Friday, October 30, 2020

Q3 ends well for income and spending. But the signs for Q4 aren't as good

While the GDP figures may have gotten the bigger attention of the week, Friday's income and spending report may have given a better indication of where our economy was actually at, and where it might be heading. And it was a pretty good report, as it indicated that the US economy continued to work its way out of the massive hole that it was put in for March and April, when COVID-19 first broke out.
Personal income increased $170.3 billion (0.9 percent) in September according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) increased $150.3 billion (0.9 percent) and personal consumption expenditures (PCE) increased $201.4 billion (1.4 percent). Real DPI increased 0.7 percent in September and Real PCE increased 1.2 percent (tables 5 and 7). The PCE price index increased 0.2 percent (table 9). Excluding food and energy, the PCE price index increased 0.2 percent.
A 1.4% increase in spending is really good, especially considering that August's increase was 1.0% and it seemed like things might be slowing down. Goods continued to be the driver of the recovery in spending, both durable and non-durable goods had solid gains, with good spending up 2.0% for September vs 1.1% for services (nominal basis). It continues a shift where Americans have been spending more on goods in the COVID World, as they spend more time around the house and need to make more use certain physical items. On the flip side, spending in services continues to be far below where it was in Feburary.
That's a 7.3% decline in real spending on services, and you can see that the growth was already leveling off on that side....before we started seeing record cases of COVID in October.

For incomes, more than half of the increase in income was driven by business owners (+$95.3 billion), which outpaced the increase in worker compensation (+$86.2 billion). In fact, owners of businesses (shown in green) are making more money than they did before COVID broke out. Workers? Not so much.
Also, note that while stimulus checks have been mostly been sent out at this point, we're still at a significantly elevated amount of unemployment benefits ($634 billion above Feburary's level on an annual basis). In fact, the amount of unemployment benefits went up in September, as the ending of $600-a-week add-ons for unemployment was offset by many states having the $400-a-week add-on that President Trump raided out of FEMA.

That's going to end in many states for October (Wisconsin is an exception, because we didn't start the $400-a-week add-on until a couple of weeks ago). But the ending of the higher $600-a-week unemployment benefit didn't slow down spending in September, and neither has the slowdown in job and wage growth in the last couple of months. But as COVID gets worse, a larger-than-normal number of businesses close for the season, and the Bubble of election spending pops after next week, what's going to keep things pumping along during the Holiday season?

Q3 had a nice rebound to get us back to the levels of "moderate recession" instead of "collapse". But it is going to be a much tougher road in Q4 to have us continue onto a full recovery, both economically and in general health.

Thursday, October 29, 2020

The "Trump economy" was never that great. Especially for Wisconsin and the Midwest

I was already going to write about this subject, but then I saw the Veep try to sell this BS in Marathon County yesterday at yet another Trump/GOP Superspreader Rally.
Vice President Pence warned this election is a choice on whether “America remains America.”
Well, there's THAT meaningless pile of BS. But I meant this statement.
“This election is really a choice between a Trump recovery and a Biden depression,” he said. “I promise you we’re going to make America great again, again.”

Pence spent the majority of his speech praising the first three years of the Trump presidency, arguing the administration successfully “made America great again” with a growing economy through 2019.
Oh really? Well, let's look at those first 3 years of the Trump/Pence record with the Obama/Biden record of the previous 3 years. We even have updated numbers from today's GDP report to get a more complete picture.

Let's start with year-over-year GDP growth, and I'll mark Obama/Biden in blue and Trump/Pence in red. Mostly because it's the best way you'll tell the difference between those years.
Let's then look at the unemployment rate over those 6 years. After notable drops in unemployment in 2014 and 2015 under Obama/Biden, these declines moderated as we got closer to full employment.
So let's go into job growth instead, using the December-December totals. And here we see some definite differences...in favor of Obama/Biden.
Again, this isn't tyaking intio account, although there is little doubt that Trump/Pence's botching of the response to COVID-19 is a big reason behind a lot of those losses, along with the continued spread of COVID in Wisconsin and much of the rest of America.

But it's especially garbage for Pence to try to claim "Trump is better for the economy" to Wisconsinites. Because the Trump years haven't been so great for us. Unemployment started rising again in 2019 in our state, and job growth dropped to near 0 by the end of that year before tanking after COVID broke out.

Reuters had an article along these same lines, calling out Trump/Pence for not coming through on their claims to bring back the Midwest economy, in an article titled "The Rust Belt Boom that wasn't."
Across the industrial belt from Wisconsin to Pennsylvania, private job growth from the first three months of 2017 through the first three months of 2020 lagged the rest of the country - with employment in Michigan, Wisconsin and Ohio growing 2% or less over that time compared to a 4.5% national average, according to QCEW data analyzed by Reuters....

Perhaps notably for the election, a Reuters analysis of 17 prominent counties in the five battleground states of Florida, Michigan, Ohio, Pennsylvania and Wisconsin showed the limits of Trump’s controversial tax and trade policies in generating jobs where he promised them. All 17 of the counties had a voting age population greater than 100,000 people as of 2016, supported Obama in the 2012 election, and voted for Trump in 2016.

In 13 of those counties, all in the Rust Belt region, private job growth lagged the rest of the country. Employment actually shrank in five of them. Of the four with faster job growth than the rest of the country, two were in Florida, one was in Pennsylvania and one was in Wisconsin (Kenosha, FYI) .
As you can see, the ice cold blue in the Midwest shows that job growth was slowing significantly in the Trump era even before COVID-19 broke out, and we were left far behind the rest of the country.
Central to Trump/Pence's claims were that they would put "America First" and bring manufacturing back to a part of the country that had lost so many of these good-paying jobs. Instead, it was another area of the economy where the Midwest was behind the rest of America under Trump.
Trump, in his 2016 campaign, put a premium on manufacturing jobs - last century’s path to the middle class - and as president used a combination of trade policy, tariffs, and blunt force arm-twisting on companies to try to shore up the prospects of the industrial heartland that formed his electoral base.

It didn’t happen. Texas, according to QCEW data, gained more manufacturing jobs from 2017 to the start of 2020 than Ohio, Michigan, Wisconsin and Pennsylvania combined; the smaller but increasingly competitive manufacturing cluster in Tennessee, Georgia, South Carolina and Alabama gained as many factory positions as those legacy manufacturing states.
To go further, manufacturing in America stagnated after 2018 - 12-month job growth on manufacturing had dwindled to near-zero by February 2020...before COVID hit. And that sector is now down 650,000 jobs in the COVID World. While Mike Pence may have been "lying for the Lord" when he talked up Donald Trump's record on the economy in the 715 this week, it didn't make it true. The bottom line is that the Trump years weren't that great for Wisconsin before COVID-19 broke out, and now that is has, it's become a full-fledged disaster. And it won't get better if these guys are kept in office.

Wednesday, October 28, 2020

COVID breaking out in all corners of Wisconsin. And GOP's blind eye isn't helping

There is nothing good to report on the COVID front in Wisconsin, and that's true in pretty much every part of the state.

Let's start in the place where VP Mike Pence, he of the multiple staff members with COVID, is heading to the airplane hangar in Mosinee for a rally today. This comes 6 weeks after President Trump had a rally at the same Marathon County site, and let's look at what has happened since then, shall we?
Not good. Neither is the situation in Rock County, where Trump was last week.
Trump was also in Waukesha last weekend, while that county's epidemic continued to worsen.
Trump went to the La Crosse County community of West Salem yesterday to hang with the Trumpers that run Kwik Trip have another rally. La Crosse County had a huge spike when students returned to classes at the local UW campus, and while it had declined since then, the county was still seeing 3 times the new cases that were happening in August.
And now you get a Trump SuperSpreader event. Good luck, guys.

What's interesting is that La Crosse County hadn't seen the recent resurgences that other counties with big UW campuses had seen. For example, look at last week's jumps in the counties that have UW-Eau Claire, UW-Stevens Point, and UW-Platteville.
And the county with the flagship school in Madison is not immune, setting a record for new cases last week after the virus seemed to have been calmed over the previous 5 weeks.
Which corresponds to national headlines from the biggest sports team at UW-Madison today. Maybe the reality of no Badger football on the Saturday before the election might make the average Wisconsin meathead recognize that this thing is real and that it's a real problem. Most won't (because it takes effort), but if a few are able to, I'll take it.

Nothing is going well here, but yet the GOP-controlled Legislature hasn't met once in the last 6 months to try to do anything that might try to control the spread of the virus, or even to help Wisconsinites that are dealing with the health and economic effects of our COVID-19 breakout. And while I am skeptical of its claim that the presidential race is still tight in Wisconsin, this part of the Marquette Law School poll seemed to indicate that state voters had connected the dots on theGOP's inaction. Right as those numbers were coming out, we got this headline, which is NOT from The Onion. I was told a couple of years ago not to swear so much on this site, but there's no other honest response to reading this. While Biden +17 in Wisconsin feels too good to be true, given the way GOPs have failed to do a damn thing about this crippling pandemic, and tried to keep it "out of sight, out of mind" to give an illusion of normalcy, they deserve a beating like that in 6 days.

Tuesday, October 27, 2020

Math note - record GDP "growth" will not get us back to pre-COVID normal

On Thursday, we will get our first read on Q3 GDP. And watch for TrumpWorld to constantly flog this report, as it comes off the depths of COVID lockdowns, and is almost certain to report the highest one-quarter jump in GDP in the nation's history. The Atlanta Fed estimates that Q3 will have an annualized growth rate of 36.2%, and it would come on the heels of a Q2 decline of 31.4% and a Q1 drop of 5.0%.

I will bet that Trump and other GOP hacks will point to this GDP report and say " Minus 5 and Minus 31.4 is Minus 36.4. Now with this 36.2% growth, we're basically back to normal!" NO. Just.....NO. And that's 3% of TOTAL output. It means that we'd have to get 3 more quarters of growth near 4% just to get back to where we were at the end of 2019.

Of course that's GDP, which measures the amount of output. But fewer people and fewer companies are the ones cranking out the products, as let's not forget that we are still down more than 10.7 million jobs compared to where we were in February. And those individuals have lost significant amounts of their unemployment benefits in recent weeks, and the potential demise of the ACA looming to cause even more disruption in people's lives.

Even if people haven't lost their jobs, many of us are not able and/or willing to spend in places and levels that we did at the start of this year, as COVID is as bad as ever with weather turning colder. And so if Trump/GOP try to say "What a great American comeback!", I think it'll piss off more people than it'll trick, because no one that's looking at our economy in any honest way can think that things are back to normal. Not by 2019 standards, and not even by 2016 standards.

Monday, October 26, 2020

Trumpism/Walkerism realigned Wisconsin voters in 2016 and 2018. So what changes in 2020?

Wanted to give your attention to an excellent breakdown by the Journal-Sentinel's Craig Gilbert of how Wisconsin voting patterns have changed across communities.

Gilbert says there are 5 different types of Wisconsin communities, based on size and location.
• “Principal cities” make up just over 30% of the statewide vote (using the 2016 presidential election). These include not just the big blue cities of Milwaukee and Madison, but lots of smaller and more purple cities such as Wausau and Green Bay.

• “Core suburbs” also make up 30% of the vote. This category includes most of the very Republican “WOW counties” (Waukesha, Ozaukee and Washington). But the WOW counties are only about a third of the state’s suburban vote.

Other big components are the purple and blue suburbs within Milwaukee County, the very Democratic suburbs of Madison and the purple and red suburbs in the Fox Valley region around Green Bay and Appleton....

• “Exurbs and large towns” make up around 20% of the vote. These include less densely populated suburbs at the edge of metro areas and communities outside metro areas with 10,000 to 50,000 people.

• “Small towns” make up 10% of the 2016 vote. These communities have between 2,500 and 10,000 people and are overwhelmingly outside the Milwaukee and Madison TV markets.

• “Isolated rural” communities make up a little under 10% of the vote. These are very small places with no commuting ties to larger places.
In 2000, 2004, and 2012, these figures were mostly the same statewide, except for Barack Obama doing better in large cities in 2012 than Al Gore did in 2000 or 2004. And in 2008, Obama improved from the last 2 Dems in every type of community, which explains how he won the state by 14 points and how Democrats were able to get complete control of state government.

But 2016 marked a major shift in these patterns. Hillary Clinton had numbers in line with Obama's 2012 figuees in the 60% of the state that makes up major cities and core suburbs. But Donald Trump blew her out in the smaller communities, and that's how he was able to win the state by less than 1%.
Gilbert notes that these patterns repeated in 2018, where Scott Walker actually improved in smaller communities while doing notably worse in the rest of the state, resulting in Walker losing to Tony Evers by just over 1%. And Gilbert says polling indicates we will see more of this in 2020.
The 2018 mid-terms marked a continuation of these trends. Compared with his previous race in 2014, Walker lost a lot of ground in the cities and suburbs but improved his margins in the most rural communities. This year, the density divide remains in force. Marquette's polling (combining May through October) has Trump trailing Biden by 32 in the cities, splitting the suburbs, winning the exurbs and small towns by around 6, and winning the most rural communities by around 14.
Interestingly, today we got a new poll that UW-Madison did of Wisconsin (which had Biden winning by 9) and 2 other Big Ten-area battleground states, and it has a similar breakdown by type of community. Unfortunately, it's combined among the 3 states and not broken down individually. And we are seeing the same numbers.

Mich, Penn, Wis poll
Big City - Biden +67
Suburb - Biden +9
Small City - Biden +27
Small Town - Trump +2
Rural Area - Trump +23

I have a feeling the "Big Cities" in the UW poll are a bit bigger than what Gilbert lists. But you get the idea, and if Trump is only winning Small Towns by 2 and is losing the suburbs, he's basically done if those numbers hold in Wisconsin.

It's a good guide to look at, and it shows a number of paths to victory for Biden.

1. Increase turnout and margins in the big cities.
2. Make further gains in or even win the suburbs.
3. Not get blown out in smaller towns, and have those results be in line with 2000, 2004, and 2012.

And if all 3 are combined, that's how you get the type of double-digit blowout that could break the GOP's gerrymander at the state level. So why not compete everywhere? Because if it works anywhere, then Biden will win Wisconsin in 8 days.

Sunday, October 25, 2020

Another worsening week of COVID in Wisconsin, as GOP waves the white flag

Wisconsin's COVID-19 breakout has been getting national attention in recent days, with these news pieces being an example. And last week's numbers continued the bad trends. Saturday the 17th had zeros across the board as the Wisconsin Department of Health Services updated its servers, so I've distributed half of the increase shown on Sunday to the prior week. There also was the entry of some prior negative tests in the DHS systems, so that brought the positivity rates down a bit for October.

But even so, it's an alarming increase in deaths and new cases, and the rate of positive tests is still at a level that we weren't close to before the last month.
And so what does the GOP have to say, as things get worse in Wisconsin and the rest of the country? They've stopped even trying to step up to control this disease. They don't want to do the work of governing that comes with being in power. FIRE THEM ALL.

Evers still has some CARES money left, but not as much as WisGOPs claim he does

In early September, the Legislative Fiscal Bureau said that there was about $207 million in the state's CARES allocation that still had to be set aside. Since then, Gov Tony Evers has announced several new initiatives, including over $100 million for Wisconsin small businesses, hotels, movie theatres, live music venues, and other industries that have been especially hard-hit in the COVID World, and an additional $50 million for child care providers and services.

So the LFB gave an update on how much CARES money has been set aside, and where it is going. The LFB reports there is still some that has to go out in the next 2 months.
Accounting for both the new programs and the reallocations, the total amount of CRF funds needed to fund the announced initiatives is $1.87 billion, with approximately $127.3 million remaining. These initiatives are summarized in the table below. Additional details on the intended purposes of the $1.87 billion in funding are also provided.
I'll take special note of the money set aside for the Reserve/Surge Operating Fund. A lot of the $445 million that was initially set aside has been reallocated for increased testing, along with the economic support programs. But it sure seems like that might be a source of more money very soon, given the recent explosion of COVID-related health needs in the state. The LFB notes one of these set-asides just started to kick in last week.
Reserve/Surge Operating Fund. $162 million has been set aside in a reserve to fund necessary expenditures related to a surge in COVID-19 cases through the end of 2020. A portion of this reserve is being used to fund the operation of an alternate care facility, built in April by the Army Corps of Engineers, at the Wisconsin State Fair Park in West Allis. The facility has a capacity of 530 beds, and is meant to ease the strain on hospitals by accepting patients who no longer require hospitalization but still require medical attention. The facility opened on October 14, 2020, with a minimum capacity of 50 beds.
Seems like payments to these overloaded hospitals and other providers is a logical place for that last $127 million, given how things have gone in October.
But wait, here's Assembly Speaker Robbin' Vos claiming that Evers isn't spending everything that he can to fight COVID. I want to thank one of my readers, who tipped me off to a rambly Facebook post by Vos, who is clearly feeling the heat from the fact that his chamber has been on a 6-month paid vacation while the pandemic gets worse in the state.

I want to center on this part in particular.
In April the state legislature passed our COVID 19 relief bill (which I authored) that gave a great deal of authority to the Governor to fight the virus. We allocated 75m dollars for him to utilize in addition to the billions of dollars of federal funds Wisconsin received. As of today he has spent $0. Let me repeat $0 of the funds allocated by the Wisconsin State Legislature.
It seems like Robbin' is referencing a segment of the CARES bill that the Legislature passed in April (the ONE time they have met in the last 7 months), which changed up policies to conform with the CARES Act, and allowed the money to be spent out. In the LFB write-up of Wisconsin's CARES bill, it is described as follows.
Allow the Joint Committee on Finance to transfer up to $75 million from sum sufficient appropriations during the public health emergency declared on March 12, 2020, by Executive Order 72, and for a period of up to 90 days after the termination of the public health emergency.

Transferred funds could be used for expenditures related to the public health emergency. Under current law, the Joint Committee on Finance can transfer funds between two appropriations or between two fiscal years in the same biennium if the transfer would eliminate unnecessary duplication of functions, result in a more efficient and effective method for performing programs, or more effectively carry out legislative intent. Such transfer must be for purposes which have been authorized or directed by the Legislature, and cannot change legislative intent. Current law does not allow a transfer from a sum sufficient appropriation to other types of appropriations.
But that indicates the $75 million has to be signed off by the Joint Finance Committee, and the most Evers can do is to ask Joint Finance to transfer the funds. In addition, this isn't additional money, it's moving money out of one program and into another.

If you go to the end of the recently-released Annual Fiscal Report, you'll see that there wasn't $75 million in sum-sufficients to move money from. Here was the most money that lapsed in the 2020 Fiscal Year, at least among programs that weren't given money for COVID-19 and carried over themselves.

Largest sum-sufficient lapses
County and municipal aids $15.15 million
Enterprize zones $8.97 million
Homestead Credit $6.175 million
Voucher and Charter Schools $4.625 million
Circuit Courts $2.33 million

So I'd like to know which of these programs Robbin' Vos would have liked the Joint Finance Committee to raid so that Evers could be given a portion of those $75 million additional dollars? Heck, we know that JFC doesn't think they need to do anything these days, given this recent reponse from Co-Chair Alberta Darling.
The Republican co-chairwoman of the Legislature’s budget committee said lawmakers have done enough to fight the surging coronavirus pandemic Thursday, echoing the comments of another GOP legislator this week who said there is nothing more they can do.

Sen. Alberta Darling of River Hills contended Democratic Gov. Tony Evers has all the powers he needs to deal with COVID-19, even as she and other Republican lawmakers have gone to court to try to limit his ability to act on his own....

Because of the power Evers has to handle the coronavirus, lawmakers don’t need to do anything more about the illness, she said.

“We don’t need to come in because we gave him all the flexibility that he needs,” said Darling, who is co-chairwoman of the budget-writing Joint Finance Committee.
So JFC Co-Chair Bertie DAHHH-ling is unaware of this $75 million fund, or she is pulling a Susan-Collins level of dishonesty. Either answer should be disqualifying.

Lastly, there's no more money coming from DC as it stands today, so there's a serious cliff looming in December, which is a time when unemployment claims are usually at their peak in a normal year and COVID not likely to have dissipated by then. Which then shoves all of the extra burdens onto state government, so we will need every penny of the $1.17 billion carried over into FY 2021 if Washington fails to do their part in the next 10 weeks.

Friday, October 23, 2020

Unemployment claims may be lower, but are still at record levels. And a damaging Winter is looming

As stimulus talks continue to drag in DC, the jobless picture is showing slight improvement in late October. The good news is that new claims appear to be falling, albeit with a few caveats. That new data from California came after concerns over fraud and a backlog in claims, and the US Department of Labor reacted by assuming Cali had the same amount of claims that it had in mid-September. That data got updated for those 3 weeks in this report, and it turned out that California's layoffs were going down, which made the nationwide totals get revised down.

Revisions to unemployment claims after Cali data
Initial Claims
Sept 26 794,000 (-55,000)
Oct 3 767,000 (-78,000)
Oct 10 842,000 (-56,000)
Oct 17 787,000 (adjusted, we think)

So the 787,000 initial claims is not a pandemic low, and really isn't very different than what we had 3 weeks ago.

And we can't forget that these "improving" numbers are still higher than the Great Recession's high mark of 659,000 new claims in a week, or the pre-2020 record of 674,250 in October of 1982. And this doesn't count the PUA program, which also benefitted from revisions showing lower claims from California (which has a disproportionate amount of PUA-type work), but we still had between 337,000 and 379,000 new claims for each of the first 3 weeks of October.

On the continuing claims side, the better news out of California dropped the totals by several hundred thousand in both regular claims and in PUA. This means that instead of seeing 25 million total claims a week, it's more like 23 million. And if you take out 3 odd weeks of PUA data for California in August (you can see it pretty clearly in the chart below), it looks like a gradual decline in claims since the peak was hit in June.
But you can also see ther gray area get bigger in recent weeks, which is indicative of people who have had their regular 26 weeks of unemployment run out, and have to go on to Extended unemployment. This number went up by another 600,000 last week, and is now near 3.75 milllion Americans.
That's the bad news in this week's jobless claims report, and it feels like more is coming. Maybe that's because I'm in Wisconsin where the weather has turned especially cold and gloomy in recent weeks while COVID cases continue to climb to new records, which is causing numerous restaurants in my town to take the unprecedented step of closing for the season. This story starts with Rockhound Brewing owner Nate Warnke describing why he has to close his business, which is coming after CARES and PPP funds ran out from DC, and it has little to do with Dane County's reduced capacity requirements.
“It’s not an economic environment or a political environment for a business like mine to stay open,” Warnke said. “The government can’t get its stuff together. We can’t control the pandemic, and it’s getting worse in Wisconsin. I’m looking at it, going ... this might be the right time to gracefully exit, before I run out of cash.”

It’s small comfort to Warnke that he and Rockhound are not alone. Beloved breakfast spot Manna CafĂ© on the north side, elegant Graft on the Capitol Square, Charlie’s on Main in Oregon with its hidden speakeasy and the family friendly Italian spot Vin Santo in Middleton — all have been casualties of COVID-19.

Some, like Pizza Brutta, decided to close one location (Middleton) and focus on others (Monroe Street). Some chains — Hopcat, Doolittles Woodfire Grill — left the area. Still others have decided to close for the winter and take stock again in the spring.
Taverns in Madtown are just as stressed.
Locally, some taverns are calling it quits for now. The Ohio Tavern announced it would close after Oct. 25 “to reexamine and hopefully reimagine the service we are able to safely provide.” Genna’s, downtown, plans to close for the season as well.

Ben Altschul is a partner in eight businesses around the city. Most of them, including Busse’s Tavern, Tip Top Tavern, Mickey’s Tavern and Porter Coffee/Bandit Tacos, will close for the winter.
As I write this, Badger football is set to kick off in Camp Randall in 2 hours. Not only am I not going to the game, me and about 100,000 other students and fans aren't tailgating downtown at this moment. And with COVID seeming to get worse by the day, I don't think I'll be in a position to head downtown for Game Day at any time during the abbreviated 2020 season.

This helps explain why I'm not buying the Trump campaign's attempt (via local radio ads) to claim the economy is back on its feet with nothing to worry about. Because any honest assessment would make it obvious that things aren't close to normal in the country's economy, and with Winter coming, the pandemic still hanging like a dark cloud, and no stimulus dollars coming out of DC, there's not much to help us get back toward normal any time soon.

Thursday, October 22, 2020

Foxconn is making nothing, hiring few, and the Evers Admin seems to be done with them

After blowing the lid off of any facade that Foxconn might ever have any level of significant jobs in the state with their report last week, Josh Dzieza of the Verge followed up today to tell us that the Evers Administration isn't buying what Foxconn has been trying to sell. Dzieza cites a recent report from the Evers' Department of Administration that indicates Foxconn isn’t going to make much of anything. Instead, it seems to exist more as company/GOP PR than any kind of addition to the state's economy.
A state report on Foxconn’s Wisconsin factory depicts a project gone far off course. The report, issued this month by Wisconsin’s Division of Executive Budget and Finance and obtained through a records request, confirms that the company has not built the enormous Gen 10.5 LCD factory specified in its contract. It also says that the building the company claims is a smaller Gen 6 LCD factory shows no signs of manufacturing LCDs in the foreseeable future and “may be better suited for demonstration purposes.”

The report notes that Foxconn received a permit to use its so-called “Fab” for storage, which The Verge first reported this week. Furthermore, according to an industry expert consulted by the state, Foxconn has not ordered the equipment that would be needed to make LCDs. If the building were to be used as an LCD manufacturing facility, the expert notes it would be the smallest Gen 6 in the world and “would appear to be more of a showcase than a business viable for the long term."
Because the project isn't going to manufacture the large panels that were promised when this scam was first announced in 2017, the Wisconsin Economic Development Corporation (WEDC) has said that they will not pay Foxconn any more state taxpayer dollars, and hasn't come close to being worth the huge state and local investment that was given to the company before 1 person was ever hired.
The project Foxconn has pursued instead, the new analysis says, would not have warranted the record-breaking subsidy package passed by then-Gov. Scott Walker, nor required the infrastructure state and local governments have built to support it. “Taxpayers fully performed their side of the agreement to date, while the Recipients have not,” the report says. In fact, “state taxpayers have spent as much if not more than” Foxconn has on improvements to the company’s supposed manufacturing campus. The Verge previously reported that state and local governments spent at least $400 million on the project, mostly on land and infrastructure the company will likely never need. Foxconn listed approximately $300 million in capital expenses at the end of 2019.

There is no foreseeable way that the Foxconn project will employ anywhere near the number of people it was supposed to under the contract with Wisconsin. At the end of last year, it employed only 281 eligible under the terms of the contract, rather than the 2,080 it was supposed to, or even the 520 it needed to employ to get tax subsidies. By the end of 2022, it was supposed to employ 13,000 workers. And those numbers are going in the wrong direction.

Lots of photo ops, not a lot of results.
Does anyone believe that if Scott Walker was still governor that Foxconn would be held accountable like this? HELL NO! We'd still be hearing about how Foxconn would be rolling out products in a manner of months (conveniently occurring after the election), and Walker's WEDC would handed out tens of millions of our taxpayer dollars to Foxconn to keep the illusion going.

Foxconn reacted to the news of their empty buildings in a predictable manner, complaining that they deserve more cash from Wisconsin taxpayers, and threatening to take their talents elsewhere if they don’t get what they want.

Foxconn said it remains committed to Wisconsin but that WEDC’s denial of subsidies “threatens the good faith negotiations” over a new contract.

A statement the same day from Foxconn founder Terry Gou, however, struck a more ominous tone, linking the future of the project to continued state support and, implicitly, to President Donald Trump’s reelection. “Foxconn will work as a partner with those who treat the company as a partner,” Gou wrote. “Foxconn will remain committed to the completion and continued expansion of our project and investment in Wisconsin as long as policymakers at the federal, state, and local levels remain committed to Foxconn and the very important technology development goals driving the company’s investments, as President Trump has done.”
Oooh, the extra-special job creator claims that he needs us to clap harder or else he'll leave! Well, I think this video speaks for a lot of Wisconsinites these days, Mr. Gou.

There are a whole lot of legitimate Wisconsin businesses that can do a whole lot better than Foxconn, and at a fraction of the cost and aggravation. And in 12 days, hopefully voters in the rest of the US do the same thing that voters in Wisconsin did in 2018, which is to ignore Foxconn’s veiled threats, and boot out the crooked executive that signed off on this PR scam.

Wednesday, October 21, 2020

Retail sales may still be good overall. But the COVID World makes for huge disparities

Another month of improved retail sales also continued to show the changes in American spending habits in the COVID World. On the positive side, it was a good overall report, which shows consumer spending continued to rise as Q3 2020 ended.
Advance estimates of U.S. retail and food services sales for September 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $549.3 billion, an increase of 1.9 percent (± 0.5 percent) from the previous month, and 5.4 percent (± 0.7 percent) above September 2019. Total sales for the July 2020 through September 2020 period were up 3.6 percent (± 0.5 percent) from the same period a year ago. The July 2020 to August 2020 percent change was unrevised at up 0.6 percent (± 0.2 percent).
Interestingly, overall retail sales are now up 3.7% from where they were in January, the last month before sales began to decline. And core retail sales are also above 0% for the year.
The biggest sector gaining in September was autos and auto parts (up a seasonally adjusted $4.0 billion), continuing strength in that sector that started once the economy reopened in many places in May. There was also a boost from some beaten-up brick-and-mortar sectors such as clothing stores (+$1.9 billion), general merchandise stores (+$1.1 billion) and food services/drinking places (+$1.1 billion).

However, even though clothing stores and bars/restaurants had decent seasonally adjusted gains for September, their level of sales still remain far below where they were in January, and sales at gas stations also continue to be down more than 15%.
On the flip side, while overall retail sales were up by 1.9%, home and garden stores were up only 0.6% for September, non-store retailers such as Amazon.com were up 0.5%, and grocery stores barely rose at all. But don't be fooled by the low growth for 1 month, as it illustrates that these sectors are maintaining the higher levels of business it has drawn since COVID-19 broke out.
This change to home-related purchases and online shopping resulted in news of a significant income tax cut for Wisconsinites this week. How? Because of a bill dealing with online sales that was passed well before COVID World began, and the sector boomed. Here's the Legislative Fiscal Bureau's explanation of that provision.
This memorandum provides information for tax year 2020 on the Department of Revenue (DOR) certification for individual income tax rates(attached to this memorandum).Procedures established under 2013 Act 20, as amended by 2017 Act 368 and 2019 Act 10, require DOR to certify lower tax rates for the two bottom individual income tax brackets to offset the increased sales and use tax collections attributable to remote sellers and marketplace providers.

For tax year 2020, the individual income tax rate reduction is based on the sales and use tax collected from remote sellers and marketplace providers during the 12-month period from October 1, 2019, to September 30, 2020. Under Act 10, the tax reduction is to be divided into two equal components and targeted as rate reductions to the two bottom tax brackets. State law requiresDOR to estimate the amount of additional sales tax collected, determine the amount of the tax ratereductions for the two bottom tax brackets, and certify and report its determinations to the Joint Committee on Finance, as well as the Governor, the Secretary of the Department of Administration (DOA), and the Legislative Audit Bureau (LAB), no later than October 20, 2020. Act 10 required the same procedures to occur in 2019 when determining the tax year 2019 income tax rate reduction.

It was estimated under Act 10 that increased sales and use tax collections from remote sellers and marketplace providers of $119.3 million would be available for income tax rate reductions in tax year 2020. However, a significant amount of taxable sales that had previously occurred in-person shifted to online purchases as a result of the coronavirus pandemic. On October 20, 2020, DOR estimated the increase in sales and use tax collections from remote sellers and marketplace providers between October 1, 2019, through September 30, 2020, was $257.3 million. The estimated increase in sales tax collections is: (a) $138.0 million higher than the Act 10 estimate ($119.3 million); and (b)$178.1 million higher than the amount certified by DOR in 2019 ($79.2 million).
This income tax cut will hit for this tax year, and only apply to the lowest 2 tax brackets in the state, so it makes the state's income tax structure more progressive, which means that the working class will get a similar level of tax cut that the middle class and upper classes might get.

And it's much larger than expected mostly because the COVID World encouraged more Wisconsinites to buy items online this year. From a budgetary standpoint, it's also interesting because the state's coffers benefitted from higher sales taxes that resulted from these online sales in the 2020 Fiscal Year (particularly March through June), but most of the bigger income tax cut isn't going to go out of the Department of Revenue until Wisconsinites file their taxes in early 2021. Which means that the good budget news of FY 2020 could translate into not-so-good budget numbers in the second half of FY 2021.

Like other aspects of our world in October 2020, the overall retail sales numbers may seem little different from where we were at the start of this year. But the COVID World has changed plenty in terms of where that money is being spent and those changes are going to continue to be felt for good and for bad in a whole lot of aspects of our lives.

WisGOPs do nothing, ignore reality as Wisconsin sets records for COVID deaths

File this under "timing is everything." And the chaser. That news follows a record week for deaths in Wisconsin, and the rate of new cases also continues to rise, even with a lack of data on Saturday due to the Wisconsin Department of Health Services updating their systems.
The fact that Ron Johnson was trying to tell WMC oligarchs that the COVID pandemic curve had flattened made for an extra-high Bubble of RW BS. And it follows this story yesterday from one of WMC's bought-off WisGOP legislators. These WisGOPs have given up, and the more they ignore reality, the worse thigs get in both the US and in Wisconsin. Maybe we should have people in charge who believe in using the science to crush the virus over dying for the DOW, and getting the do-nothing GOPs out of the way is how that happens.

Tuesday, October 20, 2020

New report says Foxconn was even more of a fraudulent mess than you ever knew

Josh Dzieza of The Verge has been at the front of the line when it comes to exposing the failure of the Foxconn project in Wisconsin. And he has topped himself with this article that hit on Monday. Here's the link. Read it. Read ALL of it. There are some amazing stories and details that I've never seen before, and here's a taster.
Months after the 2018 groundbreaking, the company was racing to hire the 260 people needed to receive the first tranche of payments from the lucrative subsidy package passed by then-Gov. Scott Walker. Recruiters were told to hit the number but given little in the way of job descriptions. Soon, the office began to fill with people who had nothing to do. Many just sat in their cubicles watching Netflix and playing games on their phones. The reality of their situation became impossible to ignore. Multiple employees recall seeing people cry in the office. “The best is when you’re in the elevator with somebody and then they just scream out of nowhere,” said an employee who experienced this several times. “They’ve had enough, because things don’t make sense here.”

“Imagine being in a job where you don’t really know if it’s real or not. Or you know it’s not real, but you don’t know it’s not real. It’s a constant thing you’re doing in your head day after day,” said one employee, who returned to the rented building Trump had spoken at, where workers had been assembling TVs, only to find the line shut down and the lights dimmed a couple of weeks after the photo op was over. “I think all of us were on the verge of a major breakdown.”

It was just the beginning. Foxconn would spend the next two years jumping from idea to idea — fish farms, exporting ice cream, storing boats — in an increasingly surreal search for some way to generate money from a doomed project. Frequent leadership changes, a reluctance to spend money, and a domineering corporate culture would create an atmosphere employees described as toxic. Many of the employees The Verge spoke with have since left the company, and all of them requested anonymity out of fear of retaliation. It has been a baffling ordeal for the people who thought they were building the Silicon Valley of the Midwest — “Wisconn Valley,” Walker called it — all the more so because so many others still believe the vision.
Dzieza also illustrates the recent information released by the Wisconsin Economic Development Corporation (WEDC) which showed that Foxconn didn't come close to the level of jobs or investment that they promised in 2018 or 2019 - before any of us knew what COVID-19 was.
And let me remind you that in order to get those 291 (temporary) jobs, the state of Wisconsin sped up a $250 million project to expand I-94 near the Foxconn site, and diverted $137 million from the rest of the state's highways to widen and fix up local roads near Foxconn.

In addition, Foxconn also got water and electrical hookups taken care of for them, and Foxconn-area communities used eminent domain to clear out several homes, using tax dollars to reimburse those owners. And wait till state taxpayers have to bail out the Village of Mount Pleasant in a few years when they can't pay for the huge debts they took on to get Foxconn in their community.

And what did we get from all that money and turmoil? Fewer jobs than we'd get from a warehouse or a big-box score. On that subject, Dzieza goes on to describe how Foxconn tried to game their hiring numbers in order to get tax dollars off of Wisconsinites (unsuccessfully, as it turned out). As I've mentioned before, the Foxconn contract is written in such a way that the number of employees that "work" there are counted on December 31, but Foxconn doesn't have to say how many hours those employees worked during the year.

Sure enough, Dzieza says Foxconn tried to bring in a large number of temporary employees last year to show "job growth", in order to get our money.
According to the company’s subsidy application, it employed 580 people at the end of 2019. Sixty percent were hired in the final two months.

The layoffs began with the new year. Starting in January, when the promised LCD factory was originally scheduled to open, Foxconn instead began letting employees go in batches.

“It was a pump and dump,” said an employee. Many of the Wisconsin residents were laid off, as were many of the local college students. Some of Foxconn’s first hires had already left, including Tank Murdoch, who held a golden shovel alongside Trump at the groundbreaking ceremony, and Peter Buck, who often served as the public face of the project and employees say quit in frustration. (Neither returned requests for comment.) An employee involved with recruiting estimated in June that Foxconn’s ranks had fallen by approximately half from its end-of-year peak, with foreign employees making up a large share of those who remained. “Mandarin is spoken more than English on my floor now,” the employee said.
Buck and Murdoch aren't the only people gone from that day.
Only 1 person that's in this picture is in the same job 3 years later...and that last guy seems likely to be looking for work in 3 months as well (if not sooner).

Again, read Josh Dzieza's article in The Verge, because there's plenty of other stuff out there that'll leave you shaking your head. We knew Foxconn was a historical scam, and we kind of knew that this company and their GOP allies were BS'ing us. But I don't think any of us knew how pathetic and flat-out fraudulent this thing is, and every crook who voted for this piece of crap and lied to us for all this time deserves to get the boot in 2 weeks.

Sunday, October 18, 2020

Weekend reading: "Wisconsin was never a safe blue state"

Wanted to direct you this recent article from FiveThirtyEight.com from Nathaniel Rakich, which helps to explain why Wisconsin went from being a "blue wall" state for Democrats in presidential years to being one of the biggest reasons that Donald Trump ended up in the White House after the 2016 elections.

Rakich begins the article by mentioning that Wisconsin was never that Dem-leaning to begin with, as evidenced by the razor-thin margins in 2000 and 2004. But Barack Obama overperformed in these parts, so it fooled people into thinking there had been a blue shift in the state.
Wisconsin is proof that politicos have short memories. In 2004, Democratic presidential candidate John Kerry carried Wisconsin by just 0.4 percentage points — making it the closest state in the country. Four years earlier, it had been even closer — Democrat Al Gore won the Badger State by just 5,708 votes, or 0.2 points.

But Democrat Barack Obama really connected with Wisconsin voters, winning the state by 14 points in 2008 and 7 points in 2012. Going into 2016, that contributed to a sense that Wisconsin was a safe bet for Hillary Clinton — part of the mythical “blue wall.” It had, after all, voted Democratic in seven consecutive presidential elections by that point.
Rakich goes onto note that the loss of Hillary Clinton and other Dems in Wisconsin was similar to losses Dems had in other parts of the country in places that had a lot of white people with low educations.
Conventional wisdom says that Clinton lost Wisconsin because she infamously did not visit the state at all during the final seven months of the 2016 campaign. But that’s probably not true; Clinton devoted a lot of effort to winning Pennsylvania and still lost there, for instance. Instead, Wisconsin probably got redder in 2016 for the same reason that Pennsylvania and other Midwestern states did: demographics. The one-time home of progressive stalwarts like Robert “Fighting Bob” La Follette and Victor Berger could not escape the modern reality that white people without a bachelor’s degree — who make up 59 percent of Wisconsin’s population age 25 and older — have become more and more Republican, especially in the Trump era. According to an analysis by the Center for American Progress, white voters without a college degree in Wisconsin went from supporting Mitt Romney 52 percent to 47 percent in 2012 to supporting Trump 56 percent to 38 percent in 2016. And as you can see in the map below, counties with the highest shares of white residents without a college degree veered the sharpest to the right:
Wisconsin's vote totals for president ended up being about 2.8% to the right of the nation (Clinton won nationwide by 2.1%, Trump won the state by less than 0.8%). And if Biden's 10-point lead (as shown by the 538 averages) holds, that would mean Biden would win here by a little more than 7, everything else being equal.

But how can Biden and othert candidates get to the point that Wisconsin is back in line with the rest of America? Rakich sees a couple of ways that involve different groups of Wisconsinites.
First, they could keep improving among suburban voters. As the map above shows, the Milwaukee suburbs were pretty much the only part of Wisconsin that actually moved toward Democrats in 2016. The problem is that, unlike, say, the Philadelphia suburbs, Milwaukee’s are still deeply Republican. The so-called “WOW counties” — Waukesha, Ozaukee and Washington — have historically been the center of Republican power in the state, powering such politicians as former Republican National Committee Chair Reince Priebus and former Gov. Scott Walker. And all the Trump era has done is turn them from maroon to crimson: Even as Republicans bombed in other suburban areas around the country, Trump still carried the WOW counties in 2016 by 28 percentage points, and Walker carried them by 35 points in Wisconsin’s 2018 gubernatorial race. It will be very interesting to see if Biden can continue to eat into that margin, though — if so, it could have long-term implications for Wisconsin politics.

Second, Democrats could fix their turnout problem among Black voters. According to the CAP analysis, 74 percent of eligible Black voters turned out to vote in Wisconsin in 2012, but only 55 percent did in 2016. Given that Black Wisconsinites voted for Clinton 92 percent to 4 percent, that was a huge blow to Democrats: According to CAP’s calculations, Clinton would have won Wisconsin if Black voters had turned out at 2012 levels but everything else had stayed the same.
But while Rakich points out that the WOW Counties were redder in 2018 than 2016, what's not mentioned is that Tony Evers did much better in those places than Mary Burke did, and it's a big reason why Scott Walker won't get the chance to screw up our elections in 2020.

Election results, 2018 vs 2014
Waukesha Co
2014 Walker +40.7%
2018 Walker +33.6% (-7.1%)

Ozaukee Co
2014 Walker +40.6%
2018 Walker +26.7% (-13.9%)

Washington Co
2014 Walker +52.5%
2018 Walker +45.7% (-6.8%)

On the turnout side, Dems got to the polls in 2018, which led to the end of Scott Walker's reign as Governor despite Walker getting more votes that year than in his prior 3 elections. On the flip side, both Mitt Romney in 2012 and George W Bush in 2004 got more votes from Wisconsinites than Trump did in 2016.
Now put those two trends from 2018 together (WOW Counties not being as red, and more Dems turning out), and that means big trouble for GOP hopes in the state. Can Trump do even better in the low-educated red counties than he did in 2020 as an incumbent with a record (which takes out some of the "shake things up" voters of 2016)? And if Biden gets 1.6 million votes like Obama did in 2008 and 2012, would Trump's performance in rural Wisconsin even matter, because he'd lose by 100,000-200,000 votes anyway?

Seems worth keeping an eye on going forward, especially as hundreds of thousands of Wisconsinites have already voted, with the most votes coming from areas that Trump did worse than Romney in.

Where WisGOP arrogance flows, COVID tends to follow

Due to Janesville being host to the latest Trump Superspreader Rally in Wisconsin, I wanted to go back to what happened to the last place that hosted a Trump rally in Wisconsin - Marathon County.

That event at the Mosinee airport was on September 15. So how's Marathon County's COVID scene since then?
And that "decline" in the last week? That's the total over 4 days, as the Wisconsin Dept of Health Services is undergoing website maintenance over this weekend and isn't updating numbers until maybe today.

So how has Rock County been doing in recent weeks, before it was "honored" with the attendance of a few thousand Trumpers last night?
Oh, that's not good either.

Also wanted to check in on another part of the state that has actively avoided dealing with COVID-19 - the largest GOP-voting county in the state, whose top elected leader said that there was no need to take any formal action against this pandemic.
Waukesha County Executive Paul Farrow made the following statement after Governor Tony Evers issued a statewide mandatory mask mandate on July 30, 2020.

“Waukesha County has an active and aggressive response to the COVID-19 pandemic, and the community’s health and safety are my top priorities. However, the Governor’s Emergency Order to mandate mask-wearing goes too far. While Waukesha County supports and actively promotes masks and face coverings as a tool to stop the spread of the virus, a government mandate will create many more issues that will not only make it more difficult to respond to the pandemic, the unenforceability of the order undermines existing laws, and overreach from the state erodes public trust in the government.

“Today, our 911 dispatch center, Sheriff’s Department and other Waukesha County departments and divisions are already receiving calls from residents concerned about this order, and we expect that to intensify when it goes into effect on Saturday and individuals begin to report others to law enforcement.

“I want to urge all members of the community NOT to call 911 to report individuals who do not properly follow the mask mandate. We need to preserve emergency response resources that are already taxed as we work to manage this pandemic, we need to ensure that local law enforcement is not reallocated from other areas to enforce this order, and we need to recognize that there are individuals who, for a number of reasons including health conditions, may not be able to safely wear a mask.

“The unfortunate fact is that the biggest impact will be on our local business owners and their employees who may be put in the uncomfortable position of enforcing the Governor’s order. Private businesses should have the flexibility to implement their own rules on mask usage in their establishments, it should not be their role to enforce government orders.

So how's Waukesha County been doing as COVID hammers the state?
Again, that record number for last week? It's only 4 days, not 7.

And if you wanted more proof that Karma is real. Sorry GOPs, you are not special, and you cannot pretend this virus doesn't exist. And because you refuse to admit this reality, maybe you shouldn't be in charge of anything for a while.

Saturday, October 17, 2020

Either Wisconsin is nearly back to normal, or we're down 200,000+ jobs. It can't be both

The final Wisconsin jobs report before the election was an odd one, where the two surveys told very different stories.
The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) preliminary employment estimates for the month of September 2020. The data shows that Wisconsin added 23,800 total non-farm and 13,700 private-sector jobs in the month of September. Wisconsin's unemployment rate for September was 5.4 percent, down from August's revised rate of 6.3 percent.
The job numbers are nice to see, but are well below what we'd be seeing if unemployment dropped by 0.9% for the month - and to a figure that is less than 2% above where we were in February, before COVID World began.

In fact, the household survey (which the unemployment rate is based on) indicates that more than 105,000 Wisconsinites got back to work in September, and more than 82,000 got back into the work force. Which is a major change from where the household survey had us in August.
The household survey does have a lot of variance from month-to-month due to its small sample size, and I'm not going to buy that we've had a massive jobs boom in the state for August and September (look around, does it look like things have turned around like that since July?).

Especially since the trends in the Wisconsin payrolls survey largely match the shocking 2-month decline and plateauing recovery that the national numbers are showing.
The payrolls survey says Wisconsin is still down more than 212,000 jobs, vs the household survey that claims only 33,000 fewer people are working vs pre-COVID World. I suppose we find out in the coming months which is more accurate, as more data from this chaotic time comes in and the annual benchmarking process takes place. But which side of the jobs report you're inclined to buy into might explain a lot when we look at election results in less than 3 weeks.

Friday, October 16, 2020

For 2020, US has record deficit while Wisconsin ends up $1.2 trillion in the black.

We knew 2020 was going to break the record for federal budget deficit, and today the Treasury Department gave us the final numbers.
$3.13 trillion it is. As alluded to by the Treasury, most of that came from extra spending due to CARES, although revenues did drop a bit as well.

US budget, 2020 vs 2019

Revenues
2019 $3.462 trillion
2020 $3.420 trillion (-$0.024 trillion)

Expenditures
2019 $4.445 trillion
2020 $6.552 trillion (+$2.107 trillion)

And half of that $2.1 trillion expenditure jump comes from aid that went out through the Treasury (including the $1,200/$2,400 stimulus checks and bailouts to various businesses), and from the expanded unemployment benefits that went out to tens of millions of Americans. The temporary increase in relief to student loans also was sizable, outpacing the increase in Social Security payments.
Also notice that decline in interest on the debt. That's despite a major increase of $4.2 trillion in outstanding Treasury debt, which illustrates the effect of the Federal Reserve cutting rates to near-zero.

A lot of those extra Federal expenses were funneled down to states through CARES and other programs, to help them pay for the extra services caused by the unprecedented loss of jobs and economic activity that came with the original breakout of COVID-19. And Wisconsin ended up getting by their 2020 Fiscal Year just fine as a result.

Ironically, the state's year-end budget numbers also came out this week, (in the form of the Annual Fiscal Report), and the numbers were far better than many of us imagined 6 months ago.
The General Fund has an undesignated balance of $1.172 billion as of the end of the fiscal year. General purpose revenue taxeswere $17.532 billion compared to $17.341 billion in the prior year, an increase of $191 million or 1.1 percent. General purpose revenue expenditures, excluding fund transfers, were $17.327 billion. This is $502 million less than the budgeted expenditure allocation of $17.829 billion.
We knew about the revenue numbers before, and those barely below-estimate numbers reflect the fact that unemployment benefits are taxed in Wisconisn (as well as at the federal level), so the loss in revenue on the income tax side wasn't nearly as bad as first feared.

In addition, even though many more Wisconsinites were in need of assistance, expenditures didn't spike because the Feds were taking up more of the costs of services such as Medicaid (which I explained in this post earlier in the week).

So for now, Wisconsin's General Fund budget is in decent shape, as that $1.172 billion is only $89 mil below what was projected by the Legislative Fiscal Bureau 3 weeks ago. And that projection had over $779 million left over at the end of the 2021 Fiscal Year, so even with the decline in 2020, there's still $690 million of cushion.

But 2021 still has danger looming. If the Feds stop paying for those extra expenses and jobs remain far below where they were at the start of 2020, you could see that cushion go away quickly. But for now, there's no reason for Gov Evers to pre-emptively put in additional budget cuts, and we may as well see what develops in DC and the overall economy in the next few months before we take any additional steps in regards to the Wisconsin state budget.

Thursday, October 15, 2020

Unemployment claims stay high, and high COVID and lower temps will keep them up

Today's new report on unemployment claims in America was alarming, both in the main headline and in the deeper stats below them. We are clearly hitting a wall as the weather turns colder and COVID-19 continues to be an anchor on everyday life.

First, the topline numbers.
The number of people filing for unemployment benefits increased last week to 898,000, a worrying sign that the job market's recovery from the pandemic-induced recession is slowing. The figure, released Thursday by the Labor Department, is an increase of 53,000 from the previous week, and is the highest level since mid-August. Claims have stagnated between 800,000 and 900,000 for the past seven weeks after falling from a peak of nearly 7 million in March. The levels are historically high – the pre-pandemic record for weekly claims sat just shy of 700,000. An additional 373,000 people applied for jobless aid through the Pandemic Unemployment Assistance program, which was created by Congress earlier this year to help workers who would not otherwise qualify for unemployment.
So 1.25 million new claims a week continue to be filed, but the news report does say there is some good news with unemployment claims.
There are encouraging signs that employers are hiring and rehiring workers, however. The number of people receiving unemployment benefits on a continuous basis fell notably during the week ending Oct. 3, down to roughly 10 million from nearly 11.2 million the week prior.
But even that positive number is misleading. If you dig down into the numbers in the actual DOL report, you'll see that the drop in continuing unemployment claims is actually a transfer of what unemployment program these people are in.

Because when people have their 26 weeks on the regular unemployment program run out, they move to the extended claims program. In the last week of September (the last week where both programs have reported numbers), regular claims went down by 800,000, but extended claims went up by that same 800,000. This type of offset has become the pattern since the start of September, which (not coincidentally) was 6 months after COVID lockdowns started to hit throughout America.
Also noteworthy with continuing unemployment claims is that the previous week of September 26 was revised up by 207,000, so it makes me wonder if there are claims getting backlogged again, which masks just how bad things are.

Even with the information we currently are going on, there are a lot of people out of work in America. As September ended, we were going on 23 straight weeks of at least 25 million continuing claims.

And now that the weather is getting colder at the same time that Wisconsin has become the COVID Capital of the Country, we’re seeing a still-depressed restaurant industry get into an even worse situation. Isthmus had a saddening piece which described the looming demise of one Madison brewpub, along with other places in town.
Nate Warnke of Madison’s Rockhound Brewing Company announced this morning that he will be closing “his little dream.”

Warnke, a former business analyst, says in a composed but emotional Facebook message that if he were one of his own former clients, he would have to advise that it was time for this project to end. “I can see no logical path forward.”

Rockhound joins other Madison businesses that have decided it was impossible to continue in the face of COVID-19, among them The Tin Fox, Hungry Badger, Common Ground, Vientiane Palace, Captain Bill’s, Manna Cafe and Bakery, Doolittle’s Woodfire Grill, Graft, and the Good Food Low-Carb Cafe.

“[The] COVID downturn is the main reason. The numbers just don’t make sense and it would be too difficult to reconcile long-term,” says Warnke in an email to Isthmus.
WisGOPs can try to blame recent restrictions on capacity that Gov Evers put on, but the real culprit is the virus itself, which has made a lot of people unwilling to eat in an enclosed building around strangers. And a whole lot of others that might risk it are already sick, and in no condition to go out.

Wisconsin saw its number of new claims jump by more than 2,900 in the most recent unemployment report, and had extended claims jump by 10,000. And if these restaurant stories from Madison are any indication of what's coming statewide, it won't take long before those closings ripple over into more parts of the state's larger economy. Which would put another headwind onto a jobs market that already seemed to be plateauing in September both in Wisconsin, and in America.