led to other losses of liberty, like the Holocaust. The City of Brookfield responded to that statement by rejecting the mask mandate, by the way.

We're also seeing mid-size counties along Highway 41 between Milwaukee and Green Bay have increasing amounts of cases, with Outagamie and Washington Counties hitting new highs well into the triple digits last week.

We can only hope that Dane County is the leading indicator, and that other places in the state start seeing new cases drop as well. But as of the end of July, it's not happening yet, and if we're going to get back toward anything resembling normal in Wisconsin by the time schools are set to start in early September, it needs to start dropping soon.

Sunday, July 26, 2020

COVID update - cases may be plateauing, but deaths are starting to rise again

I take a look at Wisconsin's COVID 19 statistics statewide based on a Saturday-to-Saturday basis. And when doing so this week, we see the same trends as previous weeks, with one bad exception.

First of all, the number of weekly cases continued to increase, nearing 6,400. Although if there's a bright spot, it's that the rate of increase is starting to level off a bit.

Likewise, we are seeing the number of tests continue to increase, and the percentage of positive tests stayed at 7.0% instead of going higher, so perhaps these are signs of plateaus in the resurgence of COVID for the state.

Here's the downside. The increase in positive COVID cases that started to pick up in late June may now be starting to translate in to more deaths a month later, as the last full week of July saw more than double the reported COVID deaths of the previous week.

While you can shrug and say "only 2% of new cases die a month later", that still means about 127 of the people who got COVID last week in Wisconsin would die, which would be a whole lot more than any one week of death that we have had. It also would likely mean hospital capacities and bed availability may start to get near their limits in August if things don't slow down.

And while I didn't include the county numbers (I've kept that on a Monday-Monday basis, and so I'll keep it that way), it looks like Dane County has been getting its early-July breakout under control, but it continues on the rise throughout most of the 262 and 920, and Milwaukee County's new cases are still coming in at a high level.

So things are far from stable, and as July winds down, we need to be making progress in Wisconsin against this virus in August for us to have any hope of getting back towards normal as the weather turns cooler and more people stay inside across America's Dairyland.

Saturday, July 25, 2020

Wisconsin budget battle looms, with the good stuff starting next month

There was a lot of budget talk on the weekly "Rewind" show on Wisconsin Eye this week, and it gave a pretty good rundown about where we are at in late-July 2020. Here's the show if you want to watch it yourself.

I wanted to hit on a few of the notes given by Capitol reporters Steve Walters and Patrick Marley.

1. The Evers Administration is clearly worried that revenues will be far below January's projections. We won't know the total numbers until August (as Walters quotes Legislative Fiscal Bureau director Bob Lang in the video), but Evers' recent announcement of $250 million in pre-emptive budget cuts for FY 2021 goes along with the belief that there will be a shortfall that has to be dealt with.

2. Naturally, Republicans take Evers' move and run with it by asking for more severe cuts. The Rewind show quotes Joint Finance co-chair John Nyrgen as saying that he thinks spending for Fiscal Year 2021 should be kept at the same levels as Fiscal Year 2020. Let me give you an idea at how much that would change plans for next year (I am also going to leave out the expected deposits to the rainy day fund, because that isn't going to happen with revenues falling short).

Walters and Marley add that this idea of freezing spending really doesn't work because the 2nd Fiscal Year has inflation-like increases in aid to K-12 schools, local governments, benefit costs and debt already baked in. In addition, there will be hundreds of millions more state dollars spent on Medicaid than what was expected in the budget (as the recent Medicaid projections indicated), since more people need assistance with hundreds of thousands of additional Wisconsinites out of work.

You can claim that Nygren's talk is out of an ideology to hamper government's ability to respond to social needs, but it's more likely because the WisGOPs are fine with Wisconsin struggling in the next 2 years, because it would allow them to try to blame Governor Evers for the subpar situation during the 2022 gubernatorial campaign.

3. There doesn't seem to be a lot of expectation of help for state government coming with whatever type of stimulus bill might get through Congress (if there is one). Marley mentions that part of the reason that Evers has held back the last $280 million of CARES money is because it is possible that GOPs in Congress will give more "flexibility" to that prior CARES money instead of giving more funds in the next stimulus bill.

That's kind of ridiculous, as the CARES money also has to set aside and used by the end of December. So for Congress to turn around 3 months later and change how that money can be used seems like quite the double-cross to state and local governments. Especially since a lot of that money has already been set aside and/or spent out under the old rules.

So those 3 things lead me to a 4th conclusion. Given that we will know how much revenue is down as of August, and we (hopefully) will know whether or not the Feds will offer assistance to state and local governments around that time, we should have a good idea about how far in the hole we might be in the next month. Once we have those numbers, Evers should call a budget emergency and call a special session to consider a budget repair bill that uses Medicaid expansion to balance the budget.

By law, the gerrymandered GOP Legislature would have to at least consider the bill. If they turn it down, Wisconsin voters that overwhelmingly favor Medicaid expansion would have that fresh in their mind as they go to the polls a few weeks later. And it would cement the (correct) image of the WisGOP Legislature as a bunch of do-nothing obstructionists who have no real answers to the problems that exist in 2020.

The next few weeks may be the last bit of relative calm on the budget front, because the big reports and realities are going to come to light very soon, in an economic situation that looks very different than it did a month ago. Combine that with what likely will be a lack of help from DC, and it's going to be a tight situation.

Thursday, July 23, 2020

New jobless claims go back up...sort of. But definitely still YUGE

I always like it when there's a weird quirk in regular economic data that makes you have to go deeper than the typical headline story. Today, it involved the weekly report on unemployment claims, and most news organizations went with this theme.
New claims for unemployment benefits rose last week for the first time in four months — since March 28 — as states began reimposing lockdown restrictions in an effort to reverse a surge of coronavirus cases.

More than 1.4 million new claims were filed during the week ending July 18, an increase of more than 100,000 over the week before, the Labor Department reported Thursday.

In addition, claims for Pandemic Unemployment Assistance, which helps people who are self-employed or who don't qualify for regular benefits, went up nearly 20,000 to about 975,000.

The number of new claims had been steadily ticking downward since March, when nearly 7 million people filed for unemployment insurance in a single week. Last week's numbers marked the first reversal of that trend.
Unemployment claims UP by more than 100,000? And an 18th straight week of new claims going over 1.3 million?

Well, not exactly. CBS Marketwatch's Rex Nutting took a look at the Department of Labor's report, and he noticed that the actual number of people filing new claims went down.
In the real world, slightly fewer people lost their jobs last week than the week before. The widely anticipated re-weakening in the labor market in reaction to the surge in coronavirus infections isn’t yet showing up in the weekly claims data. A boost in new layoffs will probably show up soon enough.

The figures that were reported Thursday morning aren’t wrong, but they are misleading.
How did this happen? Our old friend, "seasonal adjustment", which assumed that the week after the 4th of July would have even more of a dropoff.

At the end of May (a week that included Memorial Day), that seasonal adjustment resulted in an expectation of fewer claims, so the numbers were inflated. Then that reversed throughout June and early July, which makes sense because in a typical year people would see school years and Summer festivals end, and there'd be a natural increase in layoffs. Until the post-4th week of July 18, which usually has few layoffs, and resulted in a jump in "seasonally-adjusted" claims.

Nutting adds that just because fewer people filed new regular unemployment claims, it doesn't mean we still aren't seeing an unprecedented number of layoffs. Especially when you combine the regular claims with the other main unemployment program that's in force today.
For one thing, the 1.42 million initial claims widely reported by the media don’t include the 975,000 people who filed for federal unemployment benefits under the CARES Act. Furthermore, the 1.42 million number has been seasonally adjusted to account for the typical spike of seasonal layoffs that didn’t happen this year. It doesn’t do the same seasonal adjustments with the CARES number.

So while most of the media reported that claims totaled 1.42 million last week on a seasonally adjusted basis, if you read the the Labor Department report you’ll find that the actual total of new filings (including those who filed under the CARES Act) was 2.35 million. That’s quite a difference!

In the real world, the number of people filing initial claims, including claims for federal pandemic benefits, dropped from 2.45 million to 2.35 million in the week ending July 18. A month ago, that figure was 2.34 million. So layoffs have been roughly flat for a month.
I've said for a while that the bigger stat to track is continuing claims, which gives a better idea of just how many people continue to be laid off. And while that number dropped in early July (the last week measured), we still have had more than 30 million Americans claiming benefits for each of the last 9 weeks.

But what makes me think that July's jobs report might be significantly worse than June's big increase isn't the continued large number of layoffs (although 2.4 million new claims a week is still huge). Instead, it's because there have been few places re-opening between June and July, unlike the previous two months. Which means the unemployment numbers will remain elevated, at levels that are even higher than what we had at the depths of the Great Recession.

Wednesday, July 22, 2020

Baseball's back! But Wisconsin sports businesses will still be hurting

What is sure to be a weird MLB season gets going over the next couple of days. A 60-game regular season, universal DH, and no fans in the stands are among the oddities of 2020 baseball in the COVID world.

In addition to fewer games, the lack of fans is also going to have a significant economic injury for the area. Channel 12 had this report about the loss of jobs that is resulting from the COVID-shortened baseball season and lack of fans at Brewers games.

Hundreds of seasonal workers are without jobs as baseball games begin.

"It's gonna cost me over $10,000 in lost income," beer vendor Ryan Strnad said.

It's the first season in more than 30 years that he's unable to sell to fans.

"It will break my heart to watch baseball, without having a chance to vend in it to be very frank with you, and to see those empty seats," he said.
In addition to the Brewers' workers that are affected, as owners of a 20-game pack, my wife and I certainly aren't heading to Milwaukee nearly as much as we would in a typical Summer. That means we aren't spending money in bars and restaurants there, and other places that we might visit (and yes, the flip side is that we are spending more money at home....if COVID wasn't locking us down anyway).

Wisconsin's 2 main football teams are also going to have to deal with the fallout from COVID-19 (if they play at all this Fall). And it is comes off the heels of a strong 2019 both on and off the field for both the Packers are Badgers. The Pack just revealed their most recent numbers this week, and it should allow them to weather whatever fiscal problems tyhat come in the 2020 season.
The Green Bay Packers reported record revenue of $506.9 million for last year and indicated they might get through this pandemic-stricken year without dipping into their corporate reserve fund.

The NFL's smallest-market team, and the only one that reports its finances, passed the half-billion-dollar mark for the first time in the fiscal year that ended in March, just as the coronavirus pandemic shut down much of the country.

The Packers reported a 6.1% increase in total revenue, driven primarily by a $21.7 million, or 7.9%, improvement in national — i.e., television — revenue. Local revenue increased $7.3 million, or 3.6%, with increases in ticket prices, game-day sponsorships and Packers Pro Shop sales. The Titletown District also began to contribute to the bottom line.
That resulted in the team pulling an operational profit of more than $70 million last year. And given that NFL teams make more of their money from broadcasts and other team-owned businesses, a largely-empty Lambeau Field doesn't mean that the Pack goes broke.
Packers President and CEO Mark Murphy said between 10,000 and 12,000 fans might be allowed into games this season because of coronavirus pandemic safety measures. With national revenue covering player costs, that would be enough fans to cover other expenses.

"I think we are safely north of what the break-even point is, just based on the current conversation of where the number of fans will be," said Paul Baniel, vice president of finance and administration.

Get used to this image

But Wisconsin's other major football team might not be able to weather the oddness of the COVID world as easily. Badger Athletics relies heavily on season ticket sales to UW football and related football revenue, which subsidizes many of its other programs. Which makes the prospect of a conference-only 2020 season in front of limited-at-best crowds one that will put a major dent into the entire UW AD.
Even in what could be a best-case scenario given the current landscape, the University of Wisconsin athletic department is anticipating a revenue loss of at least $60 million for the 2020-21 school year because of the COVID-19 pandemic.

If the financially lucrative football season is canceled entirely, the revenue impact could be greater than $100 million, according to UW.

Responding to questions about finances, an athletic department spokesperson provided written statements saying that it is “highly likely” that UW will have to use a reserve fund to cover losses this fiscal year.

In a scenario being modeled by the department in which the Badgers football team plays the conference-only schedule now on the table and all other UW sports continue, revenues are projected to decline by $60 million to $70 million in an operating budget that calls for spending about $139 million.
By the way, any cuts that the Athletic Department would have to take on would be on top of any reductions UW-Madison might take on as part of Gov Evers' request of $250 million for Fiscal Year 2021. That's because the Athletic Department is self-supporting, and outside the realm of the Wisconsin state budget.

And much like we see with Brewers bars and other Milwaukee businesses that benefit from MLB, there are many restaurants, bars, and lodging facilities around Green Bay and Madison that will be hurt due to a lack of people traveling to Badger and Packer games this Fall. In businesses that are already being drilled in the COVID world, that could be a fatal blow that leads to more closings and job losses, if there isn't a bailout for those industries.

Yes, it'll be nice to see the Brewers back on the field this weekend. But just because the games are being played, it doesn't mean the business of sports in Wisconsin isn't going to take a significant hit this Summer.

Monday, July 20, 2020

Wisconsin COVID cases keep setting records, and it's all over the state

Like many other states, COVID-19 infections continued to trend upward in Wisconsin last week. The amount of new positive cases in a given week tripled over the last 5 weeks, with more than 5,800 Wisconsinites testing positive between last Saturday and the Saturday before it.

And while last week had the highest amount of tests in a week for Wisconsin, at more than 80,000, the rate of those tests turning up positive hit the highest levels in more than 2 months.

COVID is being felt throughout most parts of the state, as shown by this map that the Wisconsin Department of Health Services produces every week, which indicates how severely COVID is hitting a certain area.

By the numbers, Milwaukee County had its first week of more than 2,000 new cases, and we also saw record cases in Waukesha and Kenosha Counties, and Racine County is seeing cases jump back to the major levels that it was seeing in late May.

Dane County is starting to come down from the records it was setting 2 weeks ago. But it still had its 4th straight week of 500 new cases or more, and that is significantly elevated compared to what Dane County had a month ago.

And the largest counties in northeastern Wisconsin all had notable upticks in new cases, with Outagamie County seeing them more than double in the last 3 weeks.

The only positive news on COVID-19 in Wisconsin is that the increased cases have yet to translate into more deaths. We remain near multi-month lows, although we are just starting to hit 4 weeks after weekly cases started coming back up, which seems to be around the time lag between testing positive and deaths.

That makes these next 2-3 weeks crucial in Wisconsin for a couple of reasons. Both in seeing if death totals start rising and hospital capacities start getting constrained, and in seeing if we can stop the spike in new COVID-19 cases, and start to get this thing under control as the start of school gets closer by the day.

Sunday, July 19, 2020

Wis Dems have ideas on lowering unemployment backlog. But record claims keep getting filed

After months of complaints from Wisconsinites regarding the inability of people to get unemployment benefits after getting laid off, and with 1 in 10 claims still to be decided, Assembly Democrats came out with a list of changes that would remove some of the barriers that has kept people from getting their money.

Seems like we needed to see more legislation on this subject from legislators from both parties sometime in the 4 months since COVID-19 broke out. But regardless, it's something, and here's a good rundown of what these bills would do.

The waiting period, $500 wage threshold, suitable work, and a version of the work search changes were part of Tony Evers' 2019-21 budget proposals for DWD. The WisGOP Legislature took those items out of the budget, and kept the barriers that are in place.

Naturally, the WisGOPs also are planning to reject the Dems' proposals for changing unemployment rules in 2020, and it led to this gaffe from Assembly Speaker Robbin' Vos.

In addition to the garbage partisanship of the statement, Vos is bascially admitting that the barriers put in place were done with the intent of keeping Wisconsinites from getting unemployment benefits they were entitled to. And by proxy, keeping the taxes that employers pay into the unemployment fund artificially low.

As former UW professor Pamela Herd noted a couple of months ago, WisGOP's "reforms" were quite successful in turning deserving beneficiaries away.

And while ex-Governor Walker gives typical BS evasions on why he signed off on all of these added paperwork, the marginally employed college dropout is at least recognizing another big reason claims aren't getting paid.

Let's not forget that still have an unprecedented amount of unemployment claims, both in Wisconsin and nationwide. There have been at least 1 million new claims filed in each of the last 17 weeks in America, and more than 30 million continuing claims have filed every week since early May.

Likewise, there have been 17 straight weeks in Wisconsin that have had new claims of 24,000 or more, and there are still more than 200,000 continuing "regular" claims a week, well over what we had at the start of March.

And with the state setting records for new COVID-19 claims in each of the last 3 weeks, it doesn't seem like the onslaught of unemployment payments will subside any time soon.

That bad jobs situation helps explain why Republicans in Wisconsin are spending so much time whining about the lack of unemployment payments. Better to play partisan games by complaining about the lack of payments instead of dealing with the Trump/GOP failures on COVID-19 that are a big reason behind all these added claims, and the huge amount of paperwork that claimants have to fill out, and DWD workers have to slog through.

We gotta continue John Lewis' work. Especially in Wisconsin

America lost a true national hero yesterday in John Lewis. And while there are a lot of tributes pouring in, I want to choose this statement from a white Milwaukee Brewer for giving the right tone.

"How we go from here" is the real way to honor John Lewis. And there's one simple way to do that, if Ron Johnson, Mitch McConnell and the rest of the Senate GOP would simply do their jobs.

And few places have turned back the clock on voting rights and legitimate representation than Wisconsin, as Berman accurately broke down last year.

Former One Wisconsin Now leader and Dem operative Scot Ross pointed out that the WisGOPs that allowed this election-rigging must be held responsible for what they've done to voting rights in this state.

To those guys' "credit", they didn't say anything about John Lewis yesterday. Vos tweeted and retweeted whiny, cultural BS (in fairness, it's all they got at this point), and Fitz was showing himself at some Waukesha County GOP event (a place where the work of John Lewis was likely not discussed).

I'll leave you with the words of the young John Lewis himself, where he describes problems that are no different now than in 1963 (and this clip doesn't mention Lewis calling out police brutality against people of color in this speech).

We gotta do better.

Saturday, July 18, 2020

Reopening stores doesn't mean that our retail spending has returned to what it was

A key to getting the economy back on track is restoring consumer spending to the pace that it was at before COVID-19 broke out. June's retail sales report loomed as a big indicator of that, since that was the month where many restrictions closing businesses had been relaxed...and right before COVID resurged to the record levels that we are seeing today.

If you dig into the retail sales report, the topline sounds pretty good, although the April through June shows the damage that was done.
Advance estimates of U.S. retail and food services sales for June 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $524.3 billion,an increase of 7.5 percent (±0.5 percent) from the previous month, and 1.1 percent (±0.7 percent) above June 2019. Total sales for the April 2020 through June 2020 period were down 8.1 percent (±0.5 percent) from the same period a year ago. The April 2020 to May 2020 percent change was revised from up 17.7 percent(±0.5 percent) to up 18.2percent(±0.3 percent).
And if you just looked at the totals, you might think we had mostly recovered from the COVID-related shutdowns, as total retail spending was back near where we were at the start of 2020, especially if you look at "core" retail sales.

And June's sales reflected the switching in where Americans chose to spend money at, as more options were made available to them, as well as more travel to/from work and other places.

Retail sectors up in June
Clothing and accessory stores +105.1%
Electronics/appliance stores +37.4%
Furniture/home stores +32.5%
Sporting goods, hobby, music, book stores +26.5%
Bars and restaurants +20.0%
Gasoline stations +15.3%

Retail sectors down in June
Non-store retailers -2.4%
Grocery stores -1.6%
All food/beverage stores -1.2%
Building material/garden stores -0.3%

But the numbers from June don't come close to taking us back to the pre-COVID world of retail. Several brick-and-mortar retailers were still down between 10 and 30% compared to where they were in June, while the Amazon-type retailers, Menard's-type stores and grocers continued to benefit from higher sales to people that still were still staying in more than they were at the start of 2020.

This is before COVID re-emerged as widespread as ever, and caused more cutbacks and shutdowns in these depressed sectors across several states. I have no reason to think those sectors grew in July (except for maybe gas stations, and only because the price of gas has gone up), and these charts indicate the two-tier economic reality that has gotten much worse in America since March.

If you make most of your money in offices and by trading paper, you have likely been able to continue in your job with few disruptions to your income. You may even be better off, given the Bubbly stock and home markets. But if you work a job that requires a physical location, particularly a low-wage restaurant or store clerk job, you are working in a much more stressful environment due to higher exposure to COVID...if you're even working at all.

And yet, it's the office jobs and corporations that have gotten the bigger bailouts to this point, with a major cliff of cutoffs looming for the groups of people that have gotten the short end of the stick. The retail situation and the worsening COVID outbreak that's happened since then underscores the need for these depressed businesses and their workers to get more assistance from Congress ASAP. Or else many more jobs are going to go away in these sectors, and a lot of retail space/tax base is going to get vacant in a hurry.

Thursday, July 16, 2020

June had more jobs in Wisconsin. But we were still far in the hole

Today we got another update on the jobs picture in Wisconsin, as we try to climb out of the depths of the COVID-19 induced recession that hit in the Spring. And the numbers ended up being pretty good.
Wisconsin's unemployment rate dropped to 8.5% in June — a bit of good news that came Thursday as Democratic lawmakers released proposals to remove obstacles and broaden access to unemployment benefits.

The jobless numbers also came as Gov. Tony Evers' administration temporarily reassigned 100 state workers to help address a backlog in claims.

Wisconsin's unemployment rate last month was far below the national rate of 11.1% and was down from the state's high of 13.6% in April. That figure reflected the height of businesses closing across the state in response to a “safer at home” order issued by Evers to slow the spread of the virus. Wisconsin's unemployment rate was 12.1% in May.

It’s definitely good news to see Wisconsin’s unemployment rate drop by as much as it did in June. But if you look at the numbers in the report, you’ll notice this stat.

Wisconsin labor force
May 2020 3,103,200
June 2020 3,056,900 (-46,300)

That means it’s almost a 50-50 split for why the unemployment rate went down in Wisconsin. Half was due to people getting back to work, but the other half was due to people dropping out of the labor force. Some of this "reduction" is likely due to fewer people heading into Wisconsin for Summer tourism jobs because outside travel has been greatly reduced in the COVID world. In fact, 12,200 more people were listed as being in the Wisconsin work force in June 2020 vs May on a raw number basis, but that's way below the additional workers that come in for a normal year, so it becomes a seasonally-adjusted loss.

Interestingly, Wisconsin’s drop in the labor force was different than what was happening nationwide, where 1.7 million were listed as returning to the labor force. This could simply be the national survey correcting in June as things (temporarily) settled down, because Wisconsin’s participation rate is still well higher than the US’s – we were 4.2% above the US rate in June 2020 and 4.0% above the US rate in June 2019.

On the payrolls side, we also bounced back, with a bigger increase from May's jump of 71,400 jobs.
The report shows that Wisconsin added 99,300 private sector jobs in June.

Winters said industries hardest hit earlier in the pandemic, such as leisure and hospitality, were the ones driving the recovery as businesses began to reopen.
But the leisure and hospitality sector was still down more than 88,000 jobs compared to its February peak. And that underscores the jobs hole that this state and this country is still in. Nearly 1 in 10 private sector jobs are gone compared to what we had in Feburary, and Wisconsin has a higher rate of job loss than the rest of the US has.

The other is that goods-producing industries hadn't done as much seasonal hiring as they usually would for June in Wisconsin. Which translates into a seasonally-adjusted LOSS of jobs in this jobs report.

Job change, Wisconsin June 2020
Non-seasonally adjusted +6,800
Seasonally adjusted -200

Non-seasonally adjusted +7,400
Seasonally adjusted -400

And remember that this survey was taken in a time period in mid-June when new COVID-19 infections were at their lowest since the pandemic first broke out and businesses were reopening. Things look a lot different a month later, both in Wisconsin and in America, and I have to wonder if June is the last month of significant rebound in the job market for a while.

If that's true, then things will get dark very quickly for a lot of Wisconsinites, especially if there's no help coming down from DC to keep people afloat like there was in March. As these numbers show, even with 2 months of sizable job gains, there is still a massive gap in the Wisconsin jobs market.

Wednesday, July 15, 2020

COVID-19 keeps rising in Wisconsin communities large and small

Another week, and COVID-19 numbers keep rising in Wisconsin, to its highest level yet. Between July 6 and July 13, there were nearly 4,900 new positive tests for the coronavirus in the state. Nearly 35% of those positive tests came in Milwaukee County, and the two largest counties in Wisconsin have both seen sizable jumps in cases in late June and early July.

Those recent breakouts help to explain why both Dane County and the City of Milwaukee have put in mandatory mask requirements that took effect this week.

But the COVID-19 increases are happening in several parts of the state outside of those 2 populous counties. For example, 5 mid-size counties in southern Wisconsin each had more than 100 new cases in the most recent week.

And while Brown County continues to have the highest rate of infections in Northeastern Wisconsin, the other two large-population counties in the Fox Valley are having significantly more cases than they dealt with in April and May.

COVID-19 is also increasingly prevalent in smaller communities of Wisconsin. Here's a sampling of stories that were on the Wheeler Report today.

"COVID-19 hospitalizations rising in Rock County."

"Testing in Abbotsford identifies 31 positive coronavirus cases."

"Marinette County: Area experiencing ‘surge’ of COVID-19 cases."

"COVID-19 numbers rise in Sauk County."

Boy, sure seems like it would be a good time to have a coordinated, vigorous response with statewide standards to crush this resurgence of COVID-19. And possibly some kind of ability to keep people at home as much as possible in all corners of the state. Oh wait, OUR SUPREME COURT SAID WE COULDN'T DO THAT.

How's this working out for us? You think this COVID resurgence and the related drop in consumer spending is going to help our economy going forward? C'mon WMC, C'mon Bradleys! You wanted the companies "free market" to decide this instead of the professionals. Well whaddya have to say about our COVID and economic situations now?

Monday, July 13, 2020

US deficit blows past $2.7 trillion with 3 months to go. But should we worry about that?

We know that the Federal budget deficit has blown up to record levels in these last few months. But even so, today's figures still had to make you step back and say "WHOA!"
The Treasury Department reported Monday that the deficit hit $864 billion last month, an amount of red ink that surpasses most annual deficits in the nation's history and is above the previous monthly deficit record of $738 billion in April. That amount was also tied to the trillions of dollars Congress has provided to cushion the impact of the widespread shutdowns that occurred in an effort to limit the spread of the viral pandemic.

For the first nine months of this budget year, which began Oct. 1, the deficit totals $2.74 trillion, also a record for that period. That puts the country well on the way to hitting the $3.7 trillion deficit for the whole year that has been forecast by the Congressional Budget Office.

That total would surpass the previous annual record of $1.4 trillion set in 2009 when the government was spending heavily to lift the country out of the recession caused by the 2008 financial crisis.
In fact, June's deficit of $864 billion isn't far off of the $984 billion deficit for all of FY 2019.

If you dig into the Treasury's statement and then compare the numbers back for the last 6 months to the same months in 2019, you can see where COVID-19 and the recession blew up, which then blew up the deficit.

Part of the reason behind the explosion in the deficit is revenue-based, with that decline coming from COVID-19 fallout. And not just because there are millions fewer people working at this point in 2020, but also because of legislation that delayed the 2020 tax deadline to July 15 (aka, "Wednesday"). This means that people like me and my wife weren't paying our $3,000 tax bill in April, as we did in 2019, and that's reflected in the huge difference in April revenues between those 2 years.

But you'll see that the difference in revenues for June is only $94 billion, while the total deficit for June 2020 was $855 billion more than it was in June 2019. Which means the big blowup was on the spending side, and the Treasury Department pinpointed one big payout in particular.
...More than half of this increase [in the deficit vs 2019] was due to a $511 billion increase in Small Business Administration budget outlays, primarily for the Paycheck Protection Program (PPP). Cash expenditures for loan forgiveness under PPP will occur in subsequent months.
PPP payments caused a huge one-time jump in expenses for the country as a whole, much like we saw in April when hundreds of billions of dollars in stimulus checks went out to everyday Americans.

One other big number that's driving up expenses is the $600 federal add-on for unemployment benefits, in addition to the tens of millions of additional people getting benefits in 2020. That was $260 billion more than what was spent for unemployment in June 2019, and that and the PPP funding illustrate the level of money that has been going out of DC to keep people afloat.

Which also illustrates the danger in using the exploding deficit as an excuse to cut off this additional aid in a time when COVID-19 is as widespread as ever, and states and communities feel that they have to re-institute restrictions on businesses to slow that spread. There's nothing coming that's going to replace that loss of income from the Feds, which makes it increasingly likely that the recession resumes and gets deeper in the second half of 2020 if Congress doesn't continue to spend on Americans.

Yes, that'll send the deficit spiraling higher. But with little to no inflation (well, other than the stock market and the grocery store), and with 10-year bonds still fetching an annual yield of 0.62%, our record deficit hasn't had any effect on our economy beyond allowing some semblance of demand to continue. So outside of the absurd number on the paper (which does have its shock value), our deficit really isn't a economic problem for us in Summer 2020. And we certainly shouldn't look at the deficit number to guide policy at this time.

Sunday, July 12, 2020

No, Miller Park is not getting "extra" money. But it still could be redirected to a better place

When you want someone to make a big story out of something very little, the Journal-Sentinel's Dan Bice is your man! Like with this Bice column from last week that had the headline of "Miller Park board left holding an extra $4.3 million after ending regional sales tax."
Members of the board for the Southeast Wisconsin Professional Baseball Park District — the landlord for the Milwaukee Brewers' retractable roof dome stadium — voted unanimously in March to end the tax. The 0.1% sales tax had been in effect in Milwaukee, Ozaukee, Washington, Waukesha and Racine counties.

But then something funny happened.

After the controversial tax was officially over, the Miller Park district received two payments for $4.3 million from the state Department of Revenue, which collected funds generated by the sales tax for the district.

This was not money the Miller Park district was expecting.
We're not paying for this any more!

"Windfall?" If you look at typical FY 2020 Miller Park tax distributions, around $2.5 million to $3 million was collected in a typical month. So why wouldn't 1-2 months of lag be expected?

Especially if you read the Wisconsin Department of Revenue's bit of information on the now-defunct Miller Park tax, the $4.3 million looks like a typical lag.
The monthly distribution is the sum of all completed transactions posted in our processing system from the 16th of one month to the 15th of the next month. For example, the sales tax on a transaction in December should be reported on a sales tax return due by January 20 or 31. If the return is processed by February 15, the tax would be included in the February distribution to the stadium district.
So if retailers were collecting the 0.1% Miller Park tax until the end of March, then maybe all of the totals were figured by April 15 and sent on to DOR, then the Miller Park district would get that money at the end of April.

But what if they took a while to send that information in (especially as COVID-19 broke out in March), or if the firms and/or individuals chose to file sales taxes in each quarter, and then took until April 30 to send their stuff in? Seems like it would make sense that there would be some residuals that would make up a May distribution along with the regular April collection.

However, that's not going to stop anti-tax yokels in the 262 from complaining, with an example being Washington County Executive Josh Schoemann.
Last fall, the legislature finally ensuredthe baseball district wouldend this tax in 2020. Act 28 was intended to ensure the Department of Revenue could properly sunset the tax.

Washington County taxpayers have waited too long for this tax to sunset and now Madison bureaucrats cannot figure out how to end the tax. Mike Duckett and the park district board are trying to do the right thing by returning the money the taxpayers.

If the Department of Revenue cannot figure out how to properly return the money, first thing next session, legislators should introduce a bill which would require the overpayment returned to the taxpayers of the five counties in the most efficient way possible.
Actually Josh, it looks like that money was properly collected by DOR through March 31, and worked its way back to the Miller Park district. So don't worry about that part. That being said, maybe the state legislators and the Miller Park district were thinking they should stop getting payments in March, and weren't thinking about the 6-8 week lag.

And if they want to give that $4.3 million back to the 5 county governments, especially in a year where budgets are going to be difficult to balance, it might be a smart way to deal with any of these residuals, now that the Home of the Brewers has finally been paid off.