Wednesday, November 29, 2023

Higher GDP, higher profits, higher incomes, and moderate inflation. The US in Q3

What was already a big number for the US economy in the 3rd quarter ended up being even bigger today.
Gross domestic product increased at a 5.2% annualized rate last quarter, revised up from the previously reported 4.9% pace, the Commerce Department's Bureau of Economic Analysis (BEA) said in its second estimate of third-quarter GDP. It was the fastest pace of expansion since the fourth quarter of 2021.

Economists polled by Reuters had expected GDP growth would be revised up to a 5.0% rate. The economy grew at a 2.1% pace in the April-June quarter and is expanding at a pace well above what Federal Reserve officials regard as the non-inflationary growth rate of around 1.8%.

The upward revision to growth reflected upgrades to business investment on structures, mostly warehouses and healthcare facilities. Spending by state and local governments was also revised higher. Residential investment was also raised, thanks to the construction of more single-family homes, helping to end nine straight quarters of contraction.
Big stuff on the topline, and today’s GDP release had a couple of other interesting tidbits in it. One involves 3rd quarter income going up by even more than before.
Current-dollar personal income increased $218.3 billion in the third quarter, an upward revision of $18.8 billion from the previous estimate. The increase in the third quarter primarily reflected increases in compensation (led by private wages and salaries), nonfarm proprietors’ income, and personal interest income that were partly offset by a decrease in personal current transfer receipts.

Disposable personal income increased $144.0 billion, or 2.9 percent, in the third quarter, an upward revision of $48.2 billion from the previous estimate. Real disposable personal income increased 0.1 percent, an upward revision of 1.1 percentage points.
We'd seen real disposable income decline in the last few months, so this report indicates that we should expect to see sizable upward revisions in tomorrow’s Income and Spending report.

We also got the first release of 3rd quarter profits, which jumped and got back near its record levels of mid-2023.
Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $105.7 billion in the third quarter, compared with an increase of $6.9 billion in the second quarter (table 10).

Profits of domestic financial corporations increased $18.8 billion in the third quarter, in contrast to a decrease of $54.2 billion in the second quarter. Profits of domestic nonfinancial corporations increased $76.2 billion, compared with an increase of $39.0 billion. Rest-of-the-world profits increased $10.7 billion, compared with an increase of $22.1 billion. In the third quarter, receipts increased $17.4 billion, and payments increased $6.7 billion.

However, don't count on the robust 5.2% growth holding up for the rest of the year, as the Federal Reserve came out today and indicated that growth is not likely to be as good to end 2023.
The economic outlook soured on slowing growth in recent weeks as consumers are keeping a closer on spending amid an easing in the labor market as well as in the pace of inflation, according to the Federal Reserve's Beige Book released Wednesday.

Economic activity slowed since the previous report, with retail sales declining, on average, as "consumers showed more price sensitivity," the Fed said in its Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through Nov. 17. "The economic outlook for the next six to twelve months diminished over the reporting period," it added.

The more somber economic outlook comes as the demand for labor continued to ease, with wage growth remaining modest to "moderate in most Districts," according the report, though there continued to be "difficulty attracting and retaining high performers and workers with specialized skills."

The pace of inflation "largely moderated" across districts, though prices remained elevated, the report showed, with a notable rise in utilities and insurance costs across most districts. Most districts, however, expect moderate price increases to continue into next year, the report added.
While growth might not be 5% or even 3%, that also doesn't sound like anything resembling a recession, and moderate inflation and growth isn't a bad way forward when unemployment is still under 4% in the country.

As mentioned earlier, let's see if tomorrow's income and spending report has the upward revisions that today's GDP report hinted at. And if so, let's see how much growth might be slowing from the torrid Q3 we had.

Tuesday, November 28, 2023

QCEW update - Wisconsin's "low" growth is still better than the last 20 years

Had a few notes from last week's pre-release of the "gold standard" Quarterly Census of Employment and Wages (QCEW), which looked at new numbers for June 2023 from last week.

One part of this report gives the total jobs situation for all 50 states, and it shows Wisconsin is still a bottom-tier state for job growth - 40th out of the 50 states. However, the Midwest generally has trailed the nation in job growth for a long time (colder weather, aging population, etc), and so we were right in the middle for job growth in our part of the country.

Total job growth, QCEW, June 2022 - June 2023
Mich +2.46%
Minn +2.30%
Ill. +1.907%
Wis. 1.904%
Ohio +1.72%
Ind. +1.45%
Iowa +1.06%

(huh, 3 Dem-run states on top, 3 GOP-run states on the bottom)

I'll add that our 1.9% increase in job growth and the nearly 55,600-job amount is significantly better than anything we had for year-over-year growth in the 2000s or the 2010s. That’s a good sign in itself, and it means that the state had passed the number of jobs that it had in June 2019 – before the COVID pandemic caused nearly 400,000 jobs to go away by April 2020, which meant that we wouldn’t get back to pre-COVID levels for another 2 ½ years or so.

The initial QCEW release also looks at the job changes in large population counties. And the one leading the way in Wisconsin was the same one that has typically led the way for most of the last 10-15 years – Dane County. Madison’s home county added 9,729 jobs in the QCEW survey, accounting for more than 1/6 of the state’s job growth from June 2022 to June 2023, and nearly matching the 10,094 combined total of Milwaukee and Waukesha Counties. Dane also added nearly 2 ½ times the combined total of 3,932 jobs from Brown, Outagamie and Winnebago trio in the Fox Valley (the other 3 large counties that are tracked by the QCEW in this initial release).

This growth means that Dane County is more than 2.5% above the number of jobs it had 4 years ago, before the pandemic hit, and interestingly, the other 66 Wisconsin counties (as a group) have had slightly more growth than Dane County had from June 2019-June 2023 in the QCEW survey (2.9%). On the other side, Milwaukee, Brown, and Outagamie Counties still haven’t gotten back to their pre-COVID levels of jobs.

We will see what the picture looks like in the rest of the counties when the full QCEW release comes out next week, and we will get to break down the figures in each sector.

But the initial release still shows the strength of the Biden-era recovery, even in a lower-growth state like Wisconsin. And it shows that Dane County continues to be a dominant economic powerhouse that lifts the state, while Milwaukee County still has yet to recover, and perhaps the new sales tax and shared revenue system can help to reverse the defunded, lagging output that has dogged out largest city and county for far too long.

Sunday, November 26, 2023

Microsoft steps up to pay for the mess that Foxconn and local yokels left us with

More than 6 years after the PR scam deal was originally announced, we might actually get some sort of large-scale development out of the Foxconn region in the southeastern Wisconsin village of Mount Pleasant.
Under terms of a development agreement...Microsoft will pay $100 million for 630 acres of village-owned land and buy another 400 acres from a private property owner, the Creuziger family, who had declined to sell the land to the village. The parcels are north and west of the current Microsoft development on land known as areas 2 and 3.

In addition, Microsoft will guarantee a minimum $1.4 billion in new taxable land and development value by Jan. 1, 2028....

According to its agreement with the village and Racine County, taxes on $1.4 billion of valuation or payment of the equivalent amount is the minimum amount needed to cover the debt payments and other expenses expenses of the financing district that was created to develop the business park. As of last year, Foxconn's four buildings had added just more than $500 million in new taxable value according to the most recent district financial report. Foxconn has been making special payments to help cover borrowing costs, but in January the tax bill will increase dramatically, to $28 to $30 million. Payments will remain at that level until the district is retired in 2047.

Alan Marcuvitz, the attorney representing Mount Pleasant, said the Microsoft deal should put to rest concerns about the district's ability to meet its obligations. Cash will begin to flow from Microsoft beginning next year, when it will begin paying taxes on land that, under city ownership, had been tax exempt.

I suppose it's nice to see something bigger happening there, but what about the company that was originally supposed to have built up a ton of stuff in that area by now?

Former J-S business writer Kathleen Gallagher is now an executive at a tech nonprofit, and she wrote a column at her former paper saying that we shouldn't forget how the Village of Mount Pleasant mortgaged its future, and how village officials are using the Microsoft land purchase to bail themselves out of a bad Fox-con.
The sleight of hand here is that local officials and their public relations people want us to think the State of Wisconsin officially released Foxconn from its commitments in 2021, when it renegotiated the tax incentive contract. But that’s not true.

The reality is that Wisconsin renegotiated Foxconn’s eligibility for state tax credits, shrunk the cash incentives from their original stratospheric levels, and reduced the number of jobs required to get the cash payments. The state was not a party to the locals’ 2017 agreement so, as a matter of contract law, Foxconn’s promises -- the jobs, the spending and even the big screen production factory -- are still intact. For now.

Clearly Foxconn has not fulfilled key terms of the agreement. Yet local authorities haven’t declared a breach. And now that Microsoft is involved, the financial picture looks much better.
Gallagher goes on to remind us that what Foxconn ultimately did in SE Wisconsin isn't anything close to the grandiose stuff that was being bandied about 6 years ago. And yet they will end up owing us nearly nothing for the broken promises and numerous amounts of BS they and their GOP allies tried to get over on Wisconsin residents.

With Microsoft pledging to invest billions on two square miles in Racine County, government officials are touting the promise that the village and county debt on the business park will be retired early. They’ve got a better foundation for their hopes this time: Microsoft has a strong track record of following through on its development commitments.

Still, the economic impact here will fall far short of the hype. Foxconn committed to invest $10 billion, create 13,000 full-time jobs with a minimum average salary of $53,875 plus benefits, and build a supply chain infrastructure. Not to mention the anticipated uptick in innovation, which will fall far short as well.
It looks like the Mount Pleasant trustees on Monday night will release Foxconn from its promises about jobs and technology development. The apparent price: Foxconn must give up its right of first refusal on the land Microsoft wants to buy.
Chairman Gou knew. The other two didn't care.

So Foxconn getsto walk away from the free land that it got from the original scheme? With upgraded values on what they have left because of infrastructure and services that they never came close to paying full price for? I'm also curious to know if the Village of Mount Pleasant will ever get the $30 million balloon payment that Foxconn was supposed to pay by the end of January, or if Foxconn going to be able to walk away from that balloon payment as well (now that Microsoft has bought the land), which allows Mount Pleasant to put off bankruptcy pay its bills for the short term.

It seems to be a nice way to kick the can down the road with more promises of "development and jobs are coming". Like Gallagher, I do think Microsoft will follow through on much of what they are saying they will do in Racine County, and there's more hope for something sizable to finally be salvaged from this whole ordeal. NBut until the buildings are done the people move in, it's still a hope and not a guarantee.

So while Mount Pleasant can use these land sales to pay off some of the debt that's coming due in the next few years, when we get to 2028, are we going to be back in the same situation where the announced investment falls short. And if so, will state taxpayers still have to bail out the local yokels that gladly went along with the Fox-con?

Saturday, November 25, 2023

Gerrymandering case begins, and Becky Bradley gets another chance to be a whiny fool

Last Tuesday a big day in Wisconsin, and one a lot of us have awaited for many years.

And not surprisingly, it didn’t take long for one "Justice" to be an arrogant lowlife.
Just seconds into oral arguments Tuesday, conservative Justice Rebecca Bradley interrupted attorney Mark Gaber, who is with the Campaign Legal Center and representing the Democratic voters in the case, to ask why the lawsuit was not filed until shortly after Protasiewicz joined the court.

"Everybody knows that the reason we're here is because there was a change in the membership of the court," Bradley said, alleging that the parties would not have filed the case if Protasiewicz had lost. Bradley also pointed to comments Protasiewicz made while a candidate in which she described the existing maps as "rigged."
Well, that is a result of elections, Becky. The results of those elections allow for laws to be changed by changing the people pass and interpret the laws. Most of us understand that in elementary school.

That wasn’t enough the Bad Bradley, as she also gave this “down in up” statement.

So forcing legislators to face the voters and increasing the chances of them being held accountable is the OPPOSITE of democracy? Maybe in Right-Wing Bubble World, where winning one election in 2010 gives you the right to have maps and laws to be slanted in WisGOP’s favor for the next 20 years, “consent of the governed” be damned. But not in any Wisconsin most of us want to live in.

It’s especially rich hearing proud Federalist Society member Rebecca Bradley saying this. And fellow Marquette graduate Charlie Pierce called her out this weekend in Esquire on her FedSoc BS.
Bradley deserves attention here. She has no business being a supreme court judge anywhere, let alone in Wisconsin, and she has no business discussing the politics of being a justice at all. She has been a product of the wingnut terrarium her whole life. While a student at my alma mater (Rock chalk this, beeyotches!), she wrote columns for the Marquette Tribune, for which, in the years 1974-75, I was the editorial page editor. Even in my callow, First Amendment-loving youth, I wouldn't have let this kind of inhumane crapola see print.

"How sad that the lives of degenerate drug addicts and queers are valued more than the innocent lives of more prevalent ailments...But the homosexuals and drug addicts who do essentially kill themselves and others through their own behavior deservedly receive none of my sympathy...Heterosexual sex is very healthy in a loving relationship; homosexual sex, however, kills."
She since has apologized for the columns, but her rise through the ranks marks her as a lifetime beneficiary of the wingnut welfare system. She was on the board of advisers for the local Federalist Society, back when that particular blight was merely a home for wayward extremists. She was cagey about her political connections on her applications for her various judgeships, but she did cop to involvement with the Wisconsin branch of the St. Thomas More Lawyers Society, a gathering of ultramontane Catholic legal beagles. Ultimately, she was appointed to a Circuit Court and then as an interim appointment to the state supreme court by former Governor Scott Walker, the goggle-eyed homunculus hired by Koch Industries to run its midwest subsidiary formerly known as the state of Wisconsin. She was subsequently elected (by an eyelash) to a 10-year term of her own.

She is a completely political creature and has no standing at all to complain about the political nature of the court one way or another. (She's also something of a self-revisionist. In August, she got caught editing her own Wikipedia page.) And, as a good conservative, her political principles are made of taffy. When the court flipped, she demanded that Protasiewicz recuse herself from any gerrymander case based on statements the latter made during her successful campaign.....

Of course, in a previous situation, Bradley's outrage over political money was somewhat tempered.
The issue dates back to 2017, when a group of retired judges asked the Wisconsin Supreme Court to enact a ban barring justices from ruling on cases involving an individual or organization that had donated to a justice’s campaign.

At the time, a 5-2 conservative majority controlled the court. Bradley joined her right-wing colleagues, which included current Chief Justice Annette Ziegler, to kill the proposed recusal rule.
The real reason Becky Bradley and the rest of the righties are so snippy is because they rigged a system to try to keep power in their hands, and tried to insulate themselves and their allies from consequences as much as possible. Now that WisGOPs have lost control of the Wisconsin Supreme Court, and will be on the losing side of decisions, and the currently gerrymandered GOP Legislature isn't going to be gerrymandered anymore, they don’t like it.

Hey, that’s the system you Republicans made – use elections to get into power, and then you get to rule. Now that Wisconsin Dems have stopped “going high”, played to win and have consistently beaten GOPs in statewide elections for the last 7 years, WisGOPs are crying that all of their rigging will be unwound.

Maybe they should have spent the last 12 years listening to voters and actually making this state better instead of trying to cheat and come up with new and elaborate ways to avoid accountability and changes that the people demand. But that takes work and effort, and when you’re Robbin’ Vos and you have a million-dollar taxpayer-funded staff, isn’t it easier to jet off to Brazil over doing real work and having to produce positive results for anyone beyond your inner circle?

TICK TOCK, MFers! You’re going to have to care about the Real Wisconsin next year. Good luck on that.

Thursday, November 23, 2023

Why are Americans not so thankful for Bidenomics, and think Trump did better?

On this Thanksgiving, I remain confused over polls that give President Biden low marks on the economy, where voters say things are bad in a time when most data and outside reality would tell you things are very good. We have unemployment and inflation both below 4% while wage growth is above 4%. We've just seen the largest 3-year growth in US wealth in decades, job growth continues at an impressive level, and the price of gasoline has fallen below under $3 a gallon here in Wisconsin.

Rick Newman recently wrote an article on Yahoo! Finance that tried to explain why voters favor Trump's economy over Biden's, and brings the data to look into that. Now before I go into Newman's numbers, I will say that I have become deeply skeptical of articles about voters' anti-Biden "feelings", given that Dems have consistently won elections for the last 7 years in this country. And we should remember that 35-40% of Americans will say the economy was better under Trump because they are dishonest MAGAs who are so separated from reality that their opinion should be considered invalid on the subject (and many others).

But 35% is not a majority either, so let's look at the data Newman brings which can explain why those outside of BubbleWorld may think the economy was better 4 years ago. And the immediate stat he points to is wages vs inflation.
The most telling metric we follow is average hourly earnings, adjusted for inflation. This single chart may explain better than any poll why Biden is struggling with voters. (Note: All of these comparisons are through October of each president’s third year in office, so they don’t include the effects of the 2020 COVID pandemic on the Trump economy.)

Real incomes have dropped by about 1% since Biden took office. Under Trump, real incomes were up about 3%. Biden’s underperformance is entirely due to inflation, which on the whole has risen by more than nominal income during his term. Biden’s not the worst on this measure; Jimmy Carter and George H.W. Bush score worse. Both of them, notably, lost reelection bids.
I'd add that inflation is something most people can see in their everyday expenses at the store or when they pay their rent or get gasoline. So they think about it more, and therefore find it to be an annoyance and concern. Even in times of lower job growth and higher unemployment, most Americans don't get/lose jobs over the course of a year, and they tend to credit themselves with getting jobs and promotions over the US economy being "good".

Another thing many Americans hear about and pay attention to on a regular basis is the stock market, and in their presidencies-to-date, Trump was outperforming Biden through October, year 3.

Now since the end of October, the S&P has rallied nearly 9%, so Biden's numbers are likely closer to 120 on that chart today. But that's still below where we were at the end of 2021, and I'd argue that casual voters can more about where you've recently been and may be heading than the overall picture, so they're still grumpy.

But there's an important period of time missing in those chart, and it's from October 2019 to January 2021, where a lot of weird, disruptive crap happened in this country and our economy (we'll get back to this). For example, look at what happened to the stock market between October 2019 and January 2021, as the market crashed with COVID's outbreak in March 2020, and then recovered after a massive infusion of money from a Fed that cut interest rates to 0% and the Trump Administration.

And the drop in the stock market wasn't as severe and long-lasting as the loss of jobs after COVID broke out. Let's not forget that when Biden took over in January 2021, we were down 8.5 million jobs from the levels that we were at in October 2019. We've gained that back and then much more, as nearly 14 million jobs have been added since Biden took office, which makes the job gain of 5.8 million under Trump through October of Year 3 seem very lame.

Let's also note that there was a big jump in real wages in 2020 that happened not from an improved economy, but because there were fewer low-wage service jobs over that time period. It makes the relative stability in wages for 2021 even more remarkable, even as jobs in leisure and hospitality returned (2 million jobs in that sector were recovered in 2021 after losing 3.16 million in the 15 month "gap" that isn't mentioned in Newman's chart).

Now that we're back to a "normal" situation with full employment, take a look at where real wages are now compared to 4 years ago, and they're higher (albeit not by much).

Real average hourly wages, Oct 2019 to Oct 2023 (1982-84 base)
Oct 2019 $10.98
Oct 2023 $11.05

Perhaps this helps explain why too many think the Trump years were better for the economy than the Biden years have been. We have conveniently forgotten the economic wreckage of the COVID era, and all of the job loss that happened, and much of that is likely due to major federal assistance in the form of enhanced unemployment benefits and other stimulus, which meant the stress was short-lived. But many remember the post-COVID inflation that went on for 18 months, as things adjusted to the new normal and the stimulus Bubbles in the economy deflated, still see the higher prices of today, and recall that things used to cost less.

But the fact that we've been able to continue growing and have reached record highs in employment and have been seeing solid real wage growth for the last year and a half is quite an accomplishment. And we are certainly better off than we were 4 years ago.

If the upward trend of 2023 continues for the next 6-10 months, and unemployment and inflation both stay below 4%, there isn't going to be a lot to complain about. And if the Fed would adjust to that reality, and also bring their Fed Funds rate back toward 4% (as they should in that situation), then anything MAGAs are going to say about the "awful" economy in the 2024 campaign will look ridiculous outside of BubbleWorld.

Heck, it's already starting.

Makes you say "What a turkey!", doesn't it? Just like most GOP thoughts on the economy.

Happy Thanksgiving to all 5 of you, and let's smack down their gobbledygook in 2024.

Monday, November 20, 2023

A not-great WIsconsin jobs report. But still a decent position

Things can get buried as Thanksgiving approaches, but we did get a new Wisconsin jobs report late last week. Good overall situation, but not so great for the month itself.
Place of Residence Data: Wisconsin's unemployment rate was 3.2% in October, up from 3.1% in September and mirroring the 0.1% increase in the national unemployment rate, which was 3.9% in October compared to 3.8% the previous month. The number of unemployed people increased 5,400 over the month and increased by 8,500 over the year to 102,000, still remaining around record lows. The labor force gained 3,600 workers over the month for a total of 3,142,100 workers. The number of people employed decreased by 1,800 over the month for a total of 3,040,100 employed.

Place of Work Data: Total jobs increased by 32,800 over the year and decreased 1,400 over the month to 3,013,900 total jobs in October. Private sector jobs increased by 24,500 over the year and decreased by 2,800 over the month to 2,607,600. Health care and social assistance jobs grew by 13,600 over the year. Construction jobs decreased by 900 over the month and increased by 1,500 over the year.
Manufacturing had an even larger decline in October (-1,200), and continued the downward drift we have seen for most of 2023. Manufacturing's gains from September also got revised down by 1,300 jobs, meaning that Wisconsin has lost jobs in that sector for eight straight months.

Seems like something we may need to keep an eye on for 2024.

Construction's originally reported gains for September were also revised down (by 400), and October had only the second drop in construction jobs since March.

Also interesting was that Accomodation and Food Services was revised UP by 600….but then dropped by a seasonally adjusted 3,000 jobs in October after larger-than-normal seasonal layoffs. See where that heads for November as the weather cools and Holiday hospitality hires up.

One positive alluded to by the Wisconsin Department of Workforce Development is the increase in work force participation, which rose by 3,600 in October and has gone up by nearly 74,000 in the last year. And while the state has seen a modest rise in its unemployment rate in the last year, we’ve also generally seen more Wisconsinites being added to the ranks of the “employed” over people losing their jobs.

It's not a great jobs, and as 2023 ends, it's clear that the torrid job growth of 2021 and 2022 has slowed down. I suppose we should expect that, but it leads me to wonder where more growth comes from in Wisconsin for 2024. Still, 3.2% unemployment is and increased numbers in the work force is a still-strong place to be at, and even if we maintain that in the next year, I'd take it.

Saturday, November 18, 2023

Brew Crew is staying! But what kind of team will we be left watching?

The Brewers are staying? YAAAAYYY! Since it's required to use a terrible sports pun on these stories, let's find out how the Legislature got those final outs to complete the game!
Ahead of [Tuesday's] floor vote, the bill included a $2 surcharge on general admission tickets for non-Brewers events and $8 for luxury suites. The amended bill those surcharges twice over the life of the 27-year deal.

The tax on general admission tickets would climb to $3 in 2033 and $4 in 2042. The surcharge on luxury suites would go to $9 in 2033 and $10 in 2042.

The revised ticket tax would bring in $20.7 million through 2050, according to the Legislative Fiscal Bureau. The original ticket surcharge was expected to generate $14.1 million.

That would drop the state’s contribution to $365.8 million of the nearly $700 million package. Under a previous version of the bill, the state’s share was to be $386.5 million.
Another big change to the bill to get some Dems behind it was that it finally allowed Milwaukee to get a voice on the board that decides how the taxpayer dollars will be spent.
The original nine appointments [under the original Breers bill] would include four by the majority party leaders in the state Legislature and four by the guv. The ninth member would come from a list of no less than three people the Brewers would submit to the guv.

The change would add four more appointments: one for the Senate majority leader, one for the Assembly speaker and two more from the guv. Milwaukee County and the city would each submit names to the guv to fill those final two spots. The change means the guv and the Legislature will each get six appointments to the board.
But even with those moves to add MKE representation and lower state costs by making out-of-town concert attendees pay more, only 1 out of the 6 Senators who represent Milwaukee County voted for the bill (LaTonya Johnson), and other suburban Senators had a mixed reaction.

Also odd is that the Milwaukee representation and other changes was enough to allow all 4 Dem Senators that represent Dane County to vote for the bill, including my Senator (Kelda Roys) switching from No in 2 separate committees to a yes on the final bill.

Personally, I feel this to be an improved deal for Wisconsin taxpayers than what was originally hatched by the GOP Legislature, but I am relatively indifferent in a "yea" or "nay" opinion. Yes, we likely won't get as much in income taxes and tourism revenue if we didn't have the Brewers vs if we did, so it's worth it to subsidize this attraction. But I would have liked to see the team open up ALL of its books, including its operations, so we can see if this is a business that needs the help....or doesn't.

It's been a busy week for the on-field product for the team, starting with the Brewers deciding to hire from within when it came to filling the hole left by Craig Counsell's departure.

I'm good with this, especially with bringing Rickie Weeks back into a Brewers uniform. But the bigger question of "Who is Murph going to have left to manage?" got murkier with this sad story from last night.

The decision came as a result of the shoulder surgery Woodruff underwent on Oct. 13, a procedure that could sideline the 30-year-old for the entirety of the 2024 season.

Woodruff would have been due a salary north of $12 million and become a free agent heading into 2025 – an untenable scenario for a Brewers team that might well be heading toward a rebuild.

Now, Woodruff becomes a free agent.

"That was a tough, tough phone call," said a dejected Matt Arnold, the Brewers' general manager, in the wake of the team's announcement. "It was emotional. He was awesome for us in so many ways. I still think there's a chance he could be part of our team in the future.

"But certainly, a tough day any time you have to deliver news like that to somebody that means so much to your franchise."
I get that you can't pay a guy $12 million+ if he isn't going to be able to do much for you next year. But if the team isn't offering Woody any kind of acceptable 2-year contract to at least try to keep him around for an extra season and improve the team's prospects for 2025, and especially if they trade other stars like Corbin Burnes and Willy Adames instead of trying to re-sign them past 2024 (when their contracts expire), then is it a fool's errand to have taxpayers try to keep this team "competitive"?

Or is Brewers ownership now happy to pocket the funding to fix up the stadium, and muddle along without making major investments in on-field talent? Yes, the Brewers bill has an audit for the expenses on the stadium itself, but is the Crew able to turn a profit and compete in the Big Leagues even with these hundreds of millions of dollars in subsidies over the next 27 years? I'd love to see an operations audit to find out.

You can sense that if this team goes into a full rebuild for next year and spends the next couple of years out of serious contention, the Brewers' whole argument of "we need the tailgating space" will become even more absurd. They'll see attendance drop so much that they won't need half of those parking spots on most game nights, and you may as well develop that over the acres of empty concrete.

Thursday, November 16, 2023

Lower oil and other moderated prices should cancel INFLATION WATCH. And Wall Street knows it

So what's going on in the latest episode of INFLATION WATCH?

Sounds good to me! Let's look at the CPI report and get more details.
he index for shelter continued to rise in October, offsetting a decline in the gasoline index and resulting in the seasonally adjusted index being unchanged over the month. The energy index fell 2.5 percent over the month as a 5.0-percent decline in the gasoline index more than offset increases in other energy component indexes. The food index increased 0.3 percent in October, after rising 0.2 percent in September. The index for food at home increased 0.3 percent over the month while the index for food away from home rose 0.4 percent.

The index for all items less food and energy rose 0.2 percent in October, after rising 0.3 percent in September. Indexes which increased in October include rent, owners’ equivalent rent, motor vehicle insurance, medical care, recreation, and personal care. The indexes for lodging away from home, used cars and trucks, communication, and airline fares were among those that decreased over the month.

The all items index rose 3.2 percent for the 12 months ending October, a smaller increase than the 3.7- percent increase for the 12 months ending September. The all items less food and energy index rose 4.0 percent over the last 12 months, its smallest 12-month change since the period ending in September 2021. The energy index decreased 4.5 percent for the 12 months ending October, and the food index increased 3.3 percent over the last year.
Wall Street used that flat inflation number to predict that the Fed was going to reverse some of their rate hikes sooner than later. Which means that it was time to jump back into the market!
The Dow Jones Industrial Average jumped 489.83 points, or 1.43%, to end at 34,827.70. The S&P 500 rallied 1.91%, briefly trading above the key 4,500 level, to settle at 4,495.70. It was the best day since April for the broad-market index. The Nasdaq Composite jumped 2.37% to close at 14,094.38.

Tuesday’s gains added to an already stellar performance this month for stocks. The S&P 500 and Dow are up 7.2% and 5.4%, respectively, in November. The Nasdaq is up 9.7%, on pace for its biggest monthly gain since January.

CPI was flat last month, while economists polled by Dow Jones expected a gain of 0.1% month over month. So-called core CPI, which strips out food and energy prices, was also lower than expected and rose at the slowest rate in two years. This instilled optimism into the market that the Federal Reserve could finally end its rate-hiking campaign for good.

“There’s optimism that inflation is cooling to a level where the Federal Reserve can take its foot off the brake,” said Keith Buchanan, portfolio manager at Globalt Investments.
The next day, we got more signs that inflation would stay under control for the future, as the Producer Price Index went down.
The Producer Price Index for final demand fell 0.5 percent in October, seasonally adjusted, after advancing 0.4 percent in September, the U.S. Bureau of Labor Statistics reported today. (See table A.) The October decline is the largest decrease in final demand prices since a 1.2-percent drop in April 2020. On an unadjusted basis, the index for final demand rose 1.3 percent for the 12 months ended in October.

In October, the index for final demand goods fell 1.4 percent. Prices for final demand services were unchanged.

The index for final demand less foods, energy, and trade services advanced 0.1 percent in October, the fifth consecutive rise. For the 12 months ended in October, prices for final demand less foods, energy, and trade services moved up 2.9 percent.
And a big reason for that drop in producer-level prices for goods was because of a drop in oil and related energy products.

Final demand goods: Prices for final demand goods moved down 1.4 percent in October, the first decrease since falling 1.5 percent in May. A major factor in the October decline was the index for final demand energy, which dropped 6.5 percent. Prices for final demand foods fell 0.2 percent. Conversely, the index for final demand goods less foods and energy edged up 0.1 percent.
That trend of lower oil prices is continuing in November, with today featuring a huge move down.

Crude oil futures were down as much as 5% on Thursday as concerns of a supply squeeze faded amid rising inventories and fears of a slowdown in the global economy.

On Thursday, West Texas Intermediate (CL=F) crude oil futures fell 4.9% to settle at $72.90 per barrel. Brent (BZ=F) crude oil, the international benchmark price, fell by 4.63% to close at $77.42 per barrel.

Over the last month, WTI crude oil is down more than 16% while the price of Brent crude is off more than 14%....

On Wednesday, US inventories at Cushing, Okla. — used as the benchmark in WTI oil pricing — showed stockpiles rose by 3.6 million barrels last week, more than twice expectations for a build of 1.2 million barrels.

"The oil production surveys for October have been showing increasing amounts of OPEC+ production and combined with higher inventories in the USA and worries over demand, prices have been falling," said Andy Lipow, president at Lipow Oil Associates.
I think we’re pretty close to cancelling our intense INFLATION WATCH in this country (and I have argued we should have cancelled it a while ago). Instead, we need to make sure people don’t have to deal with unneeded strains due to interest rates that are too high, and have a better chance to afford housing. That affordability and maintaining job and wage growth are what our economic policymakers should care about as 2024 approaches, because 3% inflation for another year by itself will not cause any economic problems.

The question now is whether the regular media is going to report this fact, or if they'll still allow GOPs and other greedheads to keep up their dishonest whining and outdated takes, in order to avoid admitting that the overall economy is in very good place. And will the Fed admit the same, and get rates back down to atch up with the 3% annual inflation rate that we have been around for well over a year.

Monday, November 13, 2023

Dems keep winning elections, yet media and pollsters don't want to adjust to that reality

Less than 24 hours after another largely successful Election Night for Democrats, the Wisconsin news media ignored those outcomes, and reported on something else to determine the state of play in the crucial state of Wisconsin.

Get out of here with that. What ELECTION RESULTS the last 7 years would indicate that Joe Biden and Dems would be in line to lose Wisconsin? Just 7 months ago we had a double-digit landslide win for Dem-aligned Janet Protasiewicz in the Wisconsin Supreme Court election, which came 5 months after a convincing win by Dem Governor Tony Evers. And that came 2 after Dems won every statewide race in 2018, and Biden won the state back for Dems in the 2020 Presidential election.

That Marquette Poll seemed especially disconnected to reality when you dig into two crosstabs in particular.

An in-depth analysis from Catalist using actual voter files from 2022 showed 60% of voters under 45 choosing Dem Governor Tony Evers and 58% taking Senate candidate Mandela Barnes. When you remove voters 18-29 (who are individually broken down for Wisconsin in the report), it leaves Dems winning around 55% of voters 30-44 last year. A similar voter file analysis by Catalist indicates Wisconsin Hispanics voted 63% for Evers and 60% for Barnes in 2022, and I’d bet the actual votes among Wisconsin Hispanics are more likely to be 60-40 for Biden in 2024 than 60-40 for the GOP.

Also watch what Republicans say and do. If the vote among younger voters was anything near close in Wisconsin, you wouldn’t hear state Republicans moping about how badly they got their asses kicked in UW college towns in 2022 and 2023. And if this state was trending GOP for 2024, you'd see more than ZERO serious GOP candidates in the race to try to unseat current US Dem Senator Tammy Baldwin.

It’s pretty clear that an already difficult effort to poll people over the last 15 years has become near-impossible in a time where few people answer weird phone calls or random emails to take part. I'm sensitive to those structural problems in 2023. But at some point, shouldn't pollsters try to adjust their models to fit what election results and the reality on the ground are telling all of us?

I’m not saying that Biden has things in the bag in either the US or in Wisconsin- far from it. But I am saying that “Biden leads comfortably as Trump is hated by most voters” isn’t something that’ll generate clicks on the news sites and drive up ad sales, so be skeptical of anything that makes it looks like the GOP has a lead in any swing state. Given how Dems have consistently come out on top since Donald Trump’s win in 2016 shocked a lot more people into action, why would we believe that the anti-MAGA trend would change in 2024?

Especially as Trump continues to go farther off the deep end with fascist fantasies and senile ramblings.

It’s insulting to think that Americans will accept this next year when they've been rejecting it for the last 7. Democrats should be forcefully attacking corporate media about how off their polls tend to be, and why they continue to use these incorrect polls as a reason to drive inaccurate, horse-race coverage.

Dems should also ask media why they continue to treat the GOP as any kind of equal, contending party when Republicans haven’t been able to win statewide elections in any of the states they need to since 2016. As another DC shutdown looms and the GOP House is constantly shown to be incompetent fools disconnected from mainstream positions, how would those clowns have a better chance of winning over voters in the next election?

I’m sick of these BS polls, a lazy media’s reliance on those flawed numbers, and how it causes unneeded stress on all of us who recognize the disaster that would result from any Republican winning the White House in 2024, or in regaining full control of Wisconsin government anytime soon. What Trump and WisGOP want is not flying in the Real America, but corporate media has decided that telling that truth and digging into issues isn't good enough for the bottom line. And it takes actual work, you know.

Thursday, November 9, 2023

A big jump in the deficit for 2023. And the Fed ain't helping

Yesterday, the Congressional Budget Office released their full breakdown of the budget figures for the recently completed 2023 Fiscal Year. And a big finding is that after 2 years of lower deficits, things reversed in FFY 2023.

See that dotted line for 2022 and 2023. That's because federal budget officials counted President Biden's plan to forgive large amounts of student loan debt as a $379 billion, one-time payment in FFY 2022. When the US Supreme Court struck down that plan, that one-time payment was reversed, which was registered as a $333 billion reduction in expenses. And if you get rid of those one-time changes, the CBO says the US budget deficit more than doubled in 2023.

If the actions concerning the Administration’s plan for student loan cancellations were excluded from both years, the deficit for 2022 would have been smaller and the deficit for 2023 would have been larger. The deficit for 2022 was $1.3 trillion, after removing the effects of timing shifts. Excluding the cost recorded in 2022 for the student loan cancellation plan, the deficit that year would have been $0.9 trillion. Excluding the savings associated with reversing the effects of that policy, the deficit for 2023 would have been $2.0 trillion (7.5 percent of GDP) instead of $1.7 trillion (6.3 percent of GDP). Thus, without the effects of debt cancellation (and excluding the effects of timing shifts), the deficit would have grown by nearly $1.1 trillion from 2022 to 2023. That increase results from a combination of lower revenues and higher outlays, mostly for major mandatory programs and for payments of interest on the debt.

You can see that a lot of the reason behind the higher deficit is a drop in revenues of more than $400 billion. And the CBO explains that the main culprit is a drop in income tax revenues, and it includes a lot of odd one-time things, including post-COVID adjustments and a bad year in the stock market.
• Nonwithheld payments of individual income taxes fell by $292 billion (or 25 percent), relative to payments in the same period in fiscal year 2022. The decline began in January and continued through tax-filing season, mostly reflecting a decrease in payments for 2022 and 2023 tax liabilities. One factor may be smaller collections of taxes on capital gains, which had been unusually large in 2022. In addition, payments from taxpayers in areas affected by natural disasters may have been delayed because of the IRS postponement of some filing deadlines; most of those payments are now due in fiscal year 2024.
• Individual income tax refunds were $127 billion (or 52 percent) larger than in 2022, reducing net receipts…..

Part of the drop in individual income taxes is explained by the Treasury’s reclassification of receipts from individual income to payroll taxes: That reclassification was larger in 2023 than in 2022. In 2023, the Treasury reclassified as payroll taxes $48 billion of receipts initially recorded as individual income tax revenues. In 2022, the amount reclassified as payroll taxes was $17 billion. Those reclassifications occur because, when the Treasury receives payments of withheld taxes, it cannot distinguish payroll taxes from individual income taxes. Instead, it first allocates withheld taxes to one source or the other on the basis of estimates made in advance of actual collections. As additional information becomes available, including detailed information from tax returns, the Treasury makes periodic reallocations to revise past allocations.
Interestingly, while income taxes went down, payroll taxes which go to programs like Social Security and Medicare had solid growth in Fiscal Year 2023, reflecting more employment and higher wages at the lower levels of the wage scale.

On the expense side, outlays dropped overall. Much of it was due to the reversing of the student loan relief, but it also included the ending of some other COVID-era stimulus aids.
Outlays for certain refundable tax credits totaled $171 billion—a decrease of $120 billion, or 41 percent.4 That reduction occurred because the expanded child tax credit has expired. (In tax year 2021, eligibility for that credit was expanded and the size of the credit was increased; advance payments were made between July and December 2021.)

Spending by the Treasury on coronavirus relief to state, local, tribal, and territorial governments decreased by $105 billion.
On the other hand, there were sizable increases in spending on Social Security (due to an 8.7% Cost-of-living increase and higher number of recipients), and Medicare. Medicaid spending also continued to increase, as the COVID-era unwinding of the assistance rolls didn't start until more than halfway into the 2023 Fiscal Year.

We’ve also seen the cost pay for our debt have a massive increase over the last 2 years, as the high deficits have continued and the Fed has jacked up interest rates, meaning that cost nearly reached our large level of military spending in 2023. That increase in debt costs has almost entirely made up for the big decline in COVID-related assistance that included expanded tax credits and direct spending on services and aid to states and localities.

That’s what might be annoying going forward from a budgetary standpoint. It didn't cost nearly as much to pay for the massive deficits of 2020 and 2021 when the Fed Funds rates were near zero in those years. But now that the Fed has pushed its rates above 5%, and plan to stay at that level for a while (based on what Fed Chair Jerome Powell told Congress today), it is now a high, ongoing expense.

Maybe that manufactured extra expense for to pay for the debt something the Fed should keep in mind, and all the more reason that rates should come down sooner than later. Inflation is largely under control now, but if the Fed keeps causing debt service to keep rising due to high rates, it could cause higher deficits through a slower economy (limiting revenues and causing more services to be needed), and make the dollar so pricey that it makes it harder for some investors to want to buy debt and other US products.

I've said that the higher deficits in itself weren't a problem, but the higher rates that are being imposed by the Fed are (and yes, that move was partly in reaction to the inflation that fired in the wake of a deficit-influenced strong economy in 2021). And if the need to keep financing the debt causes supply of bonds to outrun demand (as we saw today), then that could keep rates legitimately high and hurt the real economy that way. That's the concern I'd have with these deficit figures, more than the numbers themselves.

Tuesday, November 7, 2023

Updated Brewers bill costs less for state, but still more room for improvement

Guess I was wrong about my theory that the Craig Counsell bombshell from yesterday was going to delay the Brewers stadium bill. In fact, it's speeding up.

So let's see JR's summary of the amendments to the Brewers bill, and see what it means.
*the state contribution would be $382.4 million, a reduction of $29.1 million from the previous $411.5 million;
In looking at the amendment text, this would be done by having the state stop making payments toward the stadium after 2044 instead the current bill’s end date of 2046. It also provides for the ticket tax to result in a dollar-for-dollar reduction on the state’s contribution.
the Brewers would add $10 million more in additional rent payments from the team, pushing that to $60 million. The team would also commit $50 million to new capital projects, though it would have control over the use of that money rather than the district board. That’s a total of $110 million in new money from the team;
This comes in the form of boosting the Brewers’ rent by $2 million for each of the last 5 years of the lease. Seems fair, given that you would think land and property values would be higher in 20 years, and it in theory would raise the “buyout” cost the Brewers would have to pay should they end their lease early.
*the commitment from Milwaukee County and the city would remain at $135 million over the life of the deal, which would run through 2050.

The overall price tag would be $692.9 million in new public and private money. That’s a reduction from the previous package of $697.9 million.
In theory, would that push some of the costs onto the team, since they’d have to make up the difference? Fine with me, but makes you wonder why the number was that high in the first place.

But I note that there is not any mention of Milwaukee representation on the Stadium District Board, which is ridiculous, given how the locals are chipping in tax dollars for the stadium repairs and also will have their neighborhoods affected by any future development in and around the ballpark.

Speaking of development, there is some odd language in the Senate amendment to go along with the study on new buildings on the stadium property that was added in at the Assembly level. Not only is the study required to be out in 2 years, but the Senate bill says there should be a “recommendation supporting or opposing a potential payment in lieu of general property taxes for any development of the baseball park facilities of the district other than a baseball stadium.”

I don’t know why we couldn’t just remove some of the property from the state’s and team’s control, and leave it open for development that way. That would at least get the property values into the City’s and County’s tax base, and can be used to help limit property taxes on all other property owners in the City and County. Just having the developers pay the Stadium District a set amount and not have to pay anyone else takes away some of the benefit for the local governments to have that development.

The bill also includes a new audit of expenses and investments done with the funds to keep up AmFam Field, which happen every two years. I'd go further on this, and have the Brewers' operations be audited as well. Maybe not every 2 years, maybe every 5, but I think we need to know if these subsidies are a key part of keeping the Brewerws viable and competitive. Or not.

In fact, I wish we had one of those operational audits right now, to see if the team's billionaire owner has an economic reason when he refuses to pay top dollar for talent, and that having taxpayers shell out for stadium upkeep would allow for more funds to be invested in improving the Brew Crew's chances on the field.

It's also interesting that after the Senate Government Operations Committee would (in theory) vote for the bill tomorrow morning, it's slated to get fast-tracked for action in another room in the Capitol later that day.

Sure seems like they're trying to move this thing through before more people are able to think more about the bill and more opposition might build to it.

I think this is slightly better than what got out of the Assembly. But as a constituent of Senator Kelda Roys (who is on the Government Operations Committee), I'd be fine with her voting NO. Because I want to see more information about the Brewers' bottom line, and I think we can further improve the bill so that the governments who pay into the ballpark's fixups get a say into what those fixups and possible developments are.

Monday, November 6, 2023

Wild day for the Brewers. And not a good one for their future

I'm catching up from a week off of work, getting ready for other work, and then I see a couple of notifications from MLB float across my phone.

Both of these were places Brewers manager Craig Counsell had interviewed at, with permission from the team. So I figured "Hey, maybe Craig is coming back here for 2024 and beyond". Which would be great, as the Brewers have more playoff appearances in the last 6 years under Counsell than they had in the 48 years before then. And a Brewers beat writer said the team had put in a huge offer to keep Counsell.

I was letting my hopes keep me from seeing that post as the "we tried" PR move from the team that it was. Within 5 minutes, I saw this.

I wasn't buying it, but I rifled through my mind which teams that might be. I figured it would be one with more resources than the Brewers, and one that could win sooner than later. But this one wasn't on my list.

I get taking the job that offers you more money and more resources to build your team. But when you've grown up in Wisconsin (like Craig Counsell did), and been a part of the Brewers organization for the last 15 years of your career, how can you pick up one day and go to the team's largest in-division rival? It's an absolute slap in the face to Brewers fans, and those Brewers-Cubs games at AmFam Field are going to be an ugly atmosphere.

And losing the best manager the team ever had sure makes the Brewers look silly as they ask for hundreds of millions of dollars to fix up their ballpark as a way of staying "competitive". But they're definitely still trying.

I don't see a Committee vote or hearing on the Brewers bill this week, and after losing their manager and having one of their best pitchers undergo serious shoulder surgery, it's hard to be enthusiastic about anything Crew-related right now.

So maybe it's a good time to have the talks go on behind the scenes for a few weeks, and maybe the anger from today's events will have faded enough that discussing this taxpayer-funded assistance for Milwaukee's baseball team won't seem inappropriate. Because right now it's about the worst time for the team to be asking for help, given that their prospects of success seem much smaller than it did a month ago.

Sunday, November 5, 2023

Back from vacay

If you're one of our five regular readers, you may have noticed that there haven't been any new posts for a week. That's because I headed across the water to Iceland, to see some things you can't see in the states.

Great trip. Weather even held up, with most days having sun and 40-45 degrees. It's going to be odd to get back at it tomorrow, but also ready for it. And ready to look into some intriguing econ data over the last week and say a few things.