Thursday, March 30, 2023

College counties got students back, and Dane County kept growing in 2022

Interesting new numbers from the US Census Bureau came out today, showing the change in population for all US counties in 2022. As has been the trend for much of the 21st Century, most of the fastest-growing counties were in the South and West, while Wisconsin was more of a mixed bag in terms of growth vs decline. But one county in our state stood out.

See that dark green dot in Western Wisconsin, showing growth above 2.5% for the year? That's Dunn County. I saw that and said "Dunn County"? That's a mostly run-of-the-mill, semi-rural Wisconsin county, but it does have one notable difference from most places in the state.

And then I remembered that early 2021 had a disproportionate amount of college students at home, because of the COVID pandemic and lack of a vaccine until the end of Spring semester. Which led me down a rabbit hole of looking at Wisconsin counties with a sizable UW campus on it, to see if that was a reason behind Dunn County's growth, and if it was similar in other parts of the state.

I left out Whitewater and River Falls because those campuses are spread across 2 counties (and would be harder to see an effect), and Milwaukee, Green Bay and Parkside (Kenosha) don't have their UW campus be a significant part of their population, so I left them out, too. In doing that, it does seem that 2022 had a bounce-back effect in a lot of these college counties, as the pandemic waned and students headed back on campus.

And that second chart tells us that something else returned to normal in 2022 - more people keep coming to the Madison area, as Dane County accounted for more than 1/2 of the state's population growth of 12,438. There was also the continuance of a negative trend for Wisconsin's most populous county. While Milwaukee County didn't lose more than 15,000 people as it did in 2021, it still lost more than 5,500 last year.

Given that Waukesha County added over 1,500 people from net domestic migration last year, it makes me wonder how many of those Milwaukee County losses came from folks moving across 124th Street. And maybe it helps explain why suburban Milwaukee has had a larger shift towards Democrats than any other area of the state in recent years.

These new Census numbers wouldn't look too far out of place in 2019. But given the disruptions of the COVID World of 2020 and 2021, it's nice to see things settling back to a familiar place for 2022. And 2023's changes should give an even better indication where things may be going for the post-COVID Wisconsin.

Wednesday, March 29, 2023

As "Big Giveaway" to Wis manufacturers gets bigger, lower-incomes lose EITC, Homestead Credits

Interesting release from the Legislative Fiscal Bureau today that updated some of the numbers from the Informational Papers that were released last month. And it gives some additional insight into just how things have been shifted toward corporations and away from low-income Wisconsinites since Scott Walker and the Wisconsin GOP took power in 2011.

One of the updates related to the Manufacturers and Agriculture Tax Credit (aka The Big Giveaway), which reduces the tax liability for these types of Wisconsin businesses (and many of their owners) down near zero. With more complete tax information, the LFB says that Giveaway was even bigger than we thought, totalling more than $437 million in Fiscal Year 2022.

And now you have a good idea where WMC gets those millions of slimy SCOWIS ads that they're spreading around the TV these days.

Conversely, fewer Wisconsinites have been able to qualify and use two lower-income tax writeoffs over the same time period. One is the Homestead Credit, which gives assistance to low-income renters and homeowners, and the other is the Earned Income Tax Credit, which is geared toward lower-income parents. These figures have now been updated through the 2021 tax year.

The Homestead Credit hasn't had its income limits or maximum write-off changed since 2011, and you can see how inflation and other changed have caused more than half of 2011's recipients to "roll off" and become ineligible for the credit. Likewise, the EITC had its state credit reduced in 2011, and the maximum credit for Wisconsinites with 2 and 3 children is lower now than it was 12 years ago, meaning the credit doesn't pay nearly as much as it used to.

Governor Evers is looking to reverse both of these trends in the 2023-25 budget. He again wants to limit the M&A tax cut, this time only allowing manufacturers to take the M&A credit on $300,000 of manufacturing income. That would be a big change for mega-millionaires that have been able to apply the M&A Giveaway to an unlimited amount of income, leading to millions in tax breaks in each years. He's tried to do some version of this in the last 2 state budgets, and the gerrymandered GOP Legislature has turned him down both times, with a third rejection likely to come in the next few weeks.

Likewise, Evers wants to boost the tax break for the EITC, giving tax relief for those lower-income families by $60.7 million in the first year it's in effect, and $63.8 million in the following year. Evers also wants to expand the income levels eligible for the Homestead Credit, allowing Wisconsinites that make $35,000 or less to be able to get that write-off, and indexing the credit and income levels for inflation, to avoid having people roll off like they have in the last 12 years.

That's something Evers has asked for before, without help from WisGOP legislators in the past. But if Janet Protasiewicz can win the Supreme Court race next week, I wonder if the GOP Legislature starts realizing that they'd better start helping the working poor in this state, because they might not have their gerrymander around in 2024 to save them. And maybe they'll use a fraction of our $7 billion surplus to give some needed relief for those Wisconsinites.

Between the MAC, the EITC, and the Homestead Credit, you can see how our tax code has been slanted to favor the rich and corporate and to take away assistance to lower-income Wisconsinites over the 12 years of gerrymandered GOP control. Maybe 2023 brings something different, especially if the gerrymander is in line to be slain.

Monday, March 27, 2023

Wisconsin still on track to have $7 billion in the bank in 3 months

I’ve mentioned previously that I was concerned about the lower amount of tax receipts that have been coming in for both the US in general, and Wisconsin specifically. On Friday, the Wisconsin Department of Revenue released their revenue collections for February, and it offered a nice reversal of that.

Wisconsin individual income tax collections, February
Feb 2022 $104.8 million
Feb 2023 $399.2 million

The Legislative Fiscal Bureau predicted this when they made their revenue estimates earlier this year. The reason why is because of recent income tax cuts and related changes put in place by the Evers Administration to increase the take-home pay of Wisconsinites last year.
Based on preliminary collections information through December, 2022, individual income tax revenues for the current fiscal year are 12.9% lower than such revenues through the same period in 2021. This is primarily due to decreased withholding collections following the withholding table update that took effect January 1, 2022. However, individual income tax revenues are expected to increase at a rate of 21.1% over the next six months relative to the same period a year prior.

The primary factor for this estimated revenue increase is an expected decline in refunds paid to taxpayers in 2022-23 relative to 2021-22. The income tax rate reduction included in 2021 Act 58, which took effect beginning in tax year 2021, caused refunds to spike when taxpayers filed their corresponding income tax returns in 2021-22. However, because the income tax withholding tables were later updated beginning January 1, 2022, to reflect the rates, brackets, and standard deduction in effect for current law, the amounts withheld from taxpayers during tax year 2022 incorporated the Act 58 rate reduction for the first time. As a result, when taxpayers file the corresponding returns in Spring of 2023, their refund amounts will be lower (all else equal) than the refunds they would have received had the withholding tables not been updated.
So February is the first month where you will generally see those lower refunds, and March and April should repeat those trends on a larger dollar amount.

The question is whether income taxes over the last 4 months will have the $675 million year-over-year increase that is needed to reach the LFB’s projections.

Conversely, Wisconsin corporate taxes for February had a significant decline – from over $43 million in Feb 2022 to $4.5 million last month. Lots of returns and quarter-end filings to go, but corporate collections are down 4.8% for FY 2023, and that’s quite a bit more than the 1.7% decline that LFB projected. Worth keeping our eyes on for the next 2 months.

Sales taxes are staying strong, up 9.2% in February 2023 vs Feb 2022, and up 9.3% for the fiscal year. That’s well past the 7.2% projected increase that the LFB had, and we only need a year-over-year increase of 4.3% over the last 4 months to meet those figures. Barring some unforeseen recession and panic over the next 3 months, sales taxes would seem likely to end up higher than anticipated.

Nothing to get too concerned about yet, and it still looks like the state is on track to have $7 billion+ in the bank when the fiscal year ends on June 30. But the next 6 weeks will verify if we can take away that portion of budget uncertainty, and allow us to get down to the brass tacks of how much of that $7 billion will be used, and how it can be used.

Sunday, March 26, 2023

2022 saw higher costs follow 2021's "inflation" and higher profits.

Found some recent releases on post-tax profits from the US Census Bureau to be interesting. Let's start with how US manufacturers have fared over the last 4 years in both sales, profits, and relatedly) costs.
U.S. manufacturing corporations' seasonally adjusted after-tax profits in the fourth quarter of 2022 totaled $235.4 billion, down $7.9 (±2.8) billion from the after-tax profits of $243.3 billion recorded in the third quarter of 2022, and down $35.0 (±1.5) billion from the after-tax profits of $270.5 billion recorded in the fourth quarter of 2021.

Seasonally adjusted sales for the quarter totaled $2,072.3 billion, not statistically different from the $2,111.3 billion in the third quarter of 2022, but up $148.4 (±28.3) billion from the $1,923.9 billion recorded in the fourth quarter of 2021.
You can see that dollar amount of sales went up in 2022, but profits went down, which indicates that higher costs hit manufacturers last year. But what's not mentioned is that 2021 featured an 80% increase in post-tax profits from the end of 2019 to the 3end of 2021. and manufacturers were still in much better shape at the end of last year than they were in the pre-COVID era.

On the retail side, you can see that other than a few months at the start of the pandemic, retail had steady increases in sales throughout this time period through the middle of last year. And that profits significantly declined in 2022, indicating a large increase in costs that started in mid-2020 and continued through most of 2022, likely reflecting increases in wages required to keep workers in those high-contact jobs.

Although some of those "increased costs" that retailers are paying to businesses might not necessarily be going to pay off the production and shipping of the products.

So let's not kid, even if the profits of these businesses were declining in 2022, they're coming off ridiculous highs from 2021. Manufacturers (especially) are doing just fine these days, but retailers are seeing some stresses.

The positive in both of these things is that workers seem to have received a small share of the higher profits of 2021, but "inflation" still has been a nice boon to corporate profits in the last two years, and we will likely see more evidence of that when the Bureau of Labor Statistics releases its year-end info on all corporate profits later this week.

Saturday, March 25, 2023

Time to renew the WMC LIST OF SHAME

The state's "business leaders" sure seem afraid that their free pass to pollute and suppress wages will end if we get a Supreme Court "Justices" that doesn't owe their seats to WMC dark money.

Oh joy! More racist BS crime ads from an organization that really doesn't care about crime issues, in an attempt to elect someone to a Supreme Court that doesn't hold criminal trials.

And before some GOP hack chimes in with "But....Janet has so much money from donations!" - We can track where all of those donations to Protasiewicz came from, and who ponied up the money. WMC members don't have the guts to allow us to know the same about them.

WMC also hides the names of their member businesses and local big fish, small pond mediocrities Chambers of Commerce that make up their organization, because they do sleazy garbage like this. So all we can do is connect the businesses to the members of WMC's events and leadership.

The first involves businesses who help to sponsor propaganda events for school children and other PR BS through WMC's charitable "Foundation".

Oh hey, my bank's on there. Cool, cool. Good thing I don't have anything beyond my meager checking account with them.

The other source we can use is to look at who makes up the Board of Directors at WMC, since they have to sign off on spending these millions of corporate tax cuts and govt subsidies profits on these garbage ads. Naturally, they haven't updated this information in 3 years, as confident, decent "business groups" do.
Wisconsin Manufacturers & Commerce (WMC) – the state’s largest and most influential business association – elected Kwik Trip Vice President Steve Loehr as Chairman of its Board of Directors on Thursday. Loehr will serve a two-year term and has been an active member of the Board since 2015.

“WMC is an effective advocate for the business community and a respected thought leader on Wisconsin’s economy,” said Loehr. “I have been honored to serve on the Board and look forward to continuing to bring our state’s business leaders together to continue our work to make Wisconsin the most competitive state in the nation.”

Waupaca Foundry, Inc. President, COO & CEO Mike Nikolai was also elected to a two-year term as Vice Chairman, while Teel Plastics, Inc. Chairman & CEO Jay Smith assumed the role of Immediate Past Chairman. Reelected to their posts as officers of the WMC Board are Gina Peter, an Executive Vice President at Wells Fargo Bank and Barbara Nick, President & CEO of Dairyland Power Cooperative, who will serve as Treasurer and Secretary respectively.
Spend or boycott as appropriate, folks. Especially when the WMC lowlifes decide that being puppetmasters of power is more important than not having a state that treats women as second-class citizens or has free and fair elections with a representative Legislature.

Friday, March 24, 2023

Wisconsin jobs at all-time high, unemployment an all-time low.

I keep thinking Wisconsin will see its job growth hit a wall, especially given the sub-3% unemployment rate in the state. But that didn’t happen in February, as jobs keep getting added, and unemployment went down to its lowest level yet.
The Department of Workforce Development (DWD) [on Thursday] released the U.S. Bureau of Labor Statistics (BLS) preliminary employment estimates for the month of February 2023, which showed Wisconsin's seasonally adjusted unemployment rate dropped to a record low of 2.7%.

In addition, total seasonally adjusted nonfarm jobs increased 7,500 over the month of February and 50,300 year-over-year to hit a new record high of 2,997,400. The total jobs number puts the state 3,400 jobs above pre-COVID-19 peaks.
That’s great to hear, especially following recent reports of increased layoffs being announced by state companies in 2023 (which I’ll get back to in a bit).

As the report indicates, Wisconsin now has finally passed the pre-COVID job levels slightly more than 3 years after that peak was hit in January 2020.

The record low unemployment rate of 2.7% seems like a big deal as well, especially with more people coming back into the work force last month. Which makes it all the more absurd that Republicans put an advisory referendum about making “able-bodied, childless adults be required to look for work in order to receive taxpayer-funded benefits.” But then again, that symbolic question is not about reality, and is instead a desperate attempt by WisGOPs to stir up dimwitted rubes for the April election with race-baiting BS (doesn’t feel like it’s working well).

That being said, those affected by those recent layoff announcements don’t seem to be losing their jobs until later this Spring, and the snowy, cold March isn’t going to help in starting seasonal work over the coming weeks. So let’s keep an eye out for both factors in the next couple of jobs reports. But perhaps it’s also true that those losing their jobs are quickly finding work to replace those lost jobs, and allowing for Wisconsin’s total job numbers to stay strong.

And let’s also see if we can finally get over 3 million total jobs in the state – a place we’ve never been to, which is pretty amazing given that we were less than 200,000 jobs away from that when 2000 began.

Wednesday, March 22, 2023

Fed raises again, but that's not why the market tanked this afternoon

When the Federal Reserve Open Markets Committee held their meeting this week, I figured that Chair Jerome Powell and company wouldn't back off of their rate hiking trend, even with recent instability at banks and with inflation clearly slowing down. And I was right about that, but the Fed's statement also led to lower rates on the bond market.

On the Fed's overall interest rate projections, little changed overall. But it is an odd combination of "higher rates for longer" but mixed with the idea that economic growth would slow down, and that 2024 allowing for rate cuts as price growth settles back down.

And if you watched the CNBC video, you'll notice that stocks also ticked up a bit after thre Fed's decision and Chairman Powell's press conference, as they figured things were steady enough, and only one more rate hike was priced in.

But then something else happened after Powell spoke.

And that something came in statements US Treasury Secretary Janet Yellen gave to a Senate committee, indicating that the Biden Administration would not bail out all bank depositors on their alone.
Some banking groups have urged the Biden administration and the Federal Deposit Insurance Corp (FDIC) to temporarily guarantee all U.S. bank deposits, a move they say will help quell a crisis of confidence after the failure of Silicon Valley Bank and Signature Bank.

Reuters reported on Tuesday that government officials discussed the idea of raising the $250,000 insurance limit per depositor without congressional approval following the SVB and Signature closures.

Yellen said she believed it was "worthwhile" for Congress to look at changes to FDIC deposit insurance, but declined to say what changes she thought were warranted.

But when asked whether insuring all U.S. deposits required congressional approval, Yellen said she was not considering such a move and was reviewing banking risks on a case-by-case basis.

"I have not considered or discussed anything having to do with blanket insurance or guarantees of deposits," she said.
And Wall Street threw a tantrum, causing the big losses.

For the record, I think that the $250,000 limits of FDIC insurance are probably outdated, and I think it would be a great idea for Congress to raise the fees banks pay to the Treasury in order to raise those limits. Which seems to be what they are going to try to do.

"There seems to be more commonality about what to do with FDIC than there was four or five days ago," the Cleveland Democrat told reporters Tuesday evening, March 21. "By our hearing next week, we may have some clarifying thoughts that there can be some consensus."

The Banking Committee is scheduled to hear from FDIC chair Martin Gruenberg, Fed vice chair for supervision Michael Barr and Nellie Liang, the Treasury undersecretary for domestic finance.....

"We'll examine deposit insurance coverage issues. We'll look at the role of social media. We'll consider legislation to strengthen guardrails and I'll continue pressing regulators to do a full review of those two bank failures and what is happening across the country," Brown said. "I think we could find some bipartisan solutions, perhaps on FDIC changes."

Brown said Tuesday that proposals include raising the insurance cap, eliminating the cap permanently or temporarily, and creating a different insurance category for businesses. The brunt of any additional costs would have to be paid for "by the big guys," Brown said, meaning larger banks and larger depositors.
But Wall Streeters want their bailout now, dammit! And to keep their low-rate coacine party as soon as they can.

While I also think rates are too high, my reasons are because the Fed shouldn't stop what's a very good economy in the real America, and inflation has been on the wane for 8 months, to the point that real short-term rates are very high these days. I would hope the Fed goes on pause with its next meeting in May, particularly as oil prices have fallen to their lowest levels since 2021, and as food prices are finally moderating.

To me, it's more important to keep the strong jobs market rolling along than in caring whether inflation is at 2% or 4%. Especially when interest rates are now at 5%

Tuesday, March 21, 2023

Wisconsin layoffs rising in early 2023, but also lots of hiring and job openings.

What's this from Wisconsin Public Radio? "Wisconsin layoff notices up"? And "possible economic slowdown"?
Over the first two and a half months of 2023, the Wisconsin Department of Workforce Development has seen an increase in layoff notices compared to the same period last year.

So far, 1,963 workers have been affected this year. That’s more than half of the 3,821 total employees affected by layoffs in all of 2022.

But the most recent unemployment data shows Wisconsin’s unemployment rate remained low at 2.9 percent in January — better than the 3.4 percent national rate that month — according to state Department of Workforce Development, or DWD.
That seems like a big deal, and it’s within 10% of the total number of people involved in layoff notices for all of 2021. The rate of layoffs in 2023 is more in line with what we saw in the pre-pandemic year of 2019, when more than 8,500 workers were affected (granted, over ¼ of 2019’s layoffs came from Wisconsin-based Shopko, which went belly-up that year and closed all of its department stores).

However, I also see some caveats with the 2023 layoff numbers. Nearly 1/5 of the losses are duet to Marshfield Clinic transitioning 377 workers to its Family Health Center spinoff, which starts on April 1 with no net jobs lost in the process. That’s not to say that Marshfield Clinic is doing fine, as it recently announced that 222 of its workers will lose their jobs in May across several locations in the state.

Similarly, even though Yellow Corp. is closing their freight terminal on the South Side of Milwaukee, the company says it plans to move most (if not all) of those 189 jobs to its other facility in nearby Oak Creek. So while that’s an annoying disruption, it shouldn’t cause much economic damage to workers or the state in general.

But that doesn’t mean there’s nothing to worry about. In addition to the Marshfield Clinic reductions, Hutchinson Technology in Eau Claire says it will lay off more than half of their 425 employees in the coming weeks and months, and triple-digit losses at Briggs and Stratton in Wauwatosa, Hubbell Gas Utility Solutions, and Biery Cheese in Plover are going to hit in March and April.

Of course, if job openings remain high and hiring stays strong in Wisconsin, the higher number of layoffs won’t be as much of a harm. And we know that as of January, Wisconsin’s job market was going very well. The recent state-level JOLTS report says that Wisconsin started off 2023 with the highest level of job openings (as % of total jobs) in the Midwest, and the second-highest rate of hires.

Given that our main jobs issue in Wisconsin has been a lack of available workers to fill the many needs employers have, any added layoffs later in 2023 would simply balance out the labor market, and might keep things moving without too much disruption.

But let’s check back on the WARN reports in a few weeks, and see if the higher interest rates of 2023 start to bite more. Or if the pressures that were feared at the start of the year turned out to be another false alarm, much like we’ve seen for the incredible continued growth of the job market for the last year in both the US as a whole, and Wisconsin in particular.

Monday, March 20, 2023

2 great references - 1 for the state budget, and 1 for the banks

A couple of large reports dropped last week that feel like great reference points in the coming months.

The first deals with the state budget, as the Wisconsin Legislative Fiscal Bureau has put out their 748=page summary of Governor Evers' budget. You also can click here to narrow in on specific agencies.

As the issues come up, this is a great spot to see in plain language what Governor Evers wants to do, and how much it will cost. It'll cut through a lot of spin and BS and help you understand the larger picture as well as the specific issues involved.

The other item I want to let you know about is PBS Frontline's documentary titled "The Age of Easy Money." It is a great summary of how the Federal Reserve had near-zero interest rates between 2008-2022 and pumped trillions into the economy to try to keep bamks functioning during and after the Great Recession, and to boost the economic recovery. It also touches on the Fed's recent rate-hiking spree, and how this might lead to some of the bank difficulties that we've seen.

Especially since the near-zero interest rates encouraged a whole lot of speculation and borrowing for a lot of fraud business ideas, and now there isn't money available to pay those loans back or for the low-interest debt that the banks bought last year to be worth anything today. And the Frontline report warns that we may not see near-zero interest rates any time soon, which could be a rough adjustment for the businesses and individuals that have come to depend on those low rates.

Less single homes, but a lot more multiplexes in America.

New housing numbers had a big jump in starts, but that's not necessarily what grabbed my eye. February housing and construction data should generally give you pause, since seasonal adjustments are at their highest around that time of year.

But is clear that there has been a shift in the type of homes being constructed in the last year. Since February 2022, the amount of single-unit houses that have been completed have generally drifted downward, but projects with 5 or more housing units has jumped by 72% in the last 12 months listed, driving an overall increase in new units being finished.

And it looks like the same story in the future, as the number of units currently under construction are trending even more toward multi-unit complexes.

It’s worthy to ask what that means for the housing market now and in the near future. It’s already difficult for many Americans to find and/or afford housing after a huge runup in prices in the early 2020s combined with the rise in interest rates that started last year. But if there isn’t a huge amount of inventory coming on of single-family homes, would that limit the price decline that has already started in some markets?

Also, does the trend to large amounts of multi-unit construction mean that renting can come back to being more affordable? Or at least start dominoes where previously-built units become more available as new units come around? God knows a lot of people would welcome that, as this guy’s 2010 candidacy has proven well ahead of its time.

Saturday, March 18, 2023

The lesson from bank concerns - you can't trust oligarchs and tech bros

Been busy dealing with the Madness of March over writing and other activities, and the Greatest Annual Sporting Event in America made for a nice escape. But I've certainly noticed what's going on in the financial markets in recent days, given that we just had a week where the DOW Jones was flat overall, but had 300+ point swings within most of the days of that week.

Not really fun to track on a day-to-day basis, and the nerves about some banks getting overextended and failing or needing central banks to shore them up with more money is at least annoying, if not worse.

I'm not overly great at the ins and outs of this type of gambling banking and investment games, . But I will note that it's not just a few tech-related banks on the US coasts having problems, as Credit Suisse reported difficulties late last week.
Credit Suisse confirmed in February that clients had pulled 110 billion Swiss francs ($119 billion) of funds in the fourth quarter while the bank suffered its biggest annual loss of 7.29 billion Swiss francs since the financial crisis. In December, Credit Suisse had tapped investors for 4 billion Swiss francs.

On Wednesday, Saudi National Bank, the bank's top backer, told reporters it could not give more money to the bank as it was constrained by regulatory hurdles, while saying it was happy with the bank's turnaround plan.

Credit Suisse shares have lost more than 75% of their value over the past twelve months.
And now we have reports of Deutsche Bank circling the withered body of Credit Suisse to bail it out and take those accounts.

Likewise, isn't it funny how GOP mega-donor/overall scumbag Peter Thiel led a run on Silicon Valley Bank by telling the companies he invested in to get out of the bank a couple of weeks ago.
Thiel's Founders Fund is thought to have propped up several startups that banked with SVB, which provided banking for nearly half of all US venture-backed startups, per its website. The fund had also called for its startups to withdraw their funds from the bank as well.

Bloomberg reported that VC funds Coatue Management, Union Square Ventures, and Founder Collective had all told their portfolio companies to pull their funds from SVB.
If I was a conspriatorial-type person, I'd almost say that Thiel would be fine with trying to cause chaos in the economy to hurt Joe Biden and grab more power for oligarchs like himself. Especially when former US Labor Secretary Robert Reich reminds us of what Thiel has previously said and done.
Peter Thiel, the billionaire tech financier who is among those leading the charge, once wrote, “I no longer believe that freedom and democracy are compatible.”

Thiel is using his fortune to squelch democracy. He donated $15m to the successful Republican Ohio senatorial primary campaign of JD Vance, who alleges that the 2020 election was stolen and that Biden’s immigration policy has meant “more Democrat voters pouring into this country.”

Thiel has donated at least $10m to the Arizona Republican primary race of Blake Masters, who also claims Trump won the 2020 election and admires Lee Kuan Yew, the authoritarian founder of modern Singapore...

Thiel and his fellow billionaires in the anti-democracy movement don’t want to conserve much of anything – at least not anything that occurred after the 1920s, which includes Social Security, civil rights, and even women’s right to vote. As Thiel wrote:

The 1920s were the last decade in American history during which one could be genuinely optimistic about politics. Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women – two constituencies that are notoriously tough for libertarians – have rendered the notion of “capitalist democracy” into an oxymoron.
Remember what happened to the economy at the end of the Gilded 1920s, a time when "real [male] leaders and optimistic job creators" controlled everything? It wasn't good.

Then add in the reality that the Federal Reserve kept interest rates near 0% for 2 years, even as the economy had picked up and the Biden/Dems in charge of DC had put in massive stimulus to bring the country back from its COVID-related doldrums. Tech bros used the rock-bottom interest rates to borrow at ridiculously low levels, and then as their products became less needed as the COVID pandemic faded, and the "optimism" about their "disruptions" didn't work out, they have little money coming in to justify the inflated stock prices.

Which is why I like to look at the S&P price-to-SALES ration to get insight on legitimate stock valuations. And it looks like a deflated Bubble over the last year.

Tech bros, bankers and other "great men" shouldn't be trusted to make things better for the Real America. But here was Donald Trump, all Republicans and too many Dems giving the green light in 2018 to allow for a lot of banks to play faster and looser with the money of depositors, and allowing someone like Peter Thiel to tank these banks with a couple of whisper campaigns and clicks of a mouse.

One Wisconsin Congressman in particular was glad to be seen supporting the changes, right before he skipped town to get paid on the East Coast.

But yet central bankers and other connected oligarchs think the big problem in our economy is that everyday people are getting 5% wage increases in a time of 4% inflation? As Jon Stewart told former Treasury Secretary Larry Summers recently - you guys need to get real about what's happening here.

Wednesday, March 15, 2023

Inflation keeps fading in February, with even better outlook. STOP TIGHTENING

Given that January’s figures put us back on INFLATION WATCH in America, this week’s releases of February’s Consumer Price Index and Producer Price Index were eyed to see if those higher numbers from January would continue, which could drive the Federal Reserve to keep raising interest rates throughout the first half of 2023.

First up was the CPI, and it leveled off from the January increase that alarmed many on Wall Street.
The Consumer Price Index (CPI) revealed headline inflation rose 0.4% over last month and 6% over the prior year in February, a slowdown from January's 0.5% month-over-month increase and 6.4% annual gain. Both measures were in-line with economist expectations, according to data from Bloomberg.

The 6% jump in inflation marks the slowest annual increase in consumer prices since September 2021.

"Core" inflation, which strips out the more volatile costs of food and energy, rose 0.5% over the prior month in February and 5.5% over last year, marking the smallest 12-month increase since December 2021. Economists had estimated "core" inflation would rise 0.4% on a month-over-month basis and increase 5.5% compared to February 2022.
You can see the steady decline in the 12-month price change since inflation peaked in June.

And then going inside that 0.4% increase in CPI, I see positive trends. February’s 0.3% increase in “food at home” was the smallest since May 2021, with fresh fruits and vegetables going down, and egg prices starting to come back toward earth with a February fall of 6.7%.

The “core” increase of 0.5% also is misleading, as much of that is due to the shelter category, and Investopedia is among those who remind us that higher “shelter” costs (reflected in a measure called Owners’ Equivalent Rent, or OER) aren’t necessarily higher costs for people in the real world.
For most goods and services, the process of recording prices is relatively simple: The bureau sends someone to a store, or calls a business, to see what they are charging for a bag of rice or to send a plumber out to repair a leaky faucet. Recording housing prices isn't as straightforward. The bureau measures actual rental rates for houses, and, using that data, estimates how much owner-occupied houses would rent for if they were put on the market.

“It's a little bit of a fuzzy metric,” said Ryan Sweet, chief U.S. economist at Oxford Economics.

OER is effectively the rent that the homeowner is giving up by living in their house instead of renting it out. It’s influenced by housing prices, but not directly tied to it….

As a result of its methodology, the all-important OER measure tends to lag behind movements in nationwide home prices by about a year. It took a long time for the pandemic-era surge in home prices to show up in the Consumer Price Index, and it will likely take a long time for the recent cooling of the housing market to show up as well.
So this will also mean that CPI will cool down in the coming months based on this lagging OER measure alone. And given that many Americans are locked into fixed-rate mortgages and/or year-long leases, it is unlikely that they actually paid 0.8% more in shelter costs in February 2023.

Then on Tuesday, we got information on Producer Prices, and that had even better news for those worried about inflationary pressures.
A key measure of inflation fell dramatically in February, according to the latest Producer Price Index, which tracks what America’s producers get paid for their goods and services.

Producer price increases slowed to an annual pace of 4.6% last month, significantly lower than the downwardly revised 5.7% in January, the Labor Department reported Wednesday. February prices fell by 0.1% after rising by a downwardly revised 0.3% in January.

Economists surveyed by Refinitiv had been expecting the 12-month rise in wholesale prices to slow to a 5.4% increase.

Taking out the often volatile food and energy components, core PPI also notched some stark declines: Annual price increases dropped to 4.4%, and the index was unchanged from the month before (0% growth). Those are down from January’s downwardly revised 5% annual price gain and 0.1% monthly increase.
So businesses aren’t seeing their costs for products in going up. That declining trend in PPI has been going on since June, with no one month having an increase in final demand above 0.3%.

The total increase in PPI in the last 8 months is less than 1% for the last 8 months measured, which translates to around 1.5% on an annual basis – below the Fed’s already-low 2% goal.

Of course, these CPI and PPI reports predate last weekend’s closures of a couple of banks , whose problems seem related to the Fed’s higher interest rates leading to those banks’ bond holdings being worth less, and lower amounts of lending (because it’s more expensive to borrow money).

And the banking fears now feed back into INFLATION WATCH, as oil plummeted Wednesday. Futures dropped down below $67 a barrel on Wednesday before recovering some losses and closing over $68. That's a lower closing price than we had at any time in 2022.

The news of the last week shows the folly of the Fed chasing last year’s inflation by continuing to increase rates today. Not only do we have 8 months of calmer inflation with little to spark it back up, but we also have banks and other businesses suffering because interest rates have gone up so fast and so quickly.

Well past time for Jerome Powell to stop the 1970s mentality, deal with 2023’s reality, and BACK OFF.

And now, a quick sports take on #12

A new type of March Madness hit this state's sports and news wires just after noon today.

No surprise on any of this, and of course Rodgers did it in typically eye-rolling fashion - using his segment on the Pat McAfee Show to make the announcement, with a nice side-order of victimization.

So Rodgers went from 90% retired (pre-darkness) to wanting to play for the #Jets. Interesting turnound. Sounds like a guy who is motivated to prove the #Packers wrong. @PatMcAfeeShow

— Rich Cimini (@RichCimini) March 15, 2023

Rodgers was leaning toward retirement when he arrived at the darkness retreat? I don't buy that for a second, and then he claims he only found out the Packers were looking to trade him when he came out of there a couple of weeks ago? Riiiiight.

As a Packer fan, this was a long time coming, starting with the original sin of drafting Jordan Love in the first round back in 2020 - a stupid move that pissed off Rodgers and wasted a chance to immediately improve a team that was one game away from the Super Bowl. Rodgers responded with 2 great seasons in 2020 and 2021, but he also flamed out in the playoffs in both years (he was outright bad in that Niners game in 2021).

Then things got worse. One year ago today, it seemed like the Packers were going to go full out for one last chance at a title when they signed Rodgers to a 3-year, $150 million contract extension. Which made it all the more perplexing when the Pack traded All-Pro receiver Davante Adams for draft picks a few days later.

After the mixed messages that the team gave going into the 2022 season, there was definite decline for both Rodgers and the team, with the year ending with another loss at Lambeau in a win-or-go-home game.

This just seemed like a relationship that had run its course. It happens, both in sports and in life. I just hope the Pack get a 1st round draft pick in THIS year's draft and other usable assets in return for trading Rodgers to the Jets, and that's what I'm paying attention to in the coming days and weeks.

Likely in the next few years, the memories of Rodgers diva behavior and tech-bro-type weirdness and conspiracy theories should fade for me, and I'll remember Aaron Rodgers for on-field brilliance that I would argue even surpassed Brett Favre's career (Rodgers never had the level of INTs and meltdown games that Favre had). I hope I'll be fired up to see him enshrined in Canton some time in the early 2030s. But for now, I'm just glad this saga is winding down.

Monday, March 13, 2023

New jobs numbers show Wisconsin doing even better, but also hitting our limits

Late last week, we got some updated data on the jobs market in Wisconsin. And much like with the country as a whole, jobs kept coming in and unemployment is staying at or near record lows.
The Department of Workforce Development (DWD)...released the U.S. Bureau of Labor Statistics (BLS) preliminary employment estimates for the month of January 2023, which showed Wisconsin added 4,100 nonfarm jobs over the month and 55,800 jobs over the year.

The data also showed that Wisconsin's unemployment rate fell to 2.9% for January, down 0.1 percentage point from the revised 3% in December 2022. The state's labor force participation rate for January was 64.5%. Nationwide for the month of January, the unemployment rate was 3.4% with a labor force participation rate of 62.4%.
Pretty good situation to be in, to be sure.

The reason we didn't find out about January's state jobs numbers until last week is because of the annual benchmarking for state figures, which follows data from the "gold standard" Quarterly Census of Employment and Wages (QCEW). Those figures run through the end of September, and came out on a statewide level in late February. With a year's worth of revisions, we can get a more accurate look at where our jobs market has been, and is at today.

What we find is that Wisconsin did not have the losses that were initially reported for the end of 2021, and instead jobs went up by nearly 29,000 between July 2021 and January 2022. After while January gains were revised down slightly (by 5,000), we still added nearly 57,000 jobs last year. And we are well ahead of where we thought we were with the original data.

The household survey that translates into the unemployment rate also was given benchmark revisions with January's survey, and those revisions indicate that Wisconsin's labor force peaked at a lower level than we originally thought, which means we didn't see as many dropouts from the work force as we thought.

Those revisions also indicate that even fewer Wisconsinites were out of work in 2022 than we thought, and was back on the decline as the year ended.

So our workforce capacity in Wisconsin may well be even more maxed out than we thought, which means that we need to find ways to get more people into the state and the work force in order to keep growth going.

Which makes it all the more absurd that the "business leaders" at Wisconsin Manufacturers and Commerce are throwing millions of dollars behind Dan Kelly's Supreme Court campaign. How is supporting a "Justice" who would continue the state's abortion ban, let polluters and exploitive firms do wahtever they want without punishment, and uphold gerrymandered maps that keep regressive Republicans in power attractive to potential workers in any way?

The LAST thing we need is more of the WisGOP status quo agenda that isn't favored by the majority of Wisconsinites, and is repellent to others that might want to come here. As these revised employment figures show, Wisconsin has already had a strong recovery from the COVID cutbacks, but we are now at a new stage where we need to boost the number of people that are living and working here. If not, we will not be able to grow much more, and will stagnate while other places keep growing.

Sunday, March 12, 2023

US budget deficit keeps rising in '23. It ain't just spending, it's the Fed and more refunds

With President Biden releasing his budget last week, the CBO budget review for February gives us a good update on where our budget deficit is. And it seems like the deficit is quite a bit higher than last year, which would put in another layer in the upcoming high-stakes budget talks.

To start with, tax revenues continue to lag, which is odd given the strong wage and job growth that continues in the country.

That's a relative tame increase in withheld payments, but it's at least an increase and somewhat understandable. What's causing that decline outside of withheld payments? One is due to higher refunds than in the 2021 tax year, and the other is due to 2022's and 2023's higher interest rates.
• Individual income tax refunds more than doubled, rising by $68 billion, thereby reducing net receipts. The precise timing of refund payments varies from year to year, but most will be paid in the period from February through April. The Internal Revenue Service reports that the number of refunds issued through the fourth week of February was 18 percent greater than in the same period in 2022. Average amounts refunded so far in 2023 are about 11 percent smaller, in part because the pandemic-related recovery rebates (also known as economic impact payments) and the expanded child tax credit have expired. …

• Remittances from the Federal Reserve decreased from $48 billion to less than $1 billion. Higher short-term interest rates raised the central bank’s interest expenses above its income, eliminating the profits of most Federal Reserve banks.
That's some of the reason for the jump in the deficit. But increased spending also is playing a significant role, led by the “big 4” – Social Security, Medicare, Medicaid, and Interest on the debt, and a one-off item.

A lot of this increase in Social Security and Medicare are related to the big inflation-related jumps in benefits to help seniors for 2023, and Medicaid is still paying expanded federal costs for continuous enrollment (which is going to be rewound in the coming months), and you can thank Jerome Powell and the Fed's rate hikes for the increase in interest costs on the debt.

But what’s that “Spectrum Auctions” item? The CBO explains.
The largest increase in outlays was related to receipts from the auction of licenses to use the electromagnetic spectrum. Proceeds from such auctions are recorded in the budget as offsetting receipts—that is, as reductions in outlays. In the first five months of fiscal year 2022, receipts totaled $81 billion—all recorded in January. No such receipts were collected during the first five months of 2023, resulting in a net increase in outlays.
What's concerning is that this big jump in overall spending is happening as other areas of “spending” are being cut due to the end of COVID-era stimulus.
Outlays for certain refundable tax credits totaled $84 billion—a decrease of $69 billion, or 45 percent. That reduction occurred because the expanded child tax credit has expired. (In tax year 2021, eligibility for and the size of the child tax credit were expanded, and advance payments were made between July and December 2021.)

Outlays from the Public Health and Social Services Emergency Fund decreased by $34 billion (or 66 percent), as expenditures decelerated for several pandemic-related activities, including reimbursements to hospitals and other health care providers, spending on coronavirus testing and contact tracing, and development and purchase of vaccines and therapies.

Spending by the Small Business Administration decreased by $15 billion, or 94 percent. In the first five months of fiscal year 2022, that agency recorded nearly $16 billion in outlays, mostly for disaster loans and for grants to operators of shuttered entertainment venues. Those outlays declined toward the end of fiscal year 2022, and there has been little such spending in the current fiscal year.
As mentioned earlier, there is some more fiscal restraint coming in Spring 2023, with expenses in SNAP and Medicaid likely to level off and decline vs last year as those expanded benefits and automatic enrollments in those respective programs go away in March and April.

While that's good fiscal news, the deficit is still certainly on the rise, and the higher interest rates complicate this due to adding expense onto the debt. Which makes for a chicken-egg question about whether the higher deficits lead to higher inflation, and so that’s why the Fed should keep rates high to slow down that type of inflation (I generally disagree witht his idea, other than deficits leading to some higher demand). Or does it mean the Fed should back off on these higher interest rates because it’s causing higher expenses and making the deficit “problem” worse? (that's where I'm at)

The higher refunds is also something to look at, both now and in the future, because extra added refunds might mean more “extraordinary measures” have to happen by the Treasury to keep from going over the debt limit, since more cash is going out the door. Or we hit the debt limit sooner, and/or refunds get slowed down to stay at/under that limit.

It also definitely means this isn't the time to bail out one Silicon Valley Bank and the boom-bust tech and start-up schemes that those funds were pulled into. Not only is it rewarding sketchy business procedures, we also literally might not have much money available to do it, at least in the coming months.

Saturday, March 11, 2023

US job growth keeps rolling along in February

It was another "Jobs Friday" yesterday, this time for February. And the US jobs market continues to be in a very good place.

So this might be the first indication of all of the reported tech layoffs appearing in the jobs reports. Also note that services continue to see jobs come back (especially in hospitality sectors), and even retail recovered after losing jobs through much of 2022.

February is also a good month to look at for another reason, because February 2020 is when employment peaked before the COVID-related shutdowns and adjustments. We exceeded that February 2020 peak last June, and are now up by nearly 3 million jobs (and 3.355 million in the private sector).

Even the increase in unemployment happened for the "good reason" - more Americans entered the work force, and about half of them got jobs.

But the overall employment-population ratio is down by nearly a full point compared to February 2020, which is indicative of the demographic challenges and post-COVID changes that have happened in this country. So we really don't have a large number of prime-age workers on the sidelines, but we do have more people to serve with less people available to do so.

That could be a good thing for workers, because it may make it more difficult to lay people off and/or have them suffer through longer lengths of unemployment, because the demands remain with fewer workers available to replace and/or compete for open positions.

But hourly wage growth also moderated (+0.24%), and really isn't causing any type of wage-price spiral. Combine it with the best job growth in decades, and it's something that both central bankers and workers should be happy about.

As I've said before, why would we keep jacking up rates to stop what seems to be a great economic situation? In February 2023, it looks like we continued to have strong job growth, good wage growth, and nothing to stop inflation from continuing to drift down from its highs in June. Let's take it and keep on rolling.

Thursday, March 9, 2023

Policy Forum crunches the big numbers, shows Evers nor WisGOPs can get all they want

Wanted to draw attention to the Wisconsin Policy's Forum breakdown of the 2023-25 budget. This is a really good high-level view of the budget across a lot of areas.

We’ve talked a lot about the one-time increases in GPR spending and the trading of lower/middle-income tax cuts for the reversal of previous tax cuts to the rich and corporate. But the Policy Forum also talks about all of the funds that go into this budget, which goes beyond the state-level taxes that make up most GPR.
The proposal also calls for the biggest spending increase on record when all types of state revenues are considered. The state’s so-called “all funds budget” includes GPR revenues, federal aid, segregated revenues such as the gas tax and hunting and fishing licenses that flow into stand-alone state funds for transportation and conservation, and program revenues such as university tuition and inspection fees. As shown in Figure 3, the proposed expenditures across all state funds would rise by a historic 17.9% over base levels in 2024 to $52.1 billion, before a slight decline of 0.8% to $51.7 billion in 2025….

In the first year of the budget, while both GPR (up 23.2%) and federal revenues (21.9%) would account for by far the largest portions of the all funds spending increase, there would also be increases in program (6.2%) and segregated (2.7%) revenues. However, all types of revenue except federal would peak in FY 2024 and slightly decline in FY 2025.
The Policy Forum says both Evers’ budget and the GOP’s flat tax scheme are both unsustainable, as they will have spending exceed revenues in 2025 and future years. And that the flat tax scheme is more damaging to the budget long-term.
Under the governor’s proposal, however, the state would draw down its general fund balance to help cover new spending on education, local governments, transportation, and a variety of other priorities. As Figure 5 shows, the drawdown would occur because proposed spending exceeds revenues by nearly $5.2 billion in 2024 and $1.3 billion in 2025. That would amount to the largest imbalance of any budget on record….

Republicans have said that they will remove or reduce many of the governor’s spending increases, which on its own would lessen the drawdown of state reserves and make the budget more sustainable. However, Senate Republicans favor a plan to shift the state’s income tax to one flat rate, a proposal which as we previously noted would lower state revenues by a projected nearly $5 billion over the 2023-25 budget and then by $9.4 billion in the 2025-27 budget, even before any cost to continue current services had been considered. This would likely make the overall budget even more difficult to sustain.
Which probably explains why the WisGOP Chairs of the Joint Finance Committee are already saying they're not likely to put the flat tax in the budget, because they know what a fiscal and political loser it is.

The Policy Forum also puts numbers and pictures behind the skyrocketing amount of surplus funds that are in the state’s bank and savings accounts.
Over the past two decades, Wisconsin’s budget reserve totals have gone from being one of the very worst in the country to being well above average. The state’s general fund is projected to close the 2023 fiscal year on June 30 with a balance of nearly $7.1 billion and a rainy day fund balance of $1.7 billion. The total reserves of more than $8.8 billion would be more than 1,900 times larger than at the close of 2005 and amounted to an unprecedented 44.7% of 2023 general fund spending, or gross appropriations. That is the highest level in Forum records going back 40 years.

And that $1.7 billion in the rainy day fund also gains interest over time, which means that it could well be closer to $1.9 billion by the end of the 2023-25 budget, even without an extra deposit from the General Fund (and Evers wants to put in another $500 million to it). So even if we knock down a decent amount of the $7.1 billion that is projected to be in the General Fund on June 30 over the next two years we should have plenty of cushion to deal with any economic difficulties or needs, and can still invest a lot more than we are.

Given these parameters, the real story is what kind of compromise results during the budget debtate, since there is clearly a way to increase investment, cut taxes, and to keep the budget structurally balanced. If we want the numerical measure of having a similar amount of revenues and expenditures at the end of the 2025 Fiscal Year, then let’s shoot for that as a total number, and we can still do a lot to reverse the damage from the 12 years that we have lived under Walker/WisGOP neglect.