Saturday, April 30, 2022

Americans keep spending beyond inflation, so economy holding up. But can incomes catch up?

On Thursday, we saw that consumer spending at the start of 2022 had its strongest quarterly performance since Q2 2021, and Friday's income and spending report for March backed that up, showing that inflation had not caused Americans to cut back.
Spending on services increased 1.1%, lifted by demand for international travel, dining out at restaurants as well as hotel stays. There were also increases in healthcare spending and outlays on recreation and transportation services.

Spending on goods increased 1.2%, mostly reflecting gasoline and other energy products, as well as food, whose prices have risen sharply. Spending on long-lasting goods like motor vehicles fell for a second straight month because of shortages.

Economists polled by Reuters had forecast consumer spending increasing 0.7%. Even with prices sky-rocketing, inflation- adjusted consumer spending eked out a 0.2% gain last month, highlighting the economy's underlying strength in an increasingly turbulent environment.
Americans have exceeded their inflation-adjusted pre-COVID spending in every month since March 2021 (when many Americans became eligible for vaccination). Even as prices have risen over the last year, consumer spending has gone up beyond inflation by another $317 billion (annual rate).

The spending increase in services is part of on ongoing shift back to pre-COVID habits after consumers switched to goods and related household items during the worst of the pandemic. And as many of us welcomed how "back to normal" things felt during March Madness this year, it was reflected in the continued comeback in spending for food services and accomodations, which had good increases in inflation-adjusted spending for both February and March.

The warning sign in that report comes from what is not keeping up with inflation - the disposable income that Americans have.

Higher spending with lower real disposable incomes are resulting in a rapidly declining saving rate, with March's rate being the lowest since the end of 2013. That is generally a good thing for the overall economy, but reflects a worrying reversion to habits from the decade of the 2000s, and we all know how THAT ended.

As I've said before, the general US economy is rolling along, with decent consumer spending growth and low unemployment. But there are a lot of cross-currents that aren't going to hold up in the longer term. Increased spending, lower savings, declining real incomes (due to less in stimulus spending and higher inflation), and higher prices aren't going to all continue for the rest of 2022. And these income and spending reports will go a long way toward telling us which part will go first, and take other parts of the economy along with it.

Friday, April 29, 2022

GDP went down? Yet consumers are still spending and US activity still growing

We figured growth in US real GDP would slow down from the torrid pace of 5.7% growth for 2021 and 6.9% for Q4. But I don’t think many were expecting the number we saw Thursday morning.
The U.S. economy unexpectedly contracted in the first quarter amid a resurgence in COVID-19 cases and drop in pandemic relief money from the government, but the decline in output is misleading as domestic demand remained strong.
Confused? Less output, but more demand and a lot more jobs in the first three months of 2022? So what’s the disconnect?

A lot of it is due to the fact that a lot more of the products that were being bought were made outside of the US.
Front-loading by businesses fearful of shortages because of the Russia-Ukraine war contributed to a surge in imports. Exports tumbled, leading to a sharp widening of the trade deficit, which chopped 3.20 percentage points from GDP growth, the most since the third quarter of 2020. Trade has now been a drag on growth for seven straight quarters.

Businesses have turned to imports to satisfy demand, with local manufacturers lacking the capacity to boost production. Business inventories increased at a $158.7 billion pace, slowing from the robust $193.2 billion rate in the October-December quarter. Inventory investment cut 0.84 percentage point from GDP growth.
Remember, this is Gross DOMESTIC Product, so while a foreign-made product is still economic activity that keeps money flowing through America, it doesn’t add much to GDP.

Dig into the full figures from the Bureau of Economic Anlysis, and you’ll find that consumer spending added more to the economy than it did in either of the last 2 quarters of 2021, even after adjusting for the increase in inflation.

Take out the trade-related stats and the decline in inventories, and there really isn't much difference in the amount of economic growth between the first 3 months of 2022, and the blowout growth number we had to end 2021.

Rex Nutting is the Washington Bureau Chief for CBS Marketwatch, and he saw a bigger warning sign in the GDP report, which makes him think the strong pace of consumer spending is likely to slow down.

Nutting says that is because COVID-era relief programs have faded away, giving less money going to Americans from DC. While that development should control inflation, Nutting says it wuld also would be a serious headwind on economic activity as 2022 progresses.

Over the last four quarters, the purchasing power of after-tax household incomes plunged by $2.2 trillion (in 2021 dollars). That’s a 10.9% decline, by far the largest in the records dating back to 1947.

Of course, the decline in incomes is merely the unwinding of the massive support that households received from the government in 2020 and 2021 via direct pandemic stimulus payments, the child tax credit, and enhanced benefits for unemployment insurance, food stamps and Medicaid, and more.

This means that the Fed is chasing a shadow. Because if our current spike in inflation is all due (as many people argue) to an overly generous federal government giving its people too much money, then our inflation problem is about to go away.

As economists Yeva Nersisyan and L. Randall Wray of the nonpartisan Levy Economics Institute of Bard College conclude in a paper published this month ahead of the GDP report: “Most of the government’s income support has already disappeared, so going forward it is not an important contributor to demand in the economy.”

The faucet has been turned off. Without all the extra money from Uncle Sam, U.S. households will have to live within their means once again. Demand will slow, and so too will inflation, according to the ironclad economic laws of supply and demand.
Nutting ads that this economic slowdown could be turned into a full-blown recession if the Fed continues to think that it has to be the ones actively trying to control inflation, and raises interest rates too much in the coming months in a time when demand and prices would already be leveling off.

I agree that recession is the bigger threat to our economy than the inflation we're seeing - although some actions to slow down the greed in corporate America would help get prices back toward balance (higher taxes on the rich and corporate, strong anti-trust enforcement, making more things in the US, you name it). Unemployment claims remain at 50+ year lows, and if anything, there aren't enough workers around to handle the country's hot demand, so I don't see a major threat of job loss UNLESS we see a quick rise in interest rates that leads to a crash in the housing and asset markets.

I'm not saying things are as great with the economy as it looked like a few months ago. But I am saying that things are still in a good place, and despite what a decline in GDP might tell you, we aren't near any kind of recession that cuts jobs.

But adjustments are ongoing, and more are likely to come. What those adjustments to an inflationary, post-COVID World are is going to be the big story in the economy for the 6+ months until the November elections.

Wednesday, April 27, 2022

Trade deficit, inventories, strong dollar should level inflation. But it isn't happening yet

Despite all the recent news about supply shortages, we got information today that indicates imports to the United States are at record levels.
The U.S. trade deficit in goods widened to a record high in March likely as businesses who are worried about shortages front-loaded imports after Russia's invasion of Ukraine, raising the risk that economic growth stalled in the first quarter.

The report from the Commerce Department on Wednesday also showed solid increases in retail and wholesale inventories. That could offset some of the hit to gross domestic product growth from the sky-high trade gap.

The goods trade deficit jumped 17.8% to an all-time high of $125.3 billion. The increase likely reflected both higher volumes and prices. Imports of goods accelerated 11.5% to $294.6 billion. They were boosted by a 15% surge in imports of industrial supplies, which include petroleum products.

Imports of consumer goods vaulted 13.6%, while those of motor vehicles increased 12.0%. There were also solid gains in imports of food and capital goods.
I’ll also note that increased imports and higher inventories should work to tamper down inflation, but that does not seem to have shown up in the CPI data so far.

The high level of imports also is illustrative of the US dollar zooming higher in recent months, which makes prodcuts from other countries cheaper for Americans to buy.

By the way, this is the exact OPPOSITE of what you’d see if our budget deficit was an economic problem and dollars were devalued.

That being said, the effect of supply backlogs from Europe and COVID-related shutdowns in China are likely to show up (or not show up) on shelves in the near future. And those increased inventories would likely decline soon enough, which could give the excuse to keep prices higher.

Another item to keep in mind is if our economy is so reliant on imports, it also leaves us susceptible to issues in other parts of the world that can screw up the supply chain and raise prices for consumers. And that takes away any advantage that might come from making things in other places, even if our dollar keeps strengthening. A positive sign with the high amount of imports is that it indicates that consumer demand stayed strong through the first 3 months of 2022, shrugging off higher prices so far. But it seems likely that something starts to give in Q2 - is it the higher prices, the higher inventories, the higher amount of imports, or the increased demand? And if it's not prices coming down, we are likely going to see growth slow from the booming rate we had at the end of 2021.

So maybe it's a good idea to encourage companies to make things in America and use local resources to reduce those uncertainties, and the Biden Administration has included a Buy America directive as part of the large infrastructure bill. Insourcing can also help keep demand moving along in this country by having the jobs (and wages) go into Americans' pockets, and back out to other businesses.

It could work, ya know. And the "inflationary/protectionist" argument isn't something that's going to fly when it's events in foreign countries that are causing the inflation is the first place. Because while our record trade deficit isn't a problem in itself (especially with the strong dollar), the overseas disruptions and related vulnerabilities to our economy that result are things we need to care about.

Tuesday, April 26, 2022

At the end of March, Wisconsin on track to have even more than $3.8 billion in the bank.

Tax filing season has just ended, and the head of Wisconsin’s Department of Revenue says that Wisconsin state government continues to have an unprecedented amount of money available.
Speaking Monday on Wisconsin Public Radio’s "The Morning Show," DOR Secretary Peter Barca said the state is expected to end its current two-year budget with a $3.8 billion surplus.

“We’re in the best shape we’ve been in fiscally in more than a half century. We’ve got a huge surplus," he said. "I think back to when I was elected back to the Legislature in 2008, we had structural deficits as far as the eye can see. Now we have structural surpluses.”

Barca said the fiscal turnaround is the result of growing revenue and a bipartisan effort to control expenditures.
That $3.8 billion means that Barca sees no reason to make any adjustment to the revenue estimates and budget outlook that the Legislative Fiscal Bureau released 3 months ago. And if anything, Barca is being conservative.

The DOR recently released their revenue collections for March, and they reflect the impact of income tax cuts that were signed into law for 2021. However, those tax cuts didn’t get into the pockets of Wisconsinites until early 2022, in the forms of higher refunds, as well as this January’s adjustments to tax withholding tables. That means that income tax revenues for the first 3 months of Calendar Year 2022 are notably lower than they were for the same months in 2021, and you can see the reduction in year-over-year growth this chart.

It’s worth remembering that January’s revenue estimates assumed that income taxes would fall by more than $1 billion in FY 2022 than FY 2021. To be fair, there was still 2 weeks left in tax filing season at the end of March, and filers had until May 2021 to send in their taxes vs April in this year, so we are still not in apples-to-apples mode on these numbers.

But it feels safe to say that the state is in good shape, and seems likely to reach that level of estimated income tax revenues. As for the other revenues, sales and corporate taxes are running well ahead of estimates, but excise taxes have been running lower.

But sales taxes and corporate taxes make up a lot more of the state’s revenue mix than excise taxes do, so it seems likely that we would see total revenues exceed the January projections. Combine that with a projected surplus of state Medicaid funds due to increase aids from DC, I would bet we end up with more than $2.84 billion in the bank when the fiscal year closes on June 30, which would also raise projections at the end of the biennium well past $3.8 billion.

Also remember that we have a record amount of funds in the state’s Rainy Day fund (see this post for more details), to the point that it cannot be added to under current law. So there is absolutely no reason we could not make one-time payments and assistance available, such as the $150-per-person rebate checks that Gov Evers wanted to send out, or getting rid of local wheel taxes via increased road funding, or suspending the gas tax while prices remain high.

Yes, all are gimmicks before an election year, but they’re short-term gimmicks that can benefit a wide variety of Wisconsinites, while maintaining the strong structural health of the state’s budget. And it's a whole lot more responsible than the permanent tax cuts to the rich that you know Republicans would do if they were in charge.

Monday, April 25, 2022

COVID cases in Wisconsin back in 4 figures

Wisconsin is now back at a notorious level of COVID infections.
The seven-day rolling average for new, confirmed COVID-19 cases in Wisconsin topped one thousand over the weekend for the first time in two months, the latest Dept. of Health Services figures show.

On Monday, its dashboard showed that key metric hitting 1,071 cases per day over the previous week. That’s a 63% jump from last Monday. It’s also three times higher than the 321 cases per day reported less than a month ago, on March 27.
Argle bargle. No, it's not close to the 18,000+ cases per day that we were seeing in mid-January, but you never want to see viral infections going up like that. And if you go to the wastewater monitoring page from the Wisconsin Department of Health Services (which has become a decent leading/current indicator of how prevalent COVID is), you’ll see several regions bouncing off their lows in March back toward the levels that were being noticed 2 months ago.

The positive is that there has been little change in the amount of COVID-related hospitalizations (slightly up vs 2 weeks ago, but down vs what we had a month ago), and the month of April will likely have the lowest number of COVID deaths since last July.

But we also know that the lag between getting a COVID case and have some of those cases ending up severe is around 3-4 weeks, especially among areas/people that are less likely to be vaccinated. So let’s not think this thing is licked yet. It's not anything worth having shutdowns over, but the rise in cases might make some consider masking up again in closed, high-traffic areas more than they have been, and the Milwaukee and Whitefish Bay school districts have recently reinstated their mask requirements (Madison schools never got rid of theirs).

Some of this is also likely seasonal, as the last 2 months haven’t had many days where outside gatherings was considered a worthwhile venture. But it also tells us COVID is not eliminated, and I don’t think it is coincidental that the state and the country is seeing a rise in cases of this illness and others as mask requirements went away in many places and travel largely restored to its pre-COVID levels. However, I would also argue that the chances of severe illness from COVID have been getting diminished in recent months, largely because of vaccination, but also because this strain may not be as brutal as the Alpha or Delta variants that caused so many health complications.

Not great, and another week of crappy weather with sub-average temperatures in these parts isn’t going to offer much relief. So it might be a good idea to keep your risk assessments in mind, and boost up if you haven’t been able to do so already.

How 5 Wis Senate districts tell the story of how the state has gone. And will go in Nov

I was going to follow up to my analysis of the changes the Supreme Court of Wisconsin did to the state Assembly map with a similar breakdown of the State Senate, but in the process of doing so, I came upon an even more intriguing observation, so I'm going to save the statewide breakdown of the Senate for later (bottom line - it heavily favors GOPs, even more than the Assembly).

As the districts stand now, under GOP Gerrymander 2.0, there are 5 Senate districts that are close, lean Republican, but have trended in very different ways over the last decade. And how they trend in 2022 will likely tell us who wins both at the Senate level, and in the 2 big statewide elections of Govenor and Senator. I am also going to include Barack Obama's win in 2012 (as it's a good starting point to show where the trends change from), but ignore sizable wins by Scott Walker in 2014's Guv election and Tammy Baldwin double-digit re-election to the US Senate in 2018 Senate.

The 5 districts are:
District 5 - Milwaukee suburbs west of the City - Brookfield, Wauwatosa, New Berlin, and West Allis.

District 17 - A huge amount of SW Wisconsin, going from Juneau County through Reedsburg, Richland Center and Dodgeville, and down to the Illinois state line with cities such as Plattevile and Monroe.

District 19 - Neenah, Menasha, most of Appleton, and some of the countryside near those cities.

District 25 - Most of NW Wisconsin - Superior, Ashland, Bayfield, Rice Lake, and Park Falls.

District 31 - Eau Claire and a huge amount of Western Wisconsin going along the Mississippi River, from Trempealeau to River Falls/Prescott.

District 5 is worth digging into for multiple reasons. The first is that it was the Senate district most affected by the Wisconsin Supreme Court's decision, as it went from a district that favored Dems by 9.8% in statewide elections between 2016 and 2020, to a district that favored Republicans by 9.8%. A big reason why is that the NW Side of the City of Milwaukee was taken out of the district, and it was replaced by more of Waukesha County.

And the part of Milwaukee that was removed from Evers' maps (shown in blue) had a sizable Black population, which was offloaded into Senate districts 4 and 6 in the approved GOP maps (shown in red).

But even though District 5 is Republican leaning on the whole over the last 4 years, the voters of that district went from being 16 points more Republican vs the rest of the state at the start of the 2010s into one that matched Joe Biden's winning margin in Wisconsin in November 2020.

You can see that District 5 favored Ron Johnson by nearly 20 points in 2016, but given how much the voters of that district turned against Donald Trump, it would seem unlikely that RoJo would get that kind of margin this November, given the crazy, Trumpy BS he's been spouting.

You'd also think that the GOP nominee for Governor would struggle here, especially if that candidate supports the Big Lie and tries to play culture war BS that clearly has been turning off the voters in this part of the burbs. It also means that current Senator Dale Kooyenga isn't nearly as safe as the 9.8% pro-GOP lean of the district would indicate, because the trends are shifting toward the Dems there. If Kooyenga is forced to answer for all of the fascist Trumpy BS that has been central to WisGOP "governance", and he doesn't have a good answer (because he certainly hasn't voted against it), Dems can win here.

Senate District 17 would seem to be another enticing target for Dems, as Sen Howard Marklein has been forced into removing any facade of "independence" due to being the co-Chair the Joint Finance Committee, and has shot down Medcaid expansion, tax cuts for working families, and increased resources for schools and local governments. But it's also turned from being a Dem-leaning district into one that backed Donald Trump by a signficant margin in 2016, and a bigger margin in 2020, while also having a lot of Trump-Feingold voters in 2016.

If Trump-election patterns hold, then Marklein should be fine and the Republicans should gain vs 2018's totals in District 17. So does that happen, or does this district go back to being one close to the statewide trend, and all races become competitive here?

Moving over to Appleton-Neenah-Menasha, District 19 has traditionally leaned Republican. But the gap has been getting smaller, and Trump won the district by less than 2 points in 2020.

Ron Johnson should especially be concerned about that trend in District 19, as he likely can't count on a double-digit win there in 2022. In addition, current GOP State Senator Roger Roth is running for Lt. Governor instead of another term, and one leading candidate to replace Roth is Rachael Cabral-Guevara, who was one of four Assembly Republicans who were flown to Arizona last Summer to "observe" the Cyber Ninjas' ansurd audit of ballots cast in the 2020 election.

Those are the type of actions and candidates that will put District 19 into play in November, and Dems should fight hard there. By contrast, Dems are on defense in District 25, which has long been held by that party, but current Senator (and Dem Leader) Janet Bewley chose not to pursue another term. In addition, this district has turned hard toward Republicans in recent years, which gives you an idea of how the 715 has become much more red and Trumpy.

For Dems to hold on to the district, they likely will need to see numbers that resemble 2018 than 2016 or 2020. And what happens in District 25 will likely explain a lot in how the statewide races end up as well.

District 31 in the Eau Claire area has a similar story to District 25, but not as pro-Trump, and Evers won this district in 2018.

With the blue college towns of Eau Claire and River Falls in this district, Dems will likely benefit from having more younger voters on campus in 2022 vs Fall 2020. But the traditionally blue/purple rural areas have been turning over, with the Assembly district that includes Trempealeau and Buffalo Counties flipping in 2014 to a Republican that says things like this.

Incumbent Dem Senator Jeff Smith is running for re-election, and you figure GOPs will target this district hard in an attempt to grab a 2/3 majority in the Senate (they are 1 seat away right now). In addition, this district is entirely in the open 3rd Congressional seat being vacated by Ron Kind, which is one of the GOP's biggest targets as they try to get control of the House of Representatives. So big showdowns all over here.

You look at recent history, and it seems likely that if one party or the other wins all 5 of these Senate seats in November, and/or wins all 5 of these districts at the top of the ticket, then that party will likely win all of the statewide races as well. And that's why both parties should be expected to compete fiercely in these areas in particular, in addition to driving up the base in their traditional strongholds.

It also will go a long way toward asking which Trump-era change in voting habits will stick around for the rest of the 2020s - rural, northern and western parts of Wisconsin turning toward the GOP, or well-educated Milwaukee suburbs and medium-sized metros going to the Dems. If one trend remains and the other fades, expect that party to be the main winner of statewide elections in what is still a very purple state.

Friday, April 22, 2022

Infrastructure funds to clear up a lot of road/bridge backlogs in Wisconsin, if WisGOPs don't mess it up

I had mentioned a few months ago that I wanted to see how much more money the Wisconsin Department of Transportation (WisDOT) was going to get from the BIF infrastructure bill that Congress passed in late 2021, and to see if the GOPs on the Joint Finance Committee would try to mess with those funds. Well, it took a while, but WisDOT finally knows how much they are going to get, and has sent the plan to JFC, who will vote on it next week.

So why has it taken so long for Wisconsinites to see this added highway money and WisDOT’s plans? Because there are two parts to states getting funds from US DOT and many other federal agencies. The first part is when Congress passes the law that allows the program, says how much money should go into it, and explains how the money is split up. That’s what happened with the passage of the BIF, after the Build Back Better package was removed from it. (you may remember that ordeal).

But then there is a second part involving the annual budget process, which finalizes how much money each program gets for the October 1-September 30 Federal Fiscal Year (FFY). You may recall there was a mucked-up budget process in Congress that meant that the full-year budget wasn’t finished until the Feds’ fiscal year was half-over. So the Legislative Fiscal Bureau points out that WisDOT didn’t even know how much they were getting in extra highway funds until earlier this month.
…..The second stage of the legislative process necessary for federal-aid highway funding is an appropriations act. Congress passed a series of Continuing Resolutions (CR) of FFY 2021 appropriations as they continued to work on an FFY 2022 appropriations act. On March 15, 2022 the Consolidated Appropriations Act, 2022 (Public Law 117-103) was signed into law providing funding for the full year. [WisDOT] was notified of partial 2022 federal-aid highway funding allocations by the Federal Highway Administration (FHWA) on April 4, 2022. The notice of funding allocations are incomplete – funding notices have not been provided for two small formula programs and the General Fund Supplement – and the FHWA is unable to estimate when the additional allocations will become available. Given how late it is in the state and federal fiscal years, there is a need to move forward now in order to try and avoid lapsing of federal funds. The funding amounts for those programs mentioned above with no allocation are estimated based on currently available information.
Despite the long wait, WisDOT is going to get a major boost in federal dollars to help pay for projects and transportation services, which will move a whole lot of projects up in the pipeline. $283 million above the budgeted totals is going to be noticed, and WisDOT plans to use that money to pay for road work, bridge work, and other projects around the state.

There also is another $11.6 million that the state will get from the bill’s National Electric Vehicle Infrastructure Program, but that merely involves WisDOT sending a plan to USDOT by August 1, and then they can set aside that money at dates later than September 30, and WisDOT says that money won’t be sent out until later.

Right before WisDOT released their request for the infrastructure funds, State Sen and Joint Finance Co-Chair Howard Marklein said around the same time that he wanted more of this federal road funding to go to local (rural) communities.

Well Howie, you’ll be glad to know that rural communities will see quite a bit at this money. No thanks to any of your fellow Republicans in Wisconsin, who all voted against this infrastructure package. Funny how he doesn't mention that.

And if Sen. Marklein is so insistent on having this infrastructure money go out quickly, he'll get his chance next week to send it through, as his fellow JFC committee members are meeting to approve or modify WisDOT’s plan. For starters, that extra $123.6 million in state highway projects is going to move up a lot of projects around the state. Here's a list that WisDOT sent LFB.

Along with the $83 million boost in available dollars for local projects and the state's Surface Transportation Progrm (STP), which more than doubles the amount of FED funds available for those projects, there are more types of projects that can be paid for with the infrastructure package.
In past federal reauthorizations, STP funds could only be used for capital projects on roads classified as either "arterials" or "major collectors," in line with federal rules. These roads are more significant on the statewide or regional level, span longer distances, and have fewer access points, higher speeds, and more lanes. However, IIJA allows some federal funds to be used for roads classified as "minor collectors" and "local roads," which generally serve lower density areas, provide direct access to properties, and have lower speeds and few signalized intersections. This change in federal rules will increase the number of local projects that are now eligible for STP funds.
But an even larger impact is going to come with bridge projects, which will have well over double the money vs what was budgeted a year ago.

Lastly, there is $14.8 million added to already-existing CMAQ air quality and Transportation Alternatives (TAP) programs, which likely will lead to more funding of bicycle-pedestrian projects, as well as additional funds for transit and clean-fuel vehicles. The Transportation Alternatives funding is projected to get boosted by nearly 150%, and has to be set at that increased level because TAP has to be a percentage of all of the federal highway funding.

So let's see if JFC allows the infrastructure to be fixed in this state, or if they meddle and hold up these funds in an attempt to keep these investments from happening, They also could change how much of these federal funds go into the different categories, and/or could reduce state funding for some projects, in theory. In a worst case scenario, JFC could sit on the entire plan and endanger all of these projects, like JFC member Duey Stroebel recently did with a proposed DNR purchase of lakefront land in Ozaukee County.

I don't think the WisGOPs would be so stupid to hold up all of the funding. But keep your eye on this, as WisGOPs often can't help but try some kind of self-centered BS to modify the Evers' Administrations plans. Dems better be out there speaking up about this pre-emptively, to bring attention to this Tuesday JFC meeting discussing this infrastructure funding, and once it is passed, to make sure that two-stepping GOPs like Howard Marklein don’t try to grab credit for something Republicans would never have delivered.

Tuesday, April 19, 2022

So how bad is Wis Gerrymander 2.0 in the Assembly?

You settle in for an Easter Weekend on Friday afternoon, you flip by social media, and you see this cross over the Twitter feed.


RACE NEUTRAL? Because Evers' maps had 90% of the state's districts being majority White wasn't White enough? In a state that's 81% White?

Given those numbers, calling Evers' maps a "racial gerrymander" is ridiculous enough, but it's also worth noting that the GOP's maps both significantly increased how Black some districts are, while also reducing the number of districts that are majority-Black to 5 from the current number of 6. The GOP maps also make the 2 majority-Black Senate districts even Blacker.

And why do you need to go with an entirely different map for the rest of the state when the "justices" could have just changed the majority-minority districts in Milwaukee that were in question, and kept everything else under the "least change" standard? UW PoliSci Professor Robert Yablon pointed out how absurd it was for a court to choose such an egregiously slanted outcome.

It was garbage enough when the Federalist Society hacks on SCOTUS sent these maps back to the Wisconsin Supreme Court to reconsider, but it's also worth remembering that this GOP-favoring decision was on top of the Wis Supreme Court's earlier standard of "least change". That had already locked in much of the GOP's 2010 gerrymander, and was a standard that seems to have been entirely created out of the air.

Ok, so we know it's a screw job, but how badly have things changed from Evers' legislative maps? Well, I took a look at it through the Dave's Redistricting app, and the answer is "enough to allow Republicans to get away with a lot more."

In the Assembly, Evers' maps had 55 districts that favored Republicans, and 44 that favored Democrats. That's a 6-seat swing toward the Dems vs what we have today under gerrymander 1.0, and in order to capture the Assembly, the Dems would need to win statewide around 55%-45%.

You can see a lot of close seats go the Dems' way under the Evers map. By comparison, the now-approved GOP gerrymander 2.0 flips 6 seats into the R column, making for a 61-38 GOP map, and a lot of GOP seats are now drawn so they traditionally get between 43 and 46% Dem votes (meaning they favor GOPs by 8-14 points). Add it up, and the Dems would need to win around 56-44 statewide to flip the Assembly.

The 6 districts that flip from Dem to GOP are as follows:

21st - Currently held by Jessie Rodriguez (R). Goes from Dem +0.5 to GOP +4.6. GOP Gerrymander takes it into GOP-voting Franklin instead of Dem-leaning Cudahy.

37th - Currently held by William Penterman (R). Goes from Dem +27.1 to GOP +9.7. This district was somewhat gerrymandered under the Evers maps to include a large amount of Sun Prairie and some of East Side Madison in Dane County, and it took out the GOP-voting Watertown area.

By comparison, the GOP map continues much of the 2010s gerrymander in District 37, which uses Watertown and other parts of Dodge County to counteract northern Dane County.

42nd - Currently held by Jon Plumer (R). Goes from Dem +1.5 to GOP +11.9. This is related to the 37th District changes, as Evers' maps had the fast-growing Dane County suburb of DeForest in this district, and the GOP gerryander has DeForest in the 37th. In the GOP's maps, the 42nd isn't in Dane County at all, and instead heads East into GOP-voting areas like Ripon and Green Lake County.

85th - Currently held by Pat Snyder (R). Goes from Dem +0.6 to GOP +4.1. The Evers maps densely packed this district into Wausau and a couple of nearby suburbs. The GOP gerrymander has fewer urban areas and more of rural eastern Marathon County.

88th - Currently held by John Macco (R). Goes from Dem +1.0 to GOP +9.6. A Green Bay version of the 85th - Evers' maps packed this district into Eastern GB and nearby suburbs like Bellvue, Allouez and part of De Pere. The GOP maps got rid of some of the suburbs and instead gave Wacco Macco countryside towns like Denmark.

96th - Currently held by Loren Oldenburg (R). Goes from Dem +0.8 to GOP +3.7. The GOP maps takes out some of the territory in rural La Crosse County and Vernon County, and takes more of GOP-voting Monroe County.

There are also four districts that don't flip, but become a lot more safer under the GOP's map, with margins going from less than 5 to more than 10. Three more go from high single digits to over 10, and 7 of those 8 seats are Republican. By comparison, only 4 seats go from having margins over 10 down into single digits.

Interestingly, out of those 4 seats put "into play", 3 are Republican seats where their advantage shrinks, and the other was a Dem-leaning seat held by a Republican (Todd Novak in Dodgeville). 2 of those seats are right next to each other (the redrawn 31st and 33rd seats east of Janesville and Beloit) and both are open. The other seat is in the SW Milwaukee suburbs of Greenfield and Hales Corners, and also appears to be open. Might be good targets for Dems to go after in the Fall.

The biggest fear you hear from Dems is the possibility of gerrymander 2.0 leading to Republicans grabbing a 2/3 majority, which would enable them to override Evers or any other Dem governor. But if you check the numbers, you'll see that it's going to be very hard for GOPs to reach 66 Assembly seats. Let's go back to the chart, and realize that GOPs would have to take every red dot on here, and the first 5 blue ones.

The "2/3 point" comes in districts that favor Dems by more than 9%, in the college towns of Oshkosh and Stevens Point. And Big Lie-supporting, anti-mask, regressive Republicans aren't putting together any kind of agenda that college students are going to vote for. Nor will highly-educated voters in blue cities like Appleton or Wauwatosa go for that, which would be the next GOP targets if Oshkosh or Stevens Point couldn't work out.

Plus, if GOPs are winning those seats, there's very little chance Tony Evers would be winning in 2022, so the "2/3 override" not a scenario that should be thought of too deeply. But what's infuriating with Gerrymander 2.0 is that Dems have even further to go if they want to have a majority in the Assembly to help a re-elected Evers pass his agenda, even if a clear majority of state voters back Dems.

If the Republicans really wanted to push for the 2/3 majority in the Assembly, they would have had to put more than just 4 more GOP districts at risk. And they didn't want to do that. So that's a small victory. But it's still an overwhelmingly BS outcome, and means that one bad election in 2010 is likely to hold this state back for the better part of the next 20 years due to the arrogant, backwards GOP "majority" in the Legislature.

Despair is not an option, however. That's what the bad guys want us to feel, and have us roll over in November. And giving up ignores the reality that there are opportunities for Dems to grab current GOP districts, given that Robbin' Vos and company got a bit too cute in some places (much as they did in the western and northern suburbs of Milwaukee in the 2010s).

Dems in Despair also increases the chance of Republicans being able to capture statewide races in 2022. Gerrymander 2.0 makes those statewide races as crucial as ever, especially since taking over state voting laws and election certification is a central part of the GOP's strategy to steal win back the White House in 2024. Given that it will be near-impossible for Republicans to grab 2/3 majorities to override a Dem Governor, keeping Evers in power would guarantee that the votes Wisconsinites cast for President will count. Which seems like something Dems should remind voters about this year.

So use the anger from this crooked Wis Supreme Court decision in a constructive way, and POUND THOSE GERRYMANDERING LOWLIFES.

Monday, April 18, 2022

Wisconsin COVID cases have a Springtime rise, but severe cases keep falling

On a day when a 35-year-old Trump-appointed hack judge struck down federal mask requirements on airplanes and other public transportation, Wisconsin and many other states are seeing rises in COVID cases.

If you look at new COVID cases officially reported to the Wisconsin Department of Health Services, that number has more than doubled in the last month, from a 7-day average of 316 up to 672. Concerning to be sure, but it also could reflect Spring Break and Easter Season travel. We also had an increase and a similar amount of cases this time last year, and 2021’s caseload quickly fell in the following weeks as more vaccinations happened and weather warmed in Wisconsin.

Let’s hope we see cases decline again as April fades into May in the next couple of weeks. If cases are still over 600 or going higher, then we have something to worry about, but as of today, I don’t see a need to drastically change our daily habits because of the recent trend of rising cases (although it seems to be a good time to increase our awareness of daily risk).

DHS also finally was able to update their information that compares the COVID situation among those who are/are not vaccinated. Interestingly, we’ve seen a closing of the gap in new cases between Wisconsinites who have gotten the shot and those who are not (although cases among all populations are down vs the start of the year), but it’s still quite a bit more likely that you will have a severe and potentially fatal case of COVID if you haven’t been vaxxed.

Deaths also continue to decline in the state, as there hasn't been a day with more than 5 deaths in the last month, and over the last couple of weeks, we haven't seen death rates this low since before the Delta variant emerged last Summer.

So it appears the combination of vaccinations and newer variants is turning COVID into something that is an annoyance more than a life-threatening situation for many more people. You still wouldn't want to get it, but it also might not be something that causes you to adjust your plans and spending habits, which means its economic impact in Wisconsin would be little to nothing...other than the damage that it's already done, of course.

Sunday, April 17, 2022

Wisconsin has plenty for a Rainy Day. Makes more sense to use some of our surplus NOW.

With Wisconsin on track to have nearly $4 billion in the bank in its General Fund by the end of June 2023, it would seem to be a good time for these extra funds to be put to use and repair a lot of the underfunding that happened throughout the 2000s and (especially) the 2010s.

But Dale Knapp at Forward Analytics (doing work for the Wisconsin Counties Association) says the state needs to continue to add to its Rainy Day Fund instead of using the General Fund’s surplus. Which seems to be an odd comment because Wisconsin’s Rainy Day Fund is at an all-time high, and by law literally cannot be added to today.

But the Counties Association report says that General Funds dollars can dwindle quickly, and that the state’s Rainy Day reserves are still below national standards.
If the general fund balance is unreliable as a long-term cushion against recession, then the state might consider bolstering its budget stabilization fund, which is designed specifically for that purpose. Currently, the $1.7 billion in that fund is 8.4% of spending, above the 5% target in state law. However, most budget experts argue that a 5% target is too low. The Government Finance Officers Association recommends holding at least 16% of spending in reserve….

Although not currently on the radar, a prudent use of some of the general fund balance would be to bolster the budget stabilization fund to an amount at or near the GFOA recommendation. This would ensure the state is well prepared for the next recession as state law restricts the use these dollars. And, it would still leave a general fund balance between $1.3 and $2.6 billion to use for other priorities.
The study said looked back at the Great Recession, and pointed out that economic downturn led to billions of dollars in declines in revenue in Wisconsin, which means the current Rainy Day Fund of $1.7 billion might not be sufficient to handle things if such a recession happened again.
In 2009, tax collections were $1.5 billion less than the amount budgeted. That $1.5 billion was 11% of budgeted 2009 spending. The recession’s impact on tax revenues continued in subsequent years. Collections in 2010 and 2011 combined were an estimated $4.0 billion less than they would have been had the recession not occurred. In fact, it took four years for tax revenues to return to 2008 levels.
While true, I’d argue that more robust supports for both individuals and government services would go a long way toward preventing such a decline in revenues and activity in the next downturn. We’ve seen with the COVID-era relief programs that giving supports in tough economic times keeps people afloat, and makes it more likely that the economy can be restored to full capacity in a quicker time than we saw with the slow (albeit steady) growth that happened in the wake of the Great Recession.

Part of the concern that Knapp and the Counties Association has is that the state’s budgets are often set up to spend more than they take in when they are signed into law. Knapp’s group says this means the budget is out of balance, and in danger of getting worse should the economy bog down.

But I'll also point out the flip side of this chart, as you can see with the blue circles have risen in each budget since 2015, meaning that Wisconsin finances have exceeded expectations in each of the last 3 biennia (and is well on track for a 4th in the 21-23 budget).

The Forward Analytics Report says this is budgeting dangerously, with a "structural deficit" set up over the course of those two years, so let’s see how the Counties Association recommends how state lawmakers can add on to the currently maxed Rainy Day Fund.
Two actions would immediately strengthen Wisconsin’s ability to withstand the next recession. First, increase the state’s budget stabilization target from 5% of spending to 15% or more of spending. This would not make Wisconsin an outlier in terms of a relatively high rainy day fund target. Rather, Wisconsin would join 21 other states with targets at least that high or with no restrictions on rainy day fund deposits.

Second, the state now has a sufficiently large general fund balance that it could shift at least $1.25 billion of those dollars to the budget stabilization fund. Wisconsin would join 15 other states as the most prepared with rainy day fund balances of at least 15% of spending (see Table 1 on page 10).

A third action would help ensure a sufficient balance once the budget stabilization fund is used during a recession. In the 36-year history of the fund, lawmakers have never voluntarily appropriated dollars to the stabilization fund. Transfers have only come via the state law on shifting excess tax collections. Lawmakers might consider some level of mandatory annual appropriations to the fund until it again reaches 15% of spending or whatever target is chosen for the fund.

I get the point if you’re talking about the straight numbers, and you certainly don’t want to be Illinois and constantly borrowing and doing accounting tricks to pay the bills. I do think that makes sense to allow the Rainy Day Fund to be added onto, perhaps with one-time deposits that gain interest in a time of rising rates.

But I also don’t see where sitting on all of our $3.8 billion surplus helps this state’s ability to attract and retain workers and families, and that’s what needed in a time of workforce shortages and aging demographics. While we can talk about one-time deposits into the Rainy Day Fund, I think it would be more useful in 2022 to give a one-time tax rebate to Wisconsinites to help them pay bills.

Evers wanted to do such a one-time rebate that would have given $150 for every Wisconsinite ($600 for a family of four, as an example), and while the idea is gimmicky, it also went along with Knapp’s recommendation that spending increases not be ongoing. And at a price tag of $816 million, there would still be another $3 billion that could be used as a fiscal cushion, Rainy Day Fund, or other needs.

Naturally, the Republicans in the gerrymandered Legislature didn’t want to do anything that might help Evers (and by proxy, Wisconsinites) before the November election. But if this state is stupid enough to vote in a GOP Governor and keep GOPs in charge of the Legislature, you can bet they will blow those billions as fast as they can. That’s what they did in 2014, with wide-ranging tax cuts given out after a one-time bump in revenues, which resulted in a sizable budget deficit that magically appeared after that November’s election, in a time that had a much smaller Rainy Day Fund.

That deficit was “solved” by Scott Walker cutting $250 million from the UW System without allowing the universities to make up the difference with tuition or other means, among other idiocies. And those cuts have yet to be restored, so perhaps getting that generator of talent back up to speed is a bigger priority for 2022 and 2023 with the huge amount of funds that we have, along with reforming an outdated school/local government funding system that is too reliant on property taxes.

I appreciate Dale Knapp and the Forward Analytics team breaking down the numbers and reminding us how quickly extra funds can go away if the economy goes wrong. And having artificial caps on the state’s Rainy Day Fund is likely an outdated concept that should be changed, as it can’t hurt to allow some more money go into it as finances stay strong in 2021-22.

But at a certain point, you’re impeding your own economy by having green eyeshades, and with billions available, it makes no sense for the state not to take advantage and improve the quality of life, stability and pocketbooks of its residents. So while the advice to keep the budget “structurally balanced” works on a balance sheet, it doesn’t make it the best idea in these times.

Friday, April 15, 2022

Wisconsin jobs and labor force keeps going up, unemployment keeps going down

Much like the national job market, more Wisconsinites continue to find work, even as the number of available workers seems to be near tapped out.
The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) preliminary employment estimates for the month of March 2022. The data shows that Wisconsin's preliminary unemployment rate declined to record low of 2.8 percent in March, down from 2.9 percent in February.

· Place of Residence Data: Wisconsin's labor force participation rate was 66.5 percent in March, up from 66.4 percent in February, and 4.1 percentage points higher than the national rate of 62.4 percent in March. Wisconsin's unemployment rate in March was 2.8 percent. Wisconsin's 2.8 percent unemployment rate is a new record low for the series.

· Place of Work Data: Wisconsin total nonfarm jobs increased from February 2022 to March 2022 by 1,000 while private-sector jobs increased by 500 over the same period.
Not mentioned in the report is that February's jobs was revised from an already-huge gain of 18,800 to an even larger 22,900 jobs, so that's 5,100 more jobs than we had in the last report. Pretty darn good.

With a year of wide-scale COVID vaccinations in place in Wisconsin, just over 13,000 Wisconsinites added to the labor force, which is solid in itself. But that is dwarfed by the more than 60,000 that have said they’ve joined the ranks of the employed, which has dropped the state's unemployment rate by more than 1/3 in the past 12 months. Go back to the end of 2020, and more than 80,000 more Wisconsinites say they are now working.

Job growth leveled off in March after the big (seasonally-adjusted) increase in February, but we’re still up more than 60,000 jobs in the last year in the payrolls survey.

We’re still down 69,000 payroll jobs from our pre-COVID peak, although more Wisconsinites are working than ever, so…self-employed hustling and/or remote work? Regardless, 336,000 jobs have come back from the COVID-induced recession, and this has been a better 6-month period of job growth in Wisconsin than the 2 6-month spans before it, which wouldn’t be what you’d expect as full employment was restored in the Biden Boom.

6-month job growth, Wisconsin
Sept 2020-Mar 2021 +35,600
Mar 2021-Sept 2021 +22,500
Sept 2021-Mar 2022 +38,400

The one notable downside in this report was a 5,500-job decline in Accomodation/FoodServices, which seems counter to a state that had virtually all remaining mask mandates and COVID-related restrictions go away in March. Let’s see if that number bounces back in April (which would indicate March’s losses are people quitting and rotating into other jobs) or if it’s the sign of some kind of layoffs in that industry.

But that aside, it seems like the Wisconsin jobs market was in good position as March ended, and our real concerns should be in improving work conditions and wages so that workers don’t fall behind due inflation, and in making this state a better place to live and work in, so more people will want to come to the state.

And if Dems are smart over the next 6 1/2 months, they hammer home that the changes to take our jobs market and economic competitiveness to the next level won’t happen as long as regressive Republicans are in charge of the Legislature. Because GOPs are all about blocking the investments and policies that encourage talent and good-paying jobs to locate in Wisconsin, likely by design.

Wednesday, April 13, 2022

In Wisconsin and in DC, it's time that 1/6 criminals and Big Liars be dragged and shredded

Each day, we see more evidence that Donald Trump and a whole lot of other Republicans were cooking up a scheme between the November 2020 election and the attempted overthrow of election results on January 6, 2021, and that it involved moves at the state and federal levels. Wisconsin was central to that scheme, as fake electors gathered in the Capitol in December 2020 to try to send 10 GOP electoral votes to DC in a cynical attempt to create a "contested" result that could then allow Trump to stay in office.

Along those lines, this story dropped in the afternoon, which sums up just how amoral the GOP's leader in the US Senate is (as if we didn't know this already).

Moscow Mitch stood back and said nothing about Trump's attempts to overturn the results in Georgia using the Big Lie, even though it could have led to a cascade of awfulness. And why? Because instead of caring about what might happen to the country if that Big Lie allowed a presidential election to be overturned, Moscow Mitch cared more the votes of MAGAt trash in the Georgia runoffs, so the GOP could stay in control of the Senate (a strategy that FAILED, by the way!)

GOPS KNEW about the TrumpWorld scheme before January 6th, and they said and did NOTHING. Moscow Mitch, Russian Ron Johnson and the rest of those lowlifes were going to wait and see how things played out for the GOP before they took any kind of stand about the Big Lie. And many are still pulling that two-step today.

You can bet WisGOPs also were aware of plans from elite right-wing circles on how they could try to reverse the choice of Wisconsin's voters in November. And you can bet some of them are working on such a scheme for 2024, should this state be stupid enough to elect a GOP governor along with a GOP Legislature this November. I also noticed some news from the Legislature that seems to be one heck of a coincidence in the week that we got the video of Robbin' Vos hosting John Eastman at Wisconsin's Capitol.

Skipping town to cash in before the plot caves in on Repiublicans, and/or avoiding any chance of being part of any 2024 scheme? Or do they have a heads-up that the Wisconsin Supreme Court will break up parts of WisGOP's Legislative gerrymander with a decision ahead of Friday's date to start passing out ballot petitions?

Or maybe they're still part of the plot to overturn and rig 2020's results. As recently as last month, RW hack lawyer John Eastman was still trying to sell his theory that state legislatures could overturn the 2020 elections, and he was selling it right here.

And now we have the video to go with it!

Explain to me how Eastman and Vos and Big Lie "investigator" Michael Gableman and others are still being allowed to grift and spread the Big Lie without any legal, political or financial punishment. They, along with TrumpWorld crooks like Steve Bannon and Trump himself, laugh at our seething rage as Merrick Garland and the January 6th Committee insist on accumulating evidence and organizing cases in private, according to "proper procedure".

The Wisconsinite in this clip captures my feelings quite well. Dems at all levels need to stop wasting time in their attempts to get the complete picture and make any criminal case against Trump officials airtight. FRY THE GUILTY ONES NOW and drag the not-so-innocent bystanders with them.

If you go public and move on the GOP's fascism, the January 6th Committee has public hearings and the DOJ hands down indictments with video of perp walks, more facts will come out anyway. Because those spineless dimwits will turn on each other, and some will try to save their skins by saying "I had nothing to do with this, but this guy did!"

And don't be smug and try to time January 6th actions till it's closer to midterms. It needs to be a relentless, public hammering on the evildoers, to the point that corporate media is not allowed to look away. Senator Brian Schatz (D-Hawaii) showed how it has to be done when he lit up pro-insurrectionist sleazebucket Josh Hawley on the Senate floor last week.

Schatz's comments to the press after that speech were even more on the mark. He expressed concern that Dems aren't signaling to the everyday voter that our system is in serious danger, so the public (understandably) doesn't pay attention to daily revelations of GOP fascism and scumminess that should be national scandals.
“The central selling proposition for a lot of moderate voters was that they could put Biden in place and then stop worrying about politics,” Schatz said, adding that despite this, noise from “the Maga movement continues to grow”.

“Voters who pay a normal amount of attention to our politics take their cues from elected officials as to how outrageous something is,” Schatz said.

“If we don’t seem particularly perturbed”, he added, situations like Hawley’s obstruction may come to seem like “no big deal”.
With that statement, Schatz shows that he understands the importance of our dire situation a lot more than the comfortable, rich, old Coastals that "lead" Dems in Congress. And why it is well past time for any Dem age 70+ in a "leadership" position to publicly announce they are taking a back seat to people that have to deal with what our country might look like in 2030.

The message for the next 7 months should be simple: ALL GOPs are guilty. ALL GOPs are fine with this country going down the drain, so ALL must be held responsible. We're in a Cold War with RW oligarchs and other amoral fascists, and if we lose, our democracy also likely is lost. We must fight and confront accordingly.