Saturday, December 31, 2022

3 posts to reflect on from 2022, and to preview 2023

Wanted to recap three of my most-seen posts in 2022.

1. Powell chooses inflation > growth. But inflation is already slowing down in Real America.

I made that post in late August, after Federal Reserve Chairman Jerome Powell made these comments.
“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” Powell said during a speech in Jackson Hole, Wyoming. "These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain."
The DOW Jones dropped over 1,000 points after those comments, as Wall Streeters (correctly) recognized that Powell and the Fed would not stop tightening in 2022. And the Fed Funds rate has gone up another 2% since those comments, and are now at the highest levels in 15 years.

This led to my first (and far from the last) use of this clip.

I wasn't keen on this strategy, as even by August, it was becoming apparent that gas prices and inflation had peaked, and were coming down.
I understand the idea of trying to crush out the chances of a wage-price spiral, but this seems to be overdoing it. We don’t need to be trip-wired into a recession by the Fed jacking rates to high levels when it looks like a lot of these issues are sorting themselves out.

We have a labor imbalance because of high demand and because we have had over 1 million people DEAD and many others that have left the work force in the last couple of years. But that has already been reflected in higher wages and prices, and price pressures are less extreme as consumers adjust and supply disruptions clear.

....Unike the Fed, I believe that 5% inflation is MUCH better than 5% unemployment. And if we see unemployment go from our current 3.5% to 5% because the Fed is still operating in a 1970s mentality instead of dealing with the reality of the 2020s, and it screws up our politics in 2022 or (more likely) 2024, I will be quite angry.
Since August, CPI has gone up a total of 1% in the four months measured since then (a 3% annual rate), and core CPI is up 1.7% in that time (and only 0.5% in the last 2 months). Which means the real Fed Funds rate is well above 0%, and there is little need to keep hiking in 2023 when we've probably gone too far as it is.

There is little doubt that our economy slows from the 2.5%-3% GDP growth we saw in the 2nd half of this year. But with inflation ending (supply shortages are mostly cleared up, stimulus is faded out and there's no election to try to influence), and job growth inevitably slowing and unemployment likely to rise above its current rock-bottom levels at some point, when does the Fed start to deal with the real problem of economic slowdown in 2023 instead of chasing the inflation ghosts of the past?

I repeated that theme in another widely-read story in October

2. Again, don't believe the hype. JOBS >>>> Inflation. And "inflation" = profiteering.
That post ended this way, with midterm elections looming in 2 weeks.

...why is Katie Porter one of the few Dems talking about this FACT in a time when corporate profits reached an annual rate of $3 TRILLION in the last quarter measured? And why is this not being connected back to the other obscene inflation in 2022 - spending during a midterm election?

Seems like something a whole lot of Americans would agree with, and demand real answers for. And Republicans absolutely do not have any answers for it. Frankly, they don't want this to change at all. It helps them and their oligarch buddies maintain the advantaqge when they can't win on the issues, especially the economy.
Since then, we've seen Q2 corporate profits stay at those record levels, with Q3 revised up to be right near that record level.

I think they can get by with keeping and paying their employees in 2023. But my bigger concern in the job market is in the tech industry, which seems to be repeating the dot-com bust of the 2000s, where it can't keep up its pandemic-related expansion, and higher interest rates pop the Bubbly companies that were invested in little more than BS (hi there, FTX!).

Here's the other highly-read post that I want to look back at. And I put it up all the way back in February.

3. Here it comes - how to pay for the the next 20 years of Miller Park.
I intentionally used the former name of the Brewers' stadium, because that's what it was named when the park was built and the Miller Park sales tax was in place to help pay for debt and ongoing maintenance at the ballyard.

Now that the Miller Park tax has finally been paid up and done away with, it inevitably means that the Brewers are looking for ways to keep up what is now known as AmFam Field, and possibly develop the many acres of land that they have control over around the ballpark.

I tied in my thoughts to another issue that is likely to become a big discussion in 2023 and future years - how to stop fiscally handcuffing Milwaukee, and allowing a better chance for public safety and/or other needs to be met.
Not that I'm in favor of any [taxpayer] subsidy given how things lay out right now, but if they [Legislature and/or local governments] want to do it, then maybe it should be a way to allow Milwaukee to get some long-deserved fiscal help. For example, why not have a 1% tax that is levied on all revenues generated from events at AmFam Field? This could then be split in some way (call it 50-50?) between the team (who uses the money for capital needs) and the City (who provides services that benefit both the Brewers and their fans).

In all seriousness, how can it be justified for the state and county get a cut of the Brewers' revenue (via sales tax), but the City basically gets no boost in tax revenue outside of the contract with Milwaukee Poloice and possibly a few more room taxes from tourists. Aside from a sales tax, another option could be to follow the example of the Bucks arena, which has a $2 ticket tax, of which $1.50 goes to downtown Milwaukee's Wisconsin Center District for future development.

Also, what happens if the City and the State tells the Brewers to pound sand and pay for their own upgrades if/when the Stadium District runs out of money? I suppose the team could go as far as claiming that the terms of their lease is being broken in not allowing the ballpark to be "kept up with the Joneses", and could use that as an excuse to try to leave town in 10 years or so. But do we really see that happening?

That type of brinksmanship is well down the road. But watch out for the talk to begin about how to "keep the Brewers competitive" by finding some kind of new subsidy or some other kind of assistance to keep the Crew from having to pay more into the ballpark that they and so many Brewer fans benefit from. You know it's coming.
This was written before the 2022 season, which the Brewers spent in first place for much of the year before making the idiotic Josh Hader trade in early August, a move General Manager David Stearns would later admit hurt the team on the field and in the locker room, before Stearns stepped down from that role.

And since the season ended, with the Brewers ending up 1 game out of the playoffs behind a Phillies team that made the World Series, what has the Crew done in advance of the 2023 season?

Gonna be pretty hard to justify paying more tax dollars for the ballpark when the team doesn't seem to be upgrading itself and trying to contend for a title (or even the expanded postseason). And if the year starts bad, I won't be surprised to see fans choosing other options for their entertainment dollar, which will make it even harder to justify state help for the Crew.

Then add in the fact that Brewers owner Mark Attanasio seems more interested in his English soccer team than in the MLB team he owns in the US, and let's just say that the Brewers stadium and ownership situation is one we should be aware of in 2023 and the near-future.

I may put together a few more personal thoughts on 2022 and 2023 later on, but it always is intriguing to go back and see what I said earlier in the year, and what was responded to by you. I often found it easier to slam a few posts on Twitter or some other area to quickly react vs diving deep on this site during the year, but with Elmo messing that spot up, it may prove a bit harder to speak up that way.

Either way, I'm not fading away from this space. I like the long-form, both as a venting outlet and as a way to explain and reference things that go beyond a snarky reply. And with the possibility of a landmark state budget (or a failed opportunity to make the big changes that are needed), and an economy that might be on the verge of recession and further disruption, 2023 could make for a lot of things worth diving into and explaining about.

Friday, December 30, 2022

Southwest fiasco shows how maybe "efficiency" ain't what works best all the time

In what's a typically slow news week that has a lot of travel, the fiasco at Southwest Airlines could not have come at a much worse time. And given that Southwest operates the most flights at Wisconsin's busiest airport, that story has been especially relevant in this state.
The line at the Southwest Airlines check-in counter at Milwaukee Mitchell International Airport was much smaller on Wednesday. But a giant pile of unclaimed bags remained on the carousel waiting to be sent to their final destination or for their owners to pick them up.

The Southwest winter meltdown continues as travelers prep for another busy weekend ahead of the New Year. The airline has added a page to its website offering travelers the ability to check their flight, rebook a flight or get a refund for those trying to use the airline through Monday.

At Mitchell International, another 32 Southwest flights were canceled Wednesday and four were delayed, according to Flight Aware, which tracks flight information in real time.

Numerous reasons have been offered about why this debacle has risen to such a giant scale. The airline points to the winter storm that struck much the country last week, the customers point to the airline for lack of preparation for the storm, and the pilots union points to the inadequate technology the airline uses to track staff.
Part of this mess is also the downside of Southwest's service model that takes it from place-to-place instead of funneling flights toward a handful of hub airports. And that model got complicated when flight schedules and crew locations got scrambled with the brutal cold snap that hit around the time people were traveling for Christmas.
While Southwest does have major connecting airports, much of its schedule involves planes and crews crisscrossing the country -- a network that aviation watchers say is more vulnerable than legacy carriers' hub-and-spoke model that can contain a disruption to particular geographic regions.

When something goes wrong, the Southwest software -- including the crew scheduling system tool -- leaves much of the work of rebuilding that delicate network to be done manually.

"It can't see the best way to fix anything when flights are canceled," said Brian Brown, president of Transport Workers Union Local 550, representing Southwest dispatchers and meteorologists. "It requires a lot more human intervention and human eyesight or brainpower, and can only handle so much."

The result is that airline officials "don't necessarily know where our crews are, where our planes are," Brown said.

Crew schedulers in another department are manually checking which pilots and flight attendants meet strict federal rules on work hours -- rules meant to keep inflight safety professionals from excessive fatigue.
And like a lot of things in the 2020s, when you've run things so tight as to wring the last possible drop of "efficiency" out of it, one little break in the chain causes a lot of things to get messed up.

US Transportation Secretary Pete Buttigieg has been out in public trying to remind screwed-over passengers that they already have the right to reimbursement when an airline can't follow through on the flight they promised them.

That's nice, but that won't stop these sort of messes from happening, and American travelers having to deal with the stresses and extra costs (in both time and money). Which means we need a base level of technology required of all airlines to improve logistics and tracking of the level of staff that is required for a flight to take place.

And if a company hasn't made that investment, then they should be required to make that investment at their own expense (because why should responsible companies be penalized for having already done the right thing?).

There also needs to be more cushion built into the air travel system to avoid the chances of this type of meltdown when weather or some other outside disruption happens, and that needs to be especially true in high-travel weeks like Christmas/New Year's. I think this tweet sums up the point quite well.

If that requires federal subsidies to pay extra funds to airlines staff in those high-travel weeks, to try to discourage sick-outs or large numbers of people taking off for vacation, I'd say do it. And if that means fewer flights and (gasp!) higher fares, then that's how it goes. I'd much rather have a 95% rate of on-time, uncanceled flights than 75% of a higher number of flights.

And I have a very selfish reason for seeing Southwest get back on track in the next 2 weeks.

That's a freebie flight based on points, so booking the backup flight and canceling SW today doesn't make a lot of sense. Just gotta cross the fingers and hope it works out, which really isn't a way for a country to have a transportation system...and an economy that has a significant part of it be reliant on people getting to places on-time.

Wednesday, December 28, 2022

State budget update - new plans for shared revenue and road funding? Same ol story on Medicaid?

From Wispolitics' budget blog, we got a couple of recent tidbits on what may be part of the spending side of the state budget debate. Assembly Speaker Robbin' Vos gave a hint of what the Legislature might try to do when they receive the budget bill in February (it's odd to me how Vos always claims to be speaking for the "Legislature", while Senate GOP Leader Devin LeMaheiu never seems to).
During a virtual event this month hosted by the nonpartisan Wisconsin Policy Forum, Vos suggested using 1 percent of the state sales tax to replace shared revenue. As sales tax revenue increases, so too would funding for local government, the speaker said.

Meanwhile, the guv earlier this year announced plans to increase shared revenue by $91.4 million, a boost of 4 percent in each year of the biennium. He also pledged another $10 million in a new state aid to help address EMS, police and fire costs.

The state took in nearly $7 billion in sales taxes during fiscal year 2021-22. Dedicating 1 penny of the state’s 5-cent sales tax to shared revenue would’ve generated $1.4 billion in the 2021-22 fiscal year.
That $1.4 billion would double the amount of funds dedicated to shared revenues this year. But if it's 1% of of all sales taxes, then it's only around $70 million. I don't see if that is specifically in addition to the $700 million a year, or to "replace" some other type of shared revenue funding.

Do we trust this guy at face value?

But let's give the benefit of the doubt to this plan, and assume that it would come in addition to current shared revenue funding. If so, there's only about a $20 million difference to cover, and all communities would benefit. It's a good start.

That's one of the items to look for in the budget debate. As for Governor Evers, he'll give another try at getting the Legislature to agree to save state tax dollars by....allowing more Wisconsinites to access health care.
*[Evers'] budget will again call for expanding Medicaid through the Affordable Care Act. Republicans have rejected it twice before, and Evers said he will rely on the public to pressure GOP lawmakers to come around on the issue. Wisconsin is one of 12 states that haven’t accepted federal funds to do the expansion. The Department of Health Services included the proposal in its budget request, estimating it would save the state $1.5 billion over the upcoming biennium.

“We can’t be the last state in the nation to take Medicaid expansion,” Evers said.
Given that Vos keeps saying he will "never" accept Medicaid expansion and rejecting it no matter how much sense it makes, I'm not going to count on this one going through. And the huge state surplus gives GOPs more cover to keep up this idiocy, as there's no need to save tax dollars in order to pay for tax cuts and balance the budget.

While that situation hasn't changed since Evers' first took office in 2019, the road funding situation certainly has. There are now hundreds of millions in additional federal dollars heading to the state as part of the Bipartisan Infrastucture Act to pay for projects, and the state's huge General Fund surplus is another way that the state's Transportation Fund can be beefed up without having to pay more at the pump.
[Evers] doesn’t see including a gas tax increase in this budget. Four years ago, he proposed raising the gas tax 8 cents to 40.9 cents a gallon and tying it to inflation. He also called for eliminating the minimum markup on fuel, arguing that would offset the impact of the tax increase. But Republicans rejected the move.  

Evers said he will propose putting some of the state’s projected surplus into transportation. He also said there needs to be a long-term conversation on how to pay for transportation costs as more drivers switch to electric vehicles. That could include going to a miles-driven tax. Evers said that conversation will be down the road.
Evers mentioning a "miles-driven tax" is an interesting nugget, as that is something that reduces the reliance of gasoline consumption to pay for road funding. Which makes sense when you consider that vehicles are increasingly fuel-efficient, making the gas tax a less steady source of paying for road repairs and other transportation-related funding.  

Tuesday, December 27, 2022

Did people finally move into Wisconsin for 2022? And other population notes

The US Census Bureau recently released their population estimates for each US state for 2022, and it continues a trend where more Americans kept moving to the South, and to the Rocky Mountain states.

In fact, population growth in the South for 2022 was larger than the estimated 1.26 million increase in population that the Census Bureau says the US had as a whole.
The South, the most populous region with a resident population of 128,716,192, was the fastest-growing and the largest-gaining region last year, increasing by 1.1%, or 1,370,163. Positive net domestic migration (867,935) and net international migration (414,740) were the components with the largest contributions to this growth, adding a combined 1,282,675 residents.

The West was the only other region to experience growth in 2022, having gained 153,601 residents — an annual increase of 0.2% for a total resident population of 78,743,364 — despite losing 233,150 residents via net domestic migration (the difference between residents moving in and out of an area). Natural increase (154,405) largely accounted for the growth in the West.

The Northeast, with a population of 57,040,406, and the Midwest, with a population of 68,787,595, lost 218,851 (-0.4%) and 48,910 (-0.1%) residents, respectively. The declines in these regions were due to negative net domestic migration. 
However, you'll notice that Wisconsin was not one of those states who lost people in 2022. And the apparent reason for that gain is even better news for our state.

Nice to hear, although Wisconsin's gain of 7,657 people from other states comes after losing more than 18,900 people to the rest of America in 2021.

Wisconsin also gained more than 8,100 people from immigration, and overall gained back most of the population we lost after the April 2020 Census, unlike Michigan and Ohio.

(NOTE: Illinois is down more 230,000 people in the same time period, and is not shown here because it throws off the chart. They are their own category in a lot of ways when it comes to population trends in both the Midwest and America).

Where Wisconsin continued to struggle is in "natural change" of population. For the second straight year, Wisconsin had more deaths that births in the state (1,798 in 2021 and 1,758 in 2022), while Minnesota and Illinois gained under this measure. But hey, at least we're not Michigan or Ohio!

Those unfavorable demographics are why Wisconsin is going to need to attract younger workers to our state, if we want to reverse the "natural loss". And sorry WisGOP, but backwards social policies, defunding community schools and offering low wages aren't going to cut it.

And while it is nice to see Wisconsin's population bounce back from the losses of 2021, there is a long way to climb back, given the high number of people who moved out in the 2010s. It requires long-term solutions without game-playing, in order to get the work force and families that we need to reverse the stagnation that has afflicted much of this state for the last 12 years.

Monday, December 26, 2022

Income, spending, inflation, all muted in November

At the end of last week, we got more evidence that the US economy's growth was downshifting, with the always-important income and spending report for November. Not only did money coming and money coming out see a slowdown, but so did price growth.
Personal income increased $80.1 billion (0.4 percent) in November, according to estimates released [Friday] by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $68.6 billion (0.4 percent) and personal consumption expenditures (PCE) increased $19.8 billion (0.1 percent).

The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.2 percent. Real DPI increased 0.3 percent in November and real PCE increased less than 0.1 percent; goods decreased 0.6 percent and services increased 0.3 percent.
Other than the decline in real spending on goods, this is what a slow-to-moderate growth, stable price economy looks like.

And even the decline in durable goods (and particularly vehicles) seems to be a seasonally-adjusted thing, as October had a strong increase, and this reverted to the norm in November. It's also noteworthy that COVID-era increases in services spending have now exceeded the increases in COVID-era non-durable goods spending.

We also saw the continuance of a trend that has happened throughout 2022, where Americans have spent more on going out to eat and drink, but have downshifted their (inflation-adjusted) spending on groceries as those prices have continued to rise.

So despite the bad numbers in the retail sales report from November, it looks like overall consumer spending was OK as 2022 wound down.

On the income side, it was another steady (but not huge) increase in job earnings and overall income, which led to the first increase in savings since July.

The personal savings rate is still alarmingly low (2.4% of disposable income), and it's one of the few reasons to justify higher interest rates at this point. But we also are already seeing the moderation in both prices and economic activity, which in a lofical world would make the Fed back off and stop raising rates.

It makes December's holiday spending numbers seem very important when it comes to getting a read on whether this growth can continue in early 2023. And whether our full-employment situation starts to come to an end.

Saturday, December 24, 2022

Merry Christmas, the govt is funded!

Now that we've avoided a government shutdown, with a $1.7 trillion spending bill getting through Congress and heading to President Biden, let's take a look at Politico's rundown of some of the items in that the bill.

And I'll start with a couple of COVID-related items, one that ends a COVID-era adjustment, and another that will keep one big change in service going.
Earlier end to Covid rules:  The bill includes a bipartisan deal to end a Covid-era Medicaid policy that gave states more funding and barred them from kicking people off federally funded insurance, setting a new end date of April 1, 2023, instead of July 2023.

Telehealth extension:  Tucked in the bill is an extension of HHS rules that made telehealth more accessible during the pandemic. But the provision, which extends the flexibility through the end of 2024, falls far short of a push from some lawmakers who wanted to make that flexibility permanent.
Both are interesting moves, and deal with health care for low-income Americans. Former UW professor Donald Moynihan noted that the end of additional Medicaid funding and the ability to remove people from the program could lead to serious disruptions this Spring. And confusion from both current Medicaid recipients and state officials, as they try to figure out if people are still eligible.

In addition, the end of the 6.2% increase in Federal help for Medicaid is going to shift those costs back down to the states, especially if you're a state like Wisconsin that hasn't expanded Medicaid and taken the extra federal funds for that. Keep this one in the back of your mind for the coming months.

In addition to the boost of $45 billion to help Ukraine fight off the Russians, I noted this budget boost, which is along the lines of the earlier increase in IRS funding to speed the processing returns and go after rich tax-dodgers.
Boost for NLRB:  Lawmakers increased the budget for the National Labor Relations Board by $25 million for the first time in nearly a decade — a top priority for unions amid a surge in union organizing across the country. Its funding now exceeds $299 million.
Now let me go over some of the items that were taken out.
Popular tax provisions tossed:  An extension of the enhanced Child Tax Credit pushed by Democrats and a provision allowing businesses to immediately write off their research expenses, rather than over a period of five years, didn’t make the final cut.

Pandemic aid:  Biden had wanted $9 billion to help combat the Covid pandemic and address emerging needs, but Republicans never wanted to provide any extra cash.
Former UW Professor Pamela Herd notes how the Child Tax Credit was set up to fail after it wasn't sending automatic paychecks to individuals, and now a great tool in reducing child poverty to record lows last year has been diminished.

As what often proves out - you make assistance easy/automatic for people to get, they will get it and the program will work. If you don't, things get a lot harder. Both are conscious choices.

On the positive side, protections for pregnant workers and breastfeeding mothers were put back into the bill via a Senate amendment later Thursday night and went through the House. But guess who voted against both of these common-sense items.

Oh, but the a-hole who tells pregnant women and new mothers to "suck it up" was the one who was "one of us". Not like that "dangerous radical" Mandela Barnes who would have...given these accomodations and demanded that they get health care?

Democrats were able to get this budget through before Republicans take over the House on January 3. Which is not what happened the last time an outgoing House majority had to pass a budget in December.

After dropping that gavel, Pretty Boy Pau-lie ran out of DC, retired to cash in on Fox's corporate board, and left it to Nancy Pelosi to end the shutdown that his incompetent self allowed.

Paul Ryan will look like a beacon of governance compared to the ass-clownery that is sure to come from the new House “majority”.
House Republicans, meanwhile, all but refused to take part in government funding talks, with Minority Leader Kevin McCarthy under intense pressure from his party’s right wing as he seeks to claim the speaker’s gavel with a flimsy majority.

In fact, McCarthy took a particularly fierce attitude toward the bill, including going to the upper chamber to lobby against it before Senate Republicans earlier this week. And he used his privileges as a party leader to speak in opposition to the legislation for roughly 25 minutes on the House floor Friday, denouncing it as a “monstrosity and one of the most shameful acts I have seen in this body.”

Privately, however, House Republicans are breathing a sigh of relief that the issue of government funding will be off their plate for the time being, particularly as they prepare to enter the majority with a paper-thin majority.
Nothing but a bunch of two-stepping poser morons. And watch them try to wreck things with the debt ceiling in 2023, then end up doing nothing beyond angering financial markets and turning even more people against them for both malice and stupidity.

Like a lot of other things, you can see the potential for economic peril, with some federal supports diminishing just as things may be maxed out and cutbacks happen along with heightened (and re-setting) interest rates. And a Republican Party that would have no problem with injuring the economy in the year before a presidential election, and not doing a thing to get it back on its feet (see 2011 for more guidance).

Fortunately, we don’t need to worry about that for a while. We have things funded for the next 9 months, and some things are in a better spot after this bill gets signed by President Biden before New Year’s. And unlike 2011, we don’t have a new round of GOP lowlifes taking over Governor’s offices and actively sabotaging the stimulus measures that the Dem Congress and President put in place, so let’s keep ‘er moving!

Friday, December 23, 2022

Evers responds on tax plans for upcoming budget. Vos responds to Evers, but will he listen?

With billions to play with in the next state budget, the tax-cutting debate between legislative Republicans and Governor Evers is starting up. Evers sketched out his tax cut plans to reporters this week which (not surprisingly) is targeted toward lower-income and middle-class Wisconsinites compared to the giveaway to the rich flattening of the tax brackets that the Republicans have said they wanted.
Wisconsin Gov. Tony Evers is promising to veto any flat income tax cut plan passed by the Republican-controlled Legislature, favoring instead his proposal to reduce taxes for the middle class by 10%....

Evers said the tax cut plan he released in August as he was running for reelection is what he will include in the two-year state budget he delivers to the Legislature on Feb. 15. Under that plan, taxes would be cut $600 million a year, including by 10% for individuals earning less than $100,000 and families earning less than $150,000.

Evers’ proposal would also cap copays for insulin at $35, repeal the state’s minimum markup law in an attempt to lower gas prices, cut taxes for seniors on fixed incomes, expand property tax relief for veterans with disabilities and attempt to lower the cost of caregiving and child care.
Seems like decent targeting, and what Evers seems to be indicating is that the income tax cut he will ask for will involve an increase in the state's standard deduction (lowering the amount of income that is taxed), or reducing the lower income tax brackets even more than they have been.

And Assembly Speaker Robbin’ Vos already seems to be admitting that there will be a need to work with Governor Evers if any tax cuts are to happen.
So while Senate Majority Leader Devin LeMahieu, R-Oostburg, has said his caucus is working on a plan to pave the way to a flat tax, Vos said Assembly Republicans are just starting to talk about tax cuts for the 2023-25 budget. Vos has said the $3.4 billion in tax cuts enacted during the current biennium are the minimum of what he wants in this budget. Still, he is open to looking at changes to property, income and corporate taxes.

Meanwhile, Gov. Tony Evers has said he can’t envision signing a budget that includes taking Wisconsin’s four individual income tax rates — which top out at 7.65 percent — and reducing them to one.

“Look, if we had Gov. Michels, tax reform and a flat tax obviously would’ve been my top priority,” Vos told in his Capitol office. “It’s still a huge priority, but I’m not going to die on that hill and say we can’t do anything if we don’t do it.”….

Vos said he envisions three areas for compromise in the upcoming session: addressing learning loss, tax cuts to help residents with inflation and innovation to address the state’s demographic challenges. With a population graying faster than the rest of the nation, Vos said Wisconsin faces a choice of an increasing tax burden or a drop in the services that government can afford unless there’s an injection of younger residents — and workers.
You want an injection of younger residents/workers, Robbin’? Maybe we shouldn’t have a 19th century abortion law, defunded public schools, and a gerrymandered Legislature that ignores what the majority of the state wants on social and economic issues.

But then Robbin’ Vos would be just be another mediocre businessman from a nothing town, and not someone anyone else has to listen to. And Vos and the rest of the GOP “leadership” won’t dare put themselves in a position where they actually have to earn respect, and win on ideas.

The words are nice, Robbin’. But let’s see if you actually take action and pass bills that actually would make this state better and more competitive. I don’t think you want that, and I don’t think your fellow mediocre businessMEN at WMC and MMAC want it, either.

Evers and the gerrymandered WisGOP Legislature obviously have different things that they want to see done with taxes, but it also seems like both recognize that they can do something that cuts taxes for at least some Wisconsinites. And it's going to be a multi-faceted poker game to see who gets what.  

Wednesday, December 21, 2022

Another offshoot of interest rate hikes - income on surpluses, and costs on deficits and debts.

I noted a recent article from longtime Capitol reporter Steven Walters, where Steve says that Wisconsin will see its already mind-bogglingly strong budget situation get a boost in another way - by drawing interest on all the cash that's currently in the state's bank account.
While news reports focused — correctly — on the department’s estimate that state government will end the current budget with a record $6.5 billion surplus on June 30, the agency also reported what interest alone will be earned on that much cash on hand.

Interest on that surplus cash will total $803.2 million over three years: $198.9 million in the year that ends on June 30; $327.4 million in the year that ends in mid-2024, and $276.9 million in the year ending in mid-2025, the department estimated.

So, while Democratic Gov. Tony Evers and Republicans who control the Legislature feud between February and July over how much to spend in the next budget, state government will be collecting $16.5 million a month in interest.
And that interest income is going to be even higher than we would have thought a few months ago, due to the Federal Reserve's sizable hike in rates during 2022. That income will be on top of any tax revenue growth that might happen over the next 30 months, and it's a pretty good win-win situation for the state's finances.

The flip side of that is that it becomes more expensive to borrow money. And due to the hikes from Jerome Powell and company, it makes it more expensive for the US to run deficits. This is starting to bear itself out as you read recent budget numbers from DC.

For example, the costs of interest on the debt will certainly be much higher than what was in the projections that the Congressional Budget Office made back in May. The net interest spent on the debt in Fiscal Year 2022 ended up well past the $399 billion that CBO estimated last Spring, and it isn't going to fall back to CBO's projection for FFY 2023.
Given that the cost of net interest on the debt in October-November 2022 ($90.3 million) is up more than 50% compared to October-November 2021 (just under $60.1 million), I'm not thinking that decline is happening. Those projections assumed the 10-year note would be 2.4% in Federal Fiscal Year 2022, and 2.9% in Federal Fiscal Year 2023 (which started on October 1). Today the 10-year is just below 3.7% and shorter-term treasuries are even higher.

The catch is that it is fine from a budgetary standpoint to run deficits in order to add back jobs and even to keep the economy growing, as long as rates stay low. But when rates go up and/or inflation stays high and becomes a bigger headwind on growth, then (and really only then) are deficits an economic problem. And it's the Fed's current insistence on fighting inflation (that's already going away) that is also raising interest costs on those deficits, which will give an excuse for GOPs in Congress to try to impose austerity that would stagger the economy ahead of the 2024 elections.

So along with the changes that are caused in individual economic activity due to the rise in interest rates, we're also going to see a budgetary effect from the Fed's actions. This is going to be helpful to the State of Wisconsin, who will gain funds on the huge amount of cash they have in the bank, but won't be good for the US Treasury or other governments that are borrowing to pay for things. And it's worth keeping in the back of your mind as rates are likely to stay elevated through at least the first part of 2023.

Monday, December 19, 2022

As WisGOPs chose MAGA and resentment, suburbanites and city dwellers chose WisDems.

Really good deep dive from the Journal_Sentinel's Craig Gilbert discussing the electoral trends within Wisconsin over the past few years. It included these stunning numbers, which shows how Democrats made huge gains in the Milwaukee suburbs in the 2018 and 2022 elections, well past the 10 point change between Scott Walker's re-election in 2014, and Tony Evers' re-election last month.

It makes a decent man proud to be a Tosa East grad.

And while we know all about how Madison has become a Dem behemoth at the ballot box, let's note that the GOP's collapse in the burbs isn't just around Milwaukee. It's also in Dane County suburbs like Fitchburg, Middleton, and Sun Prairie, which are not only rapidly growing in population, but also growing margins for Dem candidates.

While Republicans have lost ground statewide, Gilbert notes they're doing better in rural Wisconsin than they ever have before.
One way to measure this is to use Wisconsin’s more than 1,200 towns as a proxy for the rural vote. Towns account for about two-thirds of the state’s communities (the rest are cities and villages), but only about 30% of the statewide vote, because these communities are overwhelmingly small.

In the 2006 contest for governor, won by Democrat Jim Doyle, Republicans carried Wisconsin’s towns by a combined margin of 5.5 points. Then came the rural red wave. Walker carried Wisconsin’s towns by 23 points in 2010 and by 25 points in 2014.

In the 2012 race for president, won by Democrat Barack Obama, Republicans carried the towns by 12 points. But Trump carried them by 25 in both 2016 and 2020.

This year, Michels did almost as well as Trump in the towns (winning them by 24 points). In the Senate race, Johnson won them by more than Trump or Walker ever did – 29 points. It was also an improvement on Johnson’s own performance in 2016, when he won the towns by 25 points.
This is the gamble that worked for the Wisconsin GOP as long as the traditionally GOP suburbs stuck with them. But it got pushed to another level of MAGA-ness in the Trump era, and now is backfiring on them in the burbs and the larger cities.

We know that Republicans have fallen further behind in Dane and Milwaukee Counties, but Gilbert brings up an interesting note for the always-key Fox Valley area, where GOPs win big when they win statewide, but Dems keep it close when they win. And in addition to double-digit wins in the cities of Green Bay and Appleton, Dems also showed growth in GB suburbs in 2022.
...many suburban communities around Green Bay and Appleton also got bluer in this election, though the trend was not as dramatic as it was in the Milwaukee and Madison areas. Republicans won De Pere by 3 points for governor in 2018 but lost it by 6 in 2022; Democrats won the village of Allouez by 1 point in 2018 and won it by 14 in 2022.
In fact, Marquette Law School researcher John Johnson crunched the numbers in all Legislative districts, and Evers ended up winning the 19th Senate district, which includes cities such as Appleton, Neenah, Menasha, and other Outagamie County towns and suburbs.

Unfortunately, that didn't translate to the open State Senate race itself, where prior trends held, and an election-denying Republican won by 8%. But the trends are there, and the newly open 8th Senate seat in the Milwaukee suburbs is another one that has now gotten into a range that Dems have a legit chance of taking it in April, and take the GOPs' gerrymandered 2/3 majority with it.

With Dems gaining in places that have more people, WisGOPs are going to have to decide if they want to continue being MAGAtted morons, or if they want to listen to the voters that are increasingly turning Dem in burbs that Republicans used to depend on. And maybe they should actually try to work with a Governor who did very well in some of the communities and districts they represent.

Sunday, December 18, 2022

Things slowed as 2022 ended with high rates. Why is Fed still doubling down?

After the Federal Reserve indicated that it would continue to raise interest rates in 2023, and the DOW Jones lost over 1,400 points in the 2 1/2 days after the Fed released their statement, this response made my ears perk up a bit.

“Inflation is basically over, despite the way Chairman Powell characterizes it,” he told CNBC on Friday.

Siegel points to falling rent and home prices as evidence that the majority of inflationary pressures in the economy are already gone. Throughout 2022, he has made the case that Fed officials are looking at backward data to assess the housing market, which gives them a false picture of the current level of inflation in the economy.

The Fed is “making a terrible mistake” by continuing to raise interest rates even as inflation comes down from its recent four-decade high, according to Siegel.
We got more evidence that demand in the economy was slowing late last week, when we got indications that the Holiday Shopping season got off to a weak start (by seasonally-adjusted standards).
Consumers pulled back on spending in November, failing to keep up with even a muted level of inflation for the month, the Commerce Department reported Thursday.

Retail sales for the month declined 0.6%, even worse than the Dow Jones estimate for a 0.3% drop. The number is not adjusted for inflation as gauged by the Labor Department’s consumer price index, which increased 0.1% in November, which also was below expectations.

Measures that exclude autos and both autos and gas sales both showed 0.2% declines.
But jobless claims have stayed low and wage growth has continued at a decent clip as 2022 ends. So might that cause inflation to come back up in 2023? Professor Siegel says no.
When asked about the potential for rising wages to cause inflation to be sticky next year, Siegel pointed out that when accounting for inflation, Americans’ wages have actually fallen throughout the pandemic.

“Real wages have gone down. It’s hard for me to see that they’re pushing inflation up when they don’t even match inflation,” he said.
Siegel is correct in noting that real wages have fallen from what seemed to be a post-COVID normal around $11.25 (which we were at for the middle part of 2021). And despite gains in the last few months, we have not come close to recouping the inflation-adjusted losses in real wages at the end of 2021 and the first half of 2022.

It would seem pretty cruel for the Fed to force a recession just when workers are beginning to claw their way back from the greed higher prices that ate up their paychecks in 2021 and the first half of 2022.

Besides, it hasn't done much to cut into the record corporate profits that companies have enjoyed in the early 2020s, so why would the Fed care if the workers also started to get a share of those gains?

As 2022 ends, it seems clear that while the economy has been in a good spot in Q3 and Q4, there are a lot of headwinds that make continued growth in 2023 a difficult proposition. And yet the Fed seems more concerned with crushing inflation (and workers) instead of trying to keep growth and demand going, and I agree with Jeremy Siegel that it could be an awful miscalculation.

Of course, I am assuming the Fed is just stuck in a backwards-looking mentality, and isn't trying to help the Republicans blame a bad economy on the Biden Administration and other Dems in 2023 and 2024. They wouldn't be that evil, would they?

Saturday, December 17, 2022

GOP brings back flat tax scheme. As regressive and costly as ever.

With the new session at the Capitol getting underway in a couple of weeks, it's time for the GOP posturing on taxes to begin!

Tell me more, Molly Beck.

LeMahieu told the conservative MacIver Institute on Thursday he is working on a plan that would phase in a flat tax over two to four years, moving the state's income tax rates down to the state's bottom tax rate of 3.54%.

"You will see a flat tax proposal," he said of Senate GOP proposals in the upcoming legislative session. "We can't keep ignoring the fourth tax bracket in Wisconsin."

"We have the resources to do this," LeMahieu said, referring to a projected budget surplus of more than $6.6 billion. "If we do this in Wisconsin it will just be huge."
Oh, you mean the flat tax scheme that Hacky McFraley and other GOP lowlifes immediately denied once it came out? And doubly awesome to see LeMahieu tells MacIver this "news", since I have little doubt that MacIver's Bradley bosses gave him the plan in the first place.

I had predicted this is where the WisGOPs would end up when this most recent flat tax scheme first came out, because Tim Michels was stammering around claiming "no one's income taxes will go up" (even though he likely had no idea what level taxes would have to be in order to get there). And there it is.

I will say that another WisGOP tax idea was somewhat intriguing to me. Assembly Speaker Robbin' Vos says he has an different scheme that would designate part of the state's sales tax to pay for shared revenue to local communities.

Based on the Evers Administration's estimates, 1% of state sales taxes would be around $769 million in Fiscal Year 2023-24, and $791 million in Fiscal Year 2024-25. It looks like County and Municipal shared revenues are around $748 million a year today, so it's a nice little 2-3% increase in year 1. But that's nowhere near the 5-7% increase in costs that have come in 2022, let alone what has happened to costs in the 11 years before then. Seems like we're going to need to go a lot further than that little band aid, Robbin'.

Let me also remind you that the sizable inflation of 2022 is going to cause quite a few Wisconsinites to get a back-door tax cut in 2 weeks, due to indexing of tax brackets. You can safely add 5% of income to the upper limits of all of these numbers, to get an idea what things will look like when the 2023-25 budget is debated.

So a flat tax becomes even more regressive than it is today, since more Wisconsinites will likely be in the lower tax brackets in 2023.

This is before we even talk about the price tag. This would be billions of dollars thrown away on a tax cut that would overwhelmingly favor the richest Wisconsinites. And not only would I doubt this would have any immediate impact on our economy other than increasing inequality, it also would rapidly spend down our multi-billion dollar surplus, while not doing anything to fix our roads, or help local governments and schools make ends meet.

That's the type of long-term, Florida-like stupidity that hurts a state's econoimic competitiveness. Especially in a cold place like this. Let's see what the final numbers on this scheme looks like, but it seems like something that should laughed out of the Capitol as soon as it gets introduced, and replaced with a serious, more comprehensive fix to our funding situation for services at the state and local levels.

Wednesday, December 14, 2022

No matter what the data says, the Fed will keep tightening. Jobs and workers don't matter

It was decision day at the Federal Reserve. And people were looking to Fed Chair Jerome Powell not as much for the action that took place today (the Fed Funds interest rate was raised by 1/2 a point), but for what Powell would indicate he would do in 2023. Especially with increasing evidence that inflation has significantly slowed in the 2nd half of 2022.

The answer - Powell and his fellow central bankers still think the inflation monster is lurking, no matter what the data says.
Recent signs of slowing inflation have not brought any confidence yet that the fight has been won, Powell told reporters after the Fed's policy-setting committee raised its benchmark overnight interest rate by half a percentage point and projected it would continue rising to above 5% in 2023, a level not seen since a steep economic downturn in 2007.

Those rises in borrowing costs would come despite an economy that Fed officials projected will operate at near stall speed through next year, with an annual growth rate of 0.5% and an unemployment rate nearly a full percentage point higher by the end of 2023, well beyond the increase historically associated with a recession.

Because apparently seeing everyday workers gain back their earlier losses in average hourly wages just isn't an acceptable outcome for these guys.

So even as growth in jobs and the economy is slated to fall and possibly go below zero, Powell and other Fed officials indicated that they're going to keep trying to crush workers inflation and make sure it can't rise back up. Including the plans to keep tightening until there is evidence that inflation hits an arbitrarily low level.
The rate increase on Wednesday, which was approved unanimously by Fed policymakers and widely expected by financial markets, lifted the targeted policy rate to the 4.25%-4.50% range, with officials expecting it to rise to a level between 5.00% and 5.25% next year.

If anything, the bias is higher: seven of 19 policymakers projected even higher rates will be needed, and U.S. central bankers are unanimous that the risks are tilted towards higher-than-expected inflation rather than a surprise in the other direction.

Still, Powell said, repeating the hard-line on enforcing the Fed's 2% inflation target that he has developed through the year, "the largest amount of pain, the worst pain, would come from a failure to raise rates high enough and from us allowing inflation to become entrenched."
How would inflation "become entrenched"? Because workers keep seeing wages go up by 4-5% due to tight demographics, and demand stays strong, so the businesses can continue to pass on cost increases and keep profiting? THE HORROR!

These guys' heads are still stuck in the 1970s when it's pretty evident that the situation in 2022 is a whole lot different than that. We are nowhere near the edge we were in 15 years ago, but there is evidence that the rental and housing markets are seeing prices come back to earth. Continuing to increase expenses for housing and other interest rate-affected sectors doesn't seem like a great idea when the outlook already isn't great as we end 2022 with an economy that seems pretty maxed out.

Tuesday, December 13, 2022

INFLATION WATCH! There isn't much of it to talk about these days

1 day before the Federal Reserve will likely put in another rate hike in an attempt to tame inflation, we found out that inflation in November...was pretty tame.
The consumer price index, which measures a wide basket of goods and services, rose just 0.1% from the previous month, and increased 7.1% from a year ago, the Labor Department reported Tuesday. Economists surveyed by Dow Jones had been expecting a 0.3% monthly increase and a 7.3% 12-month rate.

The increase from a year ago, while well above the Federal Reserve’s 2% target for a healthy inflation level, was tied for the lowest since November 2021.

Excluding volatile food and energy prices, so-called core CPI rose 0.2% on the month and 6% on an annual basis, compared with respective estimates of 0.3% and 6.1%.
The core increase of 0.2% is something that the Fed gives extra creedence to, and is the lowest one-month increase since August 2021. The all-product inflation number was even lower than the core figure, as gas prices retreated after the election, and that number has been tame for the last 5 momnths.

With this latest evidence that INFLATION PANIC is fading out, the stock market reacted as you would have thought at the opening (although it didn't end that way).
The benchmark S&P 500 (.SPX) jumped as much as 2.76% to a three-month high early in the trading session on news that November U.S. consumer prices barely rose as gasoline and used cars cost less, leading to the smallest annual inflation increase in nearly a year at 7.1%.

Rising expectations for smaller and slower Fed rate hikes sent U.S. Treasury yields sharply lower and helped lift rate-sensitive gauges like the S&P 500 growth index (.IGX), up 1.18%, and the S&P 500 real estate index (.SPLRCR) up 2.04% to their highest intraday levels in nearly three months. The real estate sector notched its biggest daily percentage gain in two weeks as the best performing of the 11 major sectors....

Still, equities pared gains ahead of the Fed's policy statement on Wednesday, in which the central bank is widely expected to announce a 50 basis point rate hike.

"There was some excitement early on that the CPI number was once again below expectations - it shows some sequential cooling - but once we saw that initial pop, stock investors kind of reassessed," said Jason Ware, chief investment officer at Albion Financial Group in Salt Lake City, Utah.
The lower gains were due to worries that Fed Chair Jerome Powell is going to keep on raising rates well beyond the 50 points that are expected for tomorrow. But if we're seeing consumer prices rise by a total of 1% over 5 months (aka an annual rate around 2.5%), why would keep raising rates past the 4.25% they're going to be at after tomorrow?

That doesn't mean inflation concerns are over, and the 0.5% increase in food at home for November (and a 12% rise in that sector over the last 12 months) shows that many Americans are still dealing with annoyances and hardships in some areas. But with gas prices falling further in December, and producer prices continuing to level off (and go down further up the supply chain), it sure seems like we're in a much more stable place compared to June, doesn't it?

Let's hope that the Fed has looked at these real-world numbers, and stop pretending that we are in the same situation we were in at the start of the Summer. We are in a balanced economy that still is gaining jobs with inflation being back toward normal, but are near capacity and are seeing housing and construction start to falter. At this point, there isn't much inflation to put a lid on, so why would we keep tightening up to fight a "problem" that already seems to be under control?

Monday, December 12, 2022

COVID, other viruses creeping up. But it's still better than the last 2 years

In the second week of December 2022, Wisconsin is among a number of states dealing with an uptick in people getting hit by respiratory viruses. And while it hasn't been as bad as other parts of the country, the number of newly reported COVID-19 cases in this state jumped after Thanksgiving, and is back toward 1,000 cases a day for the first time in 3 months.

The Wisconsin Department of Health Services also noted that most parts of the state had seen an increase in COVID-related hospitalizations in the 2 weeks after Turkey Day. That being said, it is nowhere near the horrifying levels that we were seeing last Winter.

Similarly, November had Wisconsin's largest number of COVID deaths since August, at 115. But we haven't had anything resembling the big spikes in COVID fatalities that we were already seeing at this time in 2020 and 2021.

However, unlike 2020 and 2021, it's not just COVID that's afflicting Wisconsinites these days. Flu and other Influenza-Like-Illnesses (ILI) have been on the rise in November and December, much earlier than our recent flu seasons, and more widespread.

Monday's update of the Respiratory Virus Survelliance Report from the Wisconsin Department of Health Services also noted that while RSV isn't as overwhelming as it was in early November, "regular" flu strains have become more common.

I've personally known a sizable amount of people that have had to deal with the full variety of these viruses in recent weeks, and you likely have too. I've taken the precautions I can (bivalent COVID booster and flu shot), and have been somewhat more aware of my surroundings, and haven't gotten hit yet (knocks on wood).

But it's been a rough start to Winter for a lot of folks, and while it's nowhere near as bad as the last 2 COVID Winters, it still doesn't feel like we're back in the pre-COVID normal as Christmas and New Year's looms in the coming weeks. Stay smart and aware out there!

Sunday, December 11, 2022

Vos' anti-Madison, anti-rail BS is soooo 2010. And more absurd after what went down to Foxconn

As the Bipartisan Infrastructure Bill was being debated last year, the Biden Administration included a sizable increase in funding for Amtrak to improve and expand passenger rail. And our part of the country was included in the plans to expand service, as shown in the light blue on this map.

See Madison being included in that new service? It's led to a lot of interest in a town that would seem to have a lot of potential ridership.
"There's a significant amount of money there for passenger rail and the meetings that I've had with the Federal Railroad Administration are very positive, and the meetings with Amtrak even more so. And we are literally on their map for where they want to expand," Madison Mayor Satya Rhodes-Conway said in an interview.

"To me, that's a really positive signal that this is something that we could get done."...

The proposed expansion would include Madison and other communities between Dane and Milwaukee counties on a route between Chicago and St. Paul, Minnesota.

Madison city officials are studying six potential sites for a new Amtrak station, including spots in the city's downtown, near the University of Wisconsin-Madison's campus, and at the Dane County Regional Airport on the city's east side.

Hundreds of people attended or tuned into a meeting this week intended to gather input on where the potential train station should be located, Rhodes-Conway said. City officials will soon apply for federal funding
So while service wouldn't likely come to Madtown for several years, it's something that's back in serious discussion nearly 12 years after Scott Walker got $800 million in rail upgrades (including Amtrak expansion to Madison) killed because...the Obama Administration was going get the Feds to pay for it

Soon after that meeting, the topic came up in a forum that Assembly Speaker Robbin' Vos was taking part in, and Robbin' decided to use the same resentment BS play that Walker did.

Nice priorities, eh?

Although that being said, what can Robbin' do if the Feds give money to WisDOT and the City of Madison to improve the rail lines? Governor Evers sure isn't going to get in the way of this for the next four years (he'll likely try to help make it happen). Is Robbin' and the rest of the gerrymandered Legislature going to cut any of the $6.8 million in annual state funds that currently supports the Milwaukee-Chicago passenger rail line, a route that was profitable to Amtrak in Q1 2022? Doubtful.

It's also an absurd statement for Robbin' Vos in particular, because this is the guy WHO HAS FOXCONN LOCATED IN HIS OWN DISTRICT. Not only is that boondoggle nowhere near what was promised, but Robbin' had no problem spending $252 million in state money to expand I-94 around Foxconn, and said nothing as Scott Walker's WisDOT diverted another $134 million in state funds to upgrade local roads in the area.

But now he has an issue with state funds helping to add rail service to the state's 2nd largest city in a market filled with college students that don't have cars?

Let me also remind you that if it wasn't for Scott Walker's stupid pose against the Black Man in the White House, not only would we already have passenger rail service between Madison, Milwaukee and Chicago, but we were also slated to have new service go through Eau Claire up to the Twin Cities by now.

And it would have cost state taxpayers a fraction of what we blew on Foxconn.... and continue to blow on subsidies to that company for hiring people that likely would have been hired for other jobs anyway, and watch communities in Robbin's own district go bankrupt (and need state bailouts) due to all the debt they took on to build up infrastructure on that scam.

Saturday, December 10, 2022

Producer price inflation stays in control for Nov. As it has since June

We got our latest update on INFLATION WATCH on Friday, and the financial media portrayed it as a not-great sign.
Wholesale prices rose more than expected in November as food prices surged, dampening hopes that inflation could be headed lower, the Labor Department reported Friday.

The producer price index, a measure of what companies get for their products in the pipeline, increased 0.3% for the month and 7.4% from a year ago, which was the slowest 12-month pace since May 2021. Economists surveyed by Dow Jones had been looking for a 0.2% gain.

Excluding food and energy, core PPI was up 0.4%, also against a 0.2% estimate. Core PPI was up 6.2% from a year ago, compared with 6.6% in October.
Not great on the topline. But when I looked at the full report, I didn't see much to be concerned about.

The media report of "food prices surging" in November (by 3.3% overall) was largely contained to three types of food.

Change in producer prices, November 2022
Fresh/dry vegetables +38.1%
Fresh eggs +26.0%
Beef + veal +3.6%

That helps explain why you might be seeing absurd egg and produce prices at the grocery store, especially since both of those types of products have had double-digit increases in producer prices in each of the last 3 months. But beef/veal producer prices are still down 3% compared to July, and other food products declined in November, including like chickens (down for 5 straight months), dairy products (down 4 of the last 5 months), and grains (down each of the last 2 months).

In addition, producer-level inflation has been tame since the middle of the year, with a TOTAL change of 0.5% since June, with no month with a core price increase above 0.3% since May, and year-over-year inflation at its lowest point in the last 12 months.

And since then, we've seen oil prices drop by nearly 10% in the first full week of December, and at their lowest levels for 2022. Traders are now discussing a lack of demand in 2023 as the concern for commodity prices instead of a lack of supply.

Which reiterates to me that the Federal Reserve needs to recognize that inflation has leveled out in the 2nd half of 2022. And when you combine that with the fact that interest-rate sensitive indicators like construction spending and housing starts have been faltering as 2022 ends, and they need to stop this tightening cycle after the Fed has another interest rate hike this week.

The PPI report is another example of why financial media needs to worry less about Wall Street "expectations" and more about what the actual data is telling us. Both in the current month, and since inflation peaked back in June.