GDP revised up for Q3, likely strong for Q4. Just in time for Trump/Musk to screw it up

We knew the US economy kept growing at a good pace in late Summer and early Fall. But it turns out it was going even better than we thought.

The American economy grew at a healthy 3.1% annual clip from July through September, propelled by vigorous consumer spending and an uptick in exports, the government said in an upgrade to its previous estimate.

Third-quarter growth in U.S. gross domestic product — the economy's output of goods and services — accelerated from the April-July rate of 3% and continued to look sturdy despite high interest rates, the Commerce Department said Thursday. GDP growth has now topped 2% in eight of the last nine quarters.

Consumer spending, which accounts for about two-thirds of U.S. economic activity, expanded at a 3.7% pace, fastest since the first quarter of 2023 and an uptick from Commerce’s previous third-quarter estimate of 3.5%. Exports climbed 9.6%. Business investment grew a lackluster 0.8%, but investment in equipment expanded 10.8%. Spending and investment by the federal government jumped 8.9%, including a 13.9% surge in defense spending.

Even if you want to disregard the government aspect of GDP, and remove volatile inventory numbers as well, you'll see that Q3 had better underlying growth than either of the 2 quarters of the first half of 2024.

Combine the Q3 numbers with the strong consumer spending numbers from October and November, and we likely will see another good GDP number for Q4. The Atlanta Fed is currently estimating GDP to top 3% again to round out 2024, which would be the first time that happened since the post-COVID stimulus and recovery of 2021.

But now the incoming Trump/Musk Administration wants to end all that and cut government spending, funnel more money to the rich and away from everyday workers (who spend more of their increased incomes than rich people do), and impose tariffs that would likely lead to retailiations from other countries and cut our growth in exports.

If President Biden and DC Dems were alive, they'd be out in public pounding the reality that Trump/GOP are inheriting a very good economy that Republicans are likely to screw up in the next year. In addition to being true, it would plant the seed in the head of some low-info voters to have them notice when things start to turn downward in 2025, and lay the blame in the right place - on Republican politicians and their puppetmasters who made things worse.

The Fed cut rates, just like the market expected. So why did the market crash 1,100 points?

We had a Federal Reserve Open Markets Committee meeting today. And Fed governors took the action that most of the Wall Street "experts" thought they would.

The Federal Reserve lowered interest rates on Wednesday, but policymakers signaled caution about additional rate cuts next year in the face of stubborn inflation.

The central bank lowered its benchmark interest rate by a quarter percentage point to a range of 4.25% to 4.5%. Rates have fallen by a full percentage point since September, making it cheaper to get a car loan, finance a business or carry a balance on your credit card.

And the stock markets reacted to this news by...falling more than 1,250 points after the Fed made its decision.

Why did the market have this huge drop when the Fed gave the rate cut that was expected? Because of what the Fed thinks will happen in 2025 and beyond.

Along with its policy announcement, the Fed released updated economic forecasts in its Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future.

Fed officials see the fed funds rate falling to 3.9% in 2025, higher than the Fed's previous September projection of 3.4%. Outside of September's jumbo 50 basis point cut, the Fed has moved in 25 basis point increments over the last year or so, indicating the central bank expects to cut interest rates two more times in 2025. In September, officials had projected four cuts next year.

Coming into the decision, markets had priced in two to three additional rate cuts next year, according to Bloomberg data. The central bank slashed interest rates by a total of 100 basis points in 2024.

Wait, you're telling me that the return of Trump to the White House isn’t going to lead to a low-rate cocaine party for the country? No, it won’t. And in fact, the Fed’s outlook has inflation going to be higher next year than it previously thought.

The SEP indicated the Federal Reserve sees core inflation peaking at 2.5% next year — higher than September's projection of 2.2% — before cooling to 2.2% in 2026 and 2.0% in 2027. That higher inflation outlook pressured markets in the aftermath of the release.

The election of Donald Trump as the nation's next president has further complicated the outlook, with some economists arguing the US could face another inflation resurgence if Trump follows through with his key campaign promises.

The bond markets are clearly worried about the direction of things, as the benchmark 10-year bond has spiked by 37 basis points in less than 2 weeks, and is now at its highest level in 6 ½ months.

So maybe the post-election “Trump-timism” that those dimwits on Wall Street wanted to believe in isn’t matching up with the reality, even before Trump comes back int office. And maybe the Fed is hinting to us that they know Trump/GOP’s economic plans aren’t going to do a damn thing to calm inflation, and instead is going to make it worse. So they're getting ahead of any foolishness they might try to put into place.

MAGAs may not be keen on the reality-based community, but I got a feeling that the effects of Trump/GOP’s economic idiocy is going to seep into their BubbleWorld in 2025 whether they like it or not. And the traders on Wall Street are now cashing in their profits before they get caught in the popping of a Bubble of their own doing.

US retail sales have a strong November, and boosts Q4 growth prospects

As Christmas Shopping Season got underway last month, Americans had little problem in heading to the stores and spending money.

U.S. retail sales increased more than expected in November as households stepped up purchases of motor vehicles and online merchandise, consistent with strong underlying momentum in the economy as the year winds down...

Retail sales jumped 0.7% last month after an upwardly revised 0.5% gain in October, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, advancing 0.5%. Estimates ranged from a 0.1% dip to a 1.0% surge.

Retail sales increased 3.8% year-on-year in November.

Labor market resilience, characterized by historically low layoffs and strong wage growth, is underpinning consumer spending.

So as the President Biden's term winds down, it seems that the consumer economy is doing just fine. In fact, retail sales have especially picked up over the last 6 months after a slow end to 2023 and start to 2024.

November's jump in retail sales was driven by big increases in autos and auto parts (+2.6% on a seasonally-adjusted basis) and by non-store retailers such as Amazon (+1.8%). And both of those sectors have had strong year-over-year gains in each of the last 2 years, in contrast to sectors that have fallen off like bars and restaurants, and health stores.

Also note how dollar sales at gas stations have declined as gas prices have declined over the last 2 years, and that the pandemic-related boom in sporting goods and hobby stores continues to fade.

It's doubly interesting that November sales were this strong with Thanksgiving being as late as possible on the calendar, with Cyber Monday not coming until December. We will see if things stay strong on the retail sales side to round out 2024, which also should portend strong economic growth for Q4 overall.

Let's also see if the strong spending holds up as Trump/GOP take over and prices possibly on the rise with tariffs looming. And let's see if some of the boost in November spending is due to people making purchases to get ahead of those tariffs (raises hand), which could limit spending in 2025.

Bad stuff in my town

You may have heard there was a tragedy in Madison today.

The 39th time we've had to post this, and this time about The Onion's original hometown.

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— Tim Onion (@bencollins.bsky.social) December 16, 2024 at 3:48 PM

It was at a private school that takes vouchers, by the way (that's in case some a-hole wanted to dump on "Madison liberals" with this. They don't send their kids to voucher schools).

As long as GOP politicians are too bought off to do anything about this, it was bound to happen in our state sooner than later. It's awful, but votes beat quotes on this sort of thing.

IT'S THE GUNS, STUPID. And until enough voters elect people that understand this simple concept, there's nothing else to talk about.

It's the PPI that should make you worried about inflation coming back

The Consumer Price Index report wasn't good when it came to looking at inflation numbers (up 0.3%, with groceries up 0.5%). But I think the Producer Price Index (PPI) report from Thursday gives an even larger concern for the future.

Thursday's report from the Bureau of Labor Statistics showed that its producer price index (PPI) — which tracks the price changes companies see — rose 3% from the year prior, up from the 2.4% in October and above the 2.6% increase economists had projected. This marked the highest year-over-year increase since February 2023. On a monthly basis, prices increased 0.4%, compared to the 0.2% seen in October.

Excluding food and energy, "core" prices increased 3.4% year-over-year, above October's 3.1% increase. Economists had expected an increase of 3.2%. Meanwhile, month-over-month core prices increased 0.2%, in line with last month's rise and economist projections.

And the bigger problem is that several food-related costs went up in that PPI report, leading to an overall increase in the food index of 3.1%.

Within the food index, there were some particularly huge spikes in producer prices.

Change in producer prices, Nov 2024
Eggs +55.6%
Fresh vegetables +33.2%
Fresh fruits +21.8%
Grains +5.0%
Beef and veal +2.8%
Pork +2.8%
Processed chickens +2.4%

That's quite a big 1-month change, and I wanted to see how long it might take before we see those huge jumps in producer prices show up at the grocery store. It looks like that it won't happen immediately or all at once, because the increases and decreases tend to be smoothed out at the consumer level. But if the track of the recent months is an indication, the increases will likely be spread out over the coming months.

Oh, and for those voters who thought Donald Trump had some kind of plan to bring down food prices back to 2021 levels? It ain't happening, kids.

Congratulations everyone willing to sacrifice American excellence, pride and freedom (just to start) for better egg prices that you were never going to get in the first place. I’ll remember your ignorance and apathy with every family ripped apart.

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— 💙❤️💙Mia💙❤️💙 (@mommamia.bsky.social) December 12, 2024 at 2:05 PM

The picture at the New York Stock Exchange just takes this to another level.

So much like with toys or computers, if you have a chance to stock up on food and use your freezer (or your cold porch) to store it, you may want to do so. Because it seems like food inflation is coming back after leveling off in the last year-plus, and with the Republicans in charge, they won't be doing anything to make the markets more competitive or keep the profits from retailers and middlemen in check.

And yes, I still believe that inflation levels of 3-4% aren't that big of a deal. But we may be fortunate if it's only that much this time next year (if we're not in recession), and I can't think the Federal Reserve would be cutting rates much after their meeting next week. Which might put a lot of brakes on the silly rally we've been seeing on Wall Street in the month since the US election, and turn things the other way as reality sets in.

INFLATION WATCH bumps back up in November. But Wall Street shrugs it off

We got another episode of INFLATION WATCH from the Bureau of Labor Statistics today, and the news wasn't that great.

JUST IN: Inflation progress stalled in November. Inflation rose 2.7% (y/y), up from 2.6% in October and 2.4% in September. The monthly gain was 0.3%, which is the hottest since April. Rent, food and energy all increased. “Core inflation” (excluding food and energy) remained at 3.3%

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— Heather Long (@byheatherlong.bsky.social) December 11, 2024 at 7:33 AM

Seems like we took a step back in November, especially when you go into the actual report and see this part of it.

The index for food increased 0.4 percent in November, after rising 0.2 percent in October. The food at home index rose 0.5 percent over the month. Four of the six major grocery store food group indexes increased in November. The index for meats, poultry, fish, and eggs rose 1.7 percent over the month, as the index for beef increased 3.1 percent and the index for eggs rose 8.2 percent. The nonalcoholic beverages index increased 1.5 percent in November, after rising 0.4 percent in October. The index for other food at home rose 0.1 percent over the month and the index for fruits and vegetables increased 0.2 percent.

Oof. Maybe it really was the price of eggs that got enough people to fill in the ballot for Trump, especially when we see that eggs are up more than 37% over the last year.

But then I saw this chart, and wasn't so sure food inflation was firing back up.

Which means that actual "food at home" prices went down by 0.1%, but because prices usually drop by more than that in November, the seasonally-adjusted number is reported as a 0.5% "increase". Of course, most people don't think in terms of seasonal price changes (outside of maybe gasoline), so to them, food prices didn't change much last month.

Speaking of gasoline, we saw the same type of seasonal adjustment inflating lower prices for that product as well.

The energy index increased 0.2 percent in November, after being unchanged in October. The gasoline index increased 0.6 percent over the month. (Before seasonal adjustment, gasoline prices decreased 2.9 percent in November.) The natural gas index rose 1.0 percent over the month, after rising 0.3 percent in October. In contrast, the index for electricity fell 0.4 percent in November.

As for the 80% "core" of the CPI that removes food and energy prices, we saw that rise by 0.3% for the 4th straight month. This has caused the year-over-year core index to stay consistently over 3% this year even as the overall CPI has dropped below that level.

If this was happening in late 2023 or most of 2024, we'd be seeing panic by Wall Streeters that the Fed would use this report to keep interest rates elevated, and it would trigger a selloff on Wall Street. But instead the NASDAQ index closed over 20,000 for the first time ever and the S&P also continued its run upward. And somehow the "experts" on the Street thought this CPI report was a tame one because they expected inflation to be even higher.

"Nasdaq is rallying on the prospect of a rate cut next week and has room to move higher," said Peter Cardillo, chief market economist at Spartan Capital Securities.

Markets are pricing in more than a 96% chance the Fed will cut rates by 25 basis points next week, up from an 86% chance before the data, according to CME's FedWatch Tool. Bets had risen following Friday's employment report, which showed an uptick in unemployment alongside a surge in job growth....

"The equity market seems to be breathing a sigh of relief that this is another steady-as-she-goes report," said Wasif Latif, chief investment officer at Sarmaya Partners in New Jersey. "There's no surprises. It seems the equity market was braced for a higher than expected number."

Maybe because I'm not a coked-up trader who thinks he's going to get in on the Trump grifts for the next few years, but that doesn't make any sense to me. Sure, the Fed likely should cut rates further, because they kept them too high for too long to begin with, but I can't see how increases in 12-month overall inflation and a core increase staying at 3.3% makes things look better than they did yesterday.

With the CPI report, we also got the BLS's report on real wages for November. And much like the hourly and weekly earnings numbers in the November jobs report, it was kind of a "meh", breaking a 6-month streak of increases in inflation-adjusted hourly wages.

Real average hourly earnings for all employees were unchanged from October to November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.4 percent in average hourly earnings combined with an increase of 0.3 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased 0.3 percent over the month due to no change in real average hourly earnings combined with a 0.3-percent increase in the average workweek.

Real average hourly earnings increased 1.3 percent, seasonally adjusted, from November 2023 to November 2024. The change in real average hourly earnings combined with a 0.3-percent decrease in the average workweek resulted in a 1.0-percent increase in real average weekly earnings over this period.

Real average hourly earnings for production and nonsupervisory employees increased 0.1 percent from October to November, seasonally adjusted. This result stems from a 0.3 percent increase in average hourly earnings combined with an increase of 0.3 percent in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)...

Over the last year, real hourly wages are up 1.3% for all workers and non-supervisory workers, so progress is still being made. But let's check back and see what that stat looks like this time next year.

While I do fear inflation may be on the way up in 2025, I don't think it's going to be because of what we saw in the November 2024 CPI report. I need more evidence that the "increase" from last month is anything other than a seasonal adjustment that won't be repeated in coming months. But with the prospect of tariffs and corporate rent-seeking coming with the next Trump Administration, that's where I think we may price increases that will come as quite a shock to the fools who thought Trump would reverse the effects of the high inflation we saw from 2021 through mid-2023.

K-12 property taxes up again in Wisconsin. Reversing 2010s WisGOP policies can stop this.

As property tax bills go out, don't be surprised if you're paying more than you did last year, and possibly quite a bit more. The Wisconsin Policy Forum tells us that there will be a sizable increase in property taxes for 2024-25, especially for K-12 schools.

The Policy Forum notes that this year is the second year in a row that K-12 property taxes are up more than 5% in our state.

There are several drivers of this increase. First, in the 2023-25 state budget, lawmakers agreed to increase the state’s per pupil revenue limit by $325 in both the 2023-24 and 2024-25 school years after freezing them for the previous two years amid high inflation. The limit governs how much revenue schools can raise from state general school aids and property taxes combined – the two largest sources of K-12 revenue. In general, the larger the revenue limit increase, the larger the property tax increase unless state lawmakers also significantly raise general school aids. General school aids rose by $224.9 million from 2023-24 to 2024-25, which appears to have not been enough to stave off levy increases.

The second driver of the large K-12 property tax increase is referenda. As noted earlier, nearly 400 referenda have passed in just the last four years, including 169 in 2024 alone. Our November brief tied these record numbers to the impacts of inflation and previously lagging revenue limit increases, among other factors. An approved referendum means voters agree to have their own property taxes raised either to fund school district operational priorities or to finance the debt needed for capital projects. The data show the impact: in the 275 districts that have passed at least one referendum since the beginning of 2021, K-12 property taxes will rise by 7.6% in 2024. In the remaining districts, levies will also rise, but by a much smaller 1.0%.

But the $325-a-pupil increase came after a 2021-23 budget that didn't have any increase at all in the revenue limits, as pandemic-era aids from DC were thought to make up the difference. However, the 2021-23 budget was in a 2-year time period where the US Consumer Price Index rose by more than 12%, and the $325 a pupil in this budget doesn't come close to making up that deficit in resources. With COVID aids almost entirely used up, referenda became the choice many community schools turned to in order to maintain what they had.

The Policy Forum also mentions 2 particular state law changes from the GOP's control of the State Legislature that have an effect on property taxes and the funding available.

Another potential factor adding to K-12 levies is the growth in enrollment and payments for the state’s private choice programs. Under the state’s complicated school funding system, this growth can contribute to local property tax increases.

Last, the state budget increased the school levy tax credit by $80 million this year. This funding cannot be spent by school districts; it instead goes toward lowering net tax bills for property owners. The funding could have been used instead to further raise general school aids, which would have provided more assistance to districts with low property values and less help to districts with high values.

Both of these items could be fixed in the next budget. Let's not forget that the state has increased payments to voucher schools outside of Milwaukee by massive amounts, and that the way those voucher payments are funded is by reducing the state aids of the public school district where the lives in - even if the child never attended a day of public school. A Walker/WisGOP-era law allows the public school district to increase property taxes to make up for the lost state aid from voucher payments, which can increase K-12 property taxes.

Then, we saw a large increase in voucher school payments in the 2023-25 budget as part of a deal to allow that $325 per pupil increase in public school revenues. As a result, over $300 million in state aids are projected to be taken from K-12 public schools in this school year, with almost all of that being replaced by property taxes.

Maybe we should use some of our surplus to pay the full cost of having these 2 K-12 school systems (vouchers and public schools), and stop having property taxes make up the difference? Seems like a logical discussion to have, since we won't be able to get rid of the voucher scam with GOPs still in control of the Legislature for this session (they are NOT cutting off their funders in the voucher lobby).

On the other topic, that $80 million increase in the School Levy Credit Increase came after another $295 million increase the year before, and is significantly larger than it was when Scott Walker and the GOP came to power after the 2010 elections.

As I have mentioned previously, we could easily switch out the School Levy Credit for larger amounts of General State Aid, and that would allow for more resources to go in the classroom while not having to increase property taxes, or we could even cut those property taxes by having schools use state resources instead.

If I were Governor Evers and state Dems, I would make this budget debate center on the fact that we need to be paying for our schools with state aids that go into the classrooms, and NOT shove it off onto property taxes and school referenda. I would force the GOP to be the ones who refuse to fund schools, and who cause Wisconsin homeowners to see their property taxes go up just to avoid seeing their community schools falling behind even further.

Americans have been steaming for years, and late 2024 shows how it can blow up

Wanted to forward a great column from Denny Carter that was written in the wake of the seemingly targeted killing of United Health CEO Brian Thompson in New York City, and how Carter finds it symptomatic of a country that is seething with resentment against the privileged classes.

Carter mentions a passage in the Thomas Wolfe book Bonfire of the Vanities involving Reverend Bacon, who is an African-American preacher who received $350,000 in city funds that were supposed to be for a new source of services, but the Reverend tells them the real purpose is to redirect the legitimate rage that exists in his community.

When Bacon is asked by city officials to account for $350,000 given to his church for a new daycare center that was never built, the reverend implies that money was a down payment for his efforts to control Harlem residents and how they express their displeasure with the city and those who run it.

“If you people were worried about the children, you would build the daycare center yourself,” Bacon says when asked about the missing $350,000. “No, my friend, you’re investing in something else. You’re investing in steam control. And you’re getting value for money. Value for money. So what I’m telling you is, you best be waking up. You’re practicing the capitalism of the future, and you don’t even know it. You’re not investing in a daycare center for the children of Harlem. You’re investing in the souls…the souls…of people who’ve been in Harlem too long to look at it like children any longer, people who’ve grown up with a righteous anger in their hearts and a righteous steam building up in their souls, ready to blow. A righteous steam.”

Carter fast-forwards to today, where there is loads of unresolved anger against the rich and ruling classes, who have seen great gains in the last 30 years while the rest of us haven't gained much at all. Especially when many of the gains at the top came from exploiting loopholes in the law without any consequence for that lawlessness and scumbaggery. Which helps to explain the flippancy and celebration that many have had after a health insurance executive was gunned down on the streets of New York.

Everywhere you look, there’s steam leaking from the pipes that can no longer contain the boiling hot vapor. And so we see it again this week, with an executive from a health insurance company infamous for denying claims at a stunning rate gunned down in the middle of the street. Respectability politics never entered the picture afterward. There was only the bleakest, most blackpilled outpouring of joy anyone has ever seen. Happiness animated the online discourse of the Brian Thompson murder; even UnitedHealthcare’s Facebook post about the killing was roundly laughed at by those who said in one voice: We will not feel empathy for someone who has so readily contributed to our suffering. There would be no tears or feigned sadness for the head of a company that exists to deny people life-saving medical care.

There have, of course, been half-assed attempts at steam control. Think back to the weeks and months after the COVID pandemic shut down society and threatened to plunge the world into unprecedented economic turmoil. To save the markets from such a fate, American politicians banded together and sent some cash to working families who might be low on funds with workplaces shuttered as morgues overflowed with the COVID dead. The child tax credit instantly reduced child poverty levels across the country during the early part of the pandemic. European-style social welfare had come to the United States for a fleeting moment before corporate supersoldier Senator Joe Manchin, reflexively lying about low-income parents using the tax credit to buy cruise tickets and pot and booze, helped congressional Republicans end the program and put holes in the bellies of poor kids once more.

The Affordable Care Act was a good-faith try at steam control. Barack Obama used eight years worth of political capital to barely get a right-wing healthcare plan through a Congress with overwhelming Democratic majorities. The ACA, naturally, lacked the ultimate in steam control: A public option for those who wanted to avoid the high costs and Kafkaesque tangles of private healthcare insurers. So-called Blue Dog Democrats – known more commonly as Republicans – killed the ACA's government option because everyone knew Americans would flock to it and tank the vampiric insurers whose bottom line is bolstered by human suffering and only by human suffering. The watered-down ACA did precious little to control the public steam.

At the same time, we've not dealt with the true horrors that may be facing America, partly because our "leaders" in DC didn't want to rock the boat and do the tough work of making the rich and connected pay, which results in this country bringing back a racist idiot who wants to "terminate" the Constitution. The wreckage of our country's government and the associated idiocy involved seems fine to many people as long as it changes the losing hand they've been trying to play for years.....until they find out what it really means.

Trump confirms that he plans to deport US citizens who have undocumented parents

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— Aaron Rupar (@atrupar.com) December 8, 2024 at 9:20 AM

That might come as some news to all of the young Latino guys that moved toward Trump in 2024, likely because some thought "Trump doesn't mean people like me." Nope, sorry guys. They mean all brown people, and they're not going to differentiate between the "good ones" and the "bad ones".

Once that reality of what a second Trump term truly will be sinks in to Americans that simply wanted lower egg prices and cheaper housing (and will get neither), will we finally get some of the rightful steam to blow onto the repressive evildoers that really are holding this country back?

Nov jobs report - More jobs, more wages, but more unemployed

It was another "Jobs Friday" this week, this time for November 2024. And on the payrolls side, it looks like a nice bounce-back from an October's report, which showed the effects of mid-October hurricanes and strikes, and previous months look better as well.

U.S. job creation bounced back in November after disruptions from storms and a major strike. The Labor Department reported on Friday that the economy added 227,000 jobs last month. Revisions to the prior two months added 56,000 jobs. nyti.ms/3Bjjdse

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— The New York Times (@nytimes.com) December 6, 2024 at 8:33 AM

Oh? Tell me more, Bureau of Labor Statistics!

Health care added 54,000 jobs in November, in line with the average monthly gain of 59,000 over the prior 12 months. In November, ambulatory health care services added 22,000 jobs, led by a gain of 16,000 in home health care services. Employment also increased in hospitals (+19,000) and nursing and residential care facilities (+12,000).

Employment in leisure and hospitality trended up in November (+53,000), following little change in the prior month (+2,000). Over the month, employment trended up in food services and drinking places (+29,000). Leisure and hospitality had added an average of 21,000 jobs per month over the prior 12 months.

The leisure and hospitality increases are a good sign for consumer spending, and the increase in health care jobs continues a main source of strength in the US job market, with nearly 1.4 million jobs added in the last 2 years.

However, the Washington Post's Catherine Rampell notes that November's household survey (which is where the unemployment rate is derived from) wasn't good at all.

Headline numbers look good -- as are payroll revisions! -- but some warning flags in this report: *Household measure of employment down (both from October, and a year ago) *Unemployment rate ticked up *The number of Americans unemployed for 6 months or longer is +441,000 YoY

— Catherine Rampell (@crampell.bsky.social) December 6, 2024 at 8:12 AM

Markets also seems to read this as a relatively soft report. Yesterday odds of a December rate cut were ~71%; since the jobs report came out, odds have shot up to 87% www.cmegroup.com/markets/inte...

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— Catherine Rampell (@crampell.bsky.social) December 6, 2024 at 8:25 AM

I find that rate cut optimism interesting, as hourly and weekly wages had solid increases for November.

In November, average hourly earnings for all employees on private nonfarm payrolls rose by 13 cents, or 0.4 percent, to $35.61. Over the past 12 months, average hourly earnings have increased by 4.0 percent. In November, average hourly earnings of private-sector production and nonsupervisory employees rose by 9 cents, or 0.3 percent, to $30.57.

The average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.3 hours in November. In manufacturing, the average workweek was little changed at 40.0 hours, and overtime edged up by 0.1 hour to 2.9 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.7 hours.

That's 2 straight months of average hourly wages going up by 0.4%, and 3 of the last 4, so the stagnation of the Spring seems to be over. The increase in the work week reversed a decline in October, and that means there should be enough funds should be available to translate into a solid Christmas shopping season, especially if some purchases are being accelerated to beat any Trump/GOP tariffs that might be coming in (raises hand).

We still are in a good spot overall in the jobs market, with hiring continuing in key areas and wage growth staying a good amount above inflation. But there are some warning signs in that 4.245% unemployment rate, and while I think the numbers might be good for the overall economy at the end of 2024, I can see where they aren't so good in 2025. And then what'll that do for the Bubbly stock market and the coked-up traders who think Donald Trump's are going to take the Biden-era prosperity to another level?

Unless those stupid hopes aren't related to a real economy, and instead based on grifting and rent-seeking, and that they'll be the Insiders that benefit from that? (Yep, that's likely what it is.)

Extending Biden-era ACA credits should be a no-brainer. And MAGA states especially need it.

With 10 days left before the deadline to sign up for health insurance through the Obamacare exchanges for 2025, this memo from the Congressional Budget Office seems to be important to keep in mind for this time next year.

New CBO estimates: 3.8 million people will lose coverage and become uninsured if the enhanced premium tax credits expire as scheduled after 2025. www.cbo.gov/publication/...

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— Gideon Lukens (@gidlukens.bsky.social) December 5, 2024 at 2:20 PM

Oh really? Let's look at the memo and get some more details on that.

You have asked the Congressional Budget Office to discuss the effects on health insurance coverage and premiums that will result from not extending—either for one year or permanently—the expanded premium tax credit structure provided in the American Rescue Plan Act of 2021 (ARPA, Public Law 117-2).

ARPA reduced the maximum amount eligible enrollees must contribute toward premiums for health insurance purchased through the marketplaces established by the Affordable Care Act, and it extended eligibility to people whose income is above 400 percent of the federal poverty level (FPL). Those provisions were extended through calendar year 2025 in the 2022 reconciliation act (P.L. 117-169).

This meant that more people could get a tax write-off for buying health insurance on the Obamacare exchanges, and not have to pay as much to get them.

Those changes have worked when it comes to more people getting their insurance through the Obamacare exchanges, especially as the COVID-era policy of automatic re-enrollment in Medicaid went away starting in 2023. And the Kaiser Family Foundation tells us that not only have nearly 10 million more people gotten insurance through the Obamacare exchanges since 2020, the KFF also notes that the biggest increases for this year happened in states that voted for Donald Trump and GOP Senators.

From 2023 to 2024, Marketplace signups grew by 30% or 5 million more people. Three states (Texas, Florida, and Georgia) account for half of the national growth in Marketplace enrollment this year. The five states with the highest percent increase in signups since last year are West Virginia (80%), Louisiana (76%), Ohio (62%), Indiana (60%), and Tennessee (59%).

Here in Wisconsin, the KFF says that the number of Wisconsinites covered by Obamacare went up by 20% this year, exceeding 266,000. And I would imagine there would be thousands of Wisconsinites that may lose their insurance if these expanded ACA subsidies end after next year.

Let's go back to that CBO memo and see what the effect of inaction on these subsidies might be, including and beyond people going without insurance.

CBO estimates that, relative to extending the tax credits, not extending them—either for a year or permanently—will increase the number of people without health insurance. The agency expects some people will exit the marketplaces and become uninsured because of higher out-of-pocket costs for health insurance premiums.

Without an extension through 2026, CBO estimates, the number of people without insurance will rise by 2.2 million in that year. Without a permanent extension, CBO estimates, the number of uninsured people will rise by 2.2 million in 2026, by 3.7 million in 2027, and by 3.8 million, on average, in each year over the 2026-2034 period. (The initial increase is significantly smaller because CBO expects that some people will remain temporarily enrolled after the expanded credits expire at the end of 2025. CBO assumes enrollees would need time to fully respond to the expiration, for example, because of automatic renewal policies.)...

CBO estimates that, relative to extending the premium tax credits, not extending them—either for a year or permanently—will lead to higher gross benchmark premiums, on average, in marketplace plans. (Those premiums reflect the amount before the tax credits are accounted for.) CBO expects that healthier-than-average people will exit the marketplaces if the expanded credits are no longer available and, in response, insurers will raise premiums for the remaining enrollees.

The CBO estimates the increase in premiums would go up by 4.3% in 2026, and then have annual increases near 8% for all years after that, as the healthy people exit the Obamacare market and/or get policies through their employer (which often raises the employer's costs, since they often give some kind of help to pay for their employee's coverage).

And the price tag isn't all that much in the big scheme of things, as the CBO earlier estimated that making these higher tax credits permanent would increase the deficit by a total of $335 billion over 10 years, or $33.5 billion a year. About $250 billion of that 10-year cost come from the credits themselves, and increased enrollment of children in CHIP and related effects on other programs would cost around $25 billion.

But this part of the CBO analysis caught my attention, as it said that there would be other benefits to workers and businesses beyond the subsidies themselves.

An estimated $164 billion decrease in revenues would occur because some of the increased premium tax credit would offset enrollees’ tax liabilities;

• A $101 billion increase in tax revenues would arise from a shift in employees’ compensation from tax-favored health insurance to taxable wages, primarily because, in CBO and JCT’s estimation, employers that decide not to offer health insurance would still keep workers’ total compensation roughly unchanged; and

• About $3 billion in penalties would be collected from businesses with 50 or more full-time-equivalent workers that, under a permanent extension, no longer offer their employees health insurance coverage.

So more stability for millions of Americans for having health insurance, AND increased wages? And all for a relatively tiny cost that could be covered by making the Elon Musks of America pay another 1% of their incomes in taxes (let alone the trillions we can get back if we let the GOP Tax Scam expire after 2025)?

In a thinking and non-corrupt country, voting to enshrine these expanded ACA tax credits into law would be a no-brainer. But with government funding running out in 2 weeks and a guy coming back into office in January that already tried to deform the ACA, it seems that if it's going to happen, it's going to have to be soon. Seems like Dems in the House and Senate should lean on red state GOPs who have a disproportionate amount of their constituents that get helped by this policy, and tell them to push this through before government shuts down on their watch, and/or they get a load of angry constituents less than a year ahead of the 2026 midterms.

C'mon GOPs, you can even keep it a secret that Biden/Dem policies will be keeping a lot of your voters afloat this time next year (Dems shouldn't keep it a secret, but GOPs count on a lot of those voters to lack the maturity to listen). And we need to be especially vigilant as this year wraps up to make sure these Congresscritters do the right thing, and actually perform a rare act of legislating for something that needs to be done.

A modest proposal to lessen the property tax burden in Wisconsin

As we hit early December, many Wisconsinites will be getting their property tax bills in the near future. And after a masive number of school and local government referendum votes last month (or both, as we dealt with in Madison), many of us will likely see higher bills on this year's mailings.

In 2024, the approved referenda authorized a total of $4.4 billion in new funds for school districts, $3.3 billion of which will come from debt. This was by far the most ever in a calendar year, breaking the old record of $2.7 billion (unadjusted for inflation) in 2020. It in part reflected that the total amount of money requested via referendum reached a new high of $5.9 billion, up from 2022’s previous record of $3.3 billion.

These results translated to a school referendum passage rate for all of 2024 of 70.1%. While voters approved the large majority of referenda, it marks a 10 percentage-point decline from 2022 and was the lowest passage rate in a midterm or presidential election year since 2014. This decrease continues a recent trend of declining passage rates since 2018.

In addition to school referenda, voters also decided at least 14 municipality referenda to exceed levy limits in the Nov. 5 election. (These totals may not be complete but reflect all those included in data from the Wisconsin Elections Commission.) Of these 14, voters approved seven, authorizing those cities, villages, and towns to increase their property tax levy for operations above state-imposed limits to fund specified services, such as public safety, local roads, parks, or general services.

In the fall and spring elections combined, voters approved 17 out of 31 municipal and county referenda total statewide. This year saw the second-most municipal and county referenda approved to increase property taxes of any year on record, behind only 2022, when 29 passed.

And what those referenda allow school districts and municipalities to do is to exceed limits put on certain types of revenues under state law. For K-12 schools and technical colleges, those revenue limits are for a combined amount of state aids and property taxes, while for municipalities, the limits on overall property tax levy increases are based on the amount of "net new construction", which the Wisconsin Department of Revenue calculates as follows:

It includes changes to equalized value due to new building construction and land improvements minus changes to equalized value due to the demolition/destruction of buildings and removal of land improvements.

That causes some perverse incentives that I think could cause overbuilding to allow for a larger amount of resources to be used. But the bigger problem has been that the rate of inflation has had very little to do with the increases (or lack of increases) in these levy limits. And it ignores the fact that the median sales price of a Wisconsin home increased by more than 140% between October 2011 and October 2024, and 58% in the last 5 years, as that jump in home values has not translated into added resource capacity for schools and communities.

In this time, Wisconsin's public schools and communities have had the amount of shared revenues fall well short of the rate of inflation since 2011 (in fact, municipal general shared revenues were lower in 2024 than it was in 2011) and had their tax-raising abilities limited (which often has led to increases in property taxes via referenda). But oddly, the state has been spending increasing amounts of tax dollars to limit how much the average Wisconsinite ends up paying in property taxes, with over $2 billion set aside in this year for that purpose.

Items such as the First Dollar, School Levy, and Lottery Credits are taken directly off of a Wisconsin home owner's bill. The First Dollar Credit is largely equal for all properties regardless of the property's value, but the School Levy and Lottery Credits are taken off proportionally, with higher-value homes getting larger credits.

Here's how last year's bill looked for us, for example, and you can see the reductions of all 3 of these items from our 2023 bill.

With that in mind, I have a modest proposal for the next state budget. Why don't we send $1 bilion of the $1.275 billion in School Levy Credits to K-12 public school districts, and then raise their revenue limits by $600 million? This would be a $400 million property tax cut for Wisconsin homeowners, and also add needed resources to classrooms without having to go through the obnoxious cycle of referenda and/or budget cuts in a time when state finances are bursting.

We also can bump up the First Dollar Credit (maybe to $250 million vs $150 million), so property tax breaks are less related to property value and more evenly distributed to all Wisconsinites. Lastly, we should stop funding the Lottery Credit with General Fund dollars, and instead distribute that $83.5 million to local communities. We can combine those added tax dollars with a reform to the tight levy limits that not only accounts for the increased state aids from 2023's shared revenue reforms that started this Fall, but also allows for the higher tax base and inflation to be factors in increasing the amount of resources available for those communities to provide resources.

I know there are a lot of interlocking pieces with this, and I'm kind of rambling in a few directions. But there's no reason we can't use the 2025-27 to make a long-lasting reform that adds more state funding and lowers property taxes for Wisconsinites when it comes to paying for their public schools and municipal services, and also expand the capacity for local school and government services. We also can make those property tax cuts less regressive than the ones we have today by changing the source of where the added funding is coming from.

Seems like something Dems should jump on for this upcoming session, and wrong-foot Republicans like Robbin' Vos, who are perfectly fine with this regressive, underfunded system that results in increasing numbers of property tax increases through referendum. We can do this better, and we don't need to keep going down a road that few everyday Wisconsinites are satisfied with.

So if Trump tariffs Canada and Mexico, what happens to Wisconsin?

You may have heard that our President-elect has decided to continue with his threats to raise prices on imports and hamper trade with the countries that we share borders with.

Trump trying to start a trade war with our three largest trading partners is truly insane.

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— grimm (@mugrimm.bsky.social) November 26, 2024 at 7:44 AM

With that in mind, UW-Madison Professor Menzie Chinn looked at the data, and wanted to see what effects a trade war with Canada and Mexico might have on Wisconsin consumers and businesses. His findings are posted at Econbrowser.

As part of this analysis, Professor Chinn linked us to databases from the International Trade Association that breaks down trade stats for all 50 states through 2023. It's worth noting that Canada and Mexico get the highest amount of Wisconsin exports, resulting in a sizable trade surplus with Canada, and that these countries are also our 2 largest sources of imports.

When it comes to looking at what Wisconsin gets from these countries, looks like a lot of what comes from Mexico is equipment, and while we also get quite a bit of equipment from Canada, our largest import is paper.

Now if Trump's tariff plan was combined with a larger strategy of encouraging Wisconsin to re-ignite paper production or the type of equipment manufacturing we currently have from Mexico, this might not be a bad idea, especially if the job and wage growth in Wisconsin was to outstrip the increase in prices for consumers.

However, when you're making more money sending products to Canada than you have coming in from there (as we do in Wisconsin), that makes the prospect of Canadian retailiation and protection of their own industries something that would likely hurt Wisconsin jobs. This seems especially true for Machinery, as we send a lot of products in that industry to both Canada and Mexico.

And as Professor Chinn notes in another post on Econbrowser, the last time Trump was president and tried this trade war strategy, it didn't work out for Wisconsinites. Not for agriculture, as Wisconsin led the nation in farm bankruptcies in 2019, or for manufacturers, who saw job and business losses soon after the trade restrictions were put in place.

Maybe all of this is a bluff (and many things are with Trump), and just designed to give the appearance of toughness to other countries, and little will change in terms of trade. But my instinct is that Trump and the sycophants around him are indeed stupid enough to throw these tariffs onto products and end up with retailiation from other countries without the Trump Admin having the next steps planned out to make the needed adjustments for both workers and businesses.

So my guess is that we're going to be back in the bad old days of 2019 sooner than later....except with more automation and more corporate greed likely leading to more pain being felt by everyday Americans.

More proof the US economy was in a very strong place before Trump was elected

Right before the holiday, we got a look back at what was going on with the US economy as voters went to the polls for the last election. And despite what some voters claim to have been feeling, things were in a really good spot overall.

First of all, the revisions to Q3 GDP came in, and reiterated that economic growth was strong through last September.

Per the Bloomberg table below summarizing the release of the revised data: America’s solid GDP growth of 2.8% was powered by a 3.5% expansion in consumption. #economy #growth

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— Mohamed A. El-Erian (@elerianm.bsky.social) November 27, 2024 at 8:17 AM

And another report for October's data indicated that consumer spending continued last month.

U.S. consumer spending increased slightly more than expected in October, suggesting the economy retained much of its solid growth momentum early in the fourth quarter, but progress on lowering inflation appears to have stalled in recent months....

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.4% last month after an upwardly revised 0.6% advance in September, the Commerce Department's Bureau of Economic Analysis said. Economists polled by Reuters had forecast consumer spending would gain 0.3% after a previously reported 0.5% increase in September.

Adjusted for inflation, consumer spending edged up 0.1%, consistent with a roughly 2.5% annualized growth rate this quarter. Spending rose at a 3.5% rate in the July-September quarter, accounting for the economy's 2.8% growth pace.

The Atlanta Fed is forecasting gross domestic product increasing at a 2.7% rate in the fourth quarter.

Inflation-adjusted consumer spending growth has stayed consistent since inflation started getting under control in early 2023, and has grown in 9 of the 10 months for 2024.

Included in that increase was a solid increase in food services and accomodations, which seems to have shaken off a slump in the first half of 2024 to reach new psot-COVID peaks in October.

On the income side, there was a solid 0.6% increase for October and a 0.7% increase in disposable income, more than double the rate of inflation. That rebound is a welcome sign, as newly revised data in the same report indicated that wage and salary growth had flattened in early 2024 before coming back in recent months. And that flattening happened after an earlier revision showed wages had grown faster at the end of 2023.

We got evidence earlier in the year that strong job growth in early 2024 was merely "meh", so that adds up, and indicates that not only had the economy moderated in early 2024, but that the Federal Reserve was indeed too slow to lower interest rates from their 23-year highs.

However, we also have evidence that things have picked back up in the second half of 2024. And I couldn't help but notice this set of headlines from CBS Marketwatch yesterday.

Do NOT allow Trumpers to memory-hole the reality that the US economy was in a very good place at the time he got elected for a second time. Especially since I strongly suspect things won't be that good this time next year.

Free Bucky, and free up more funds to keep the rest of the UW System running

As a new state budget cycle gets underway, you can bet a topic of discussion will involve the funding and future of the UW System. Even as our state has $4 billion in extra funds in its bank account, many UW campuses have suffered in recent years, including the closing of 6 2-year campuses by the start of the next school year, and 4-year campuses such as Oshkosh, Platteville, and Milwaukee having staff layoffs.

Ahead of the new legislative session, there was a Study Committee set up to go over ideas about what should happen with the UW System, to get ideas out front and flesh out measures before any bills get introduced.

To start, let's go over how the UW System gets it's funding today, courtesy of this memo from the Legislative Fiscal Bureau.

I'll note that one of the big reasons for that decline in state funding % is a sizable increase in gifts and federal contracts, while GPR (mostly state tax dollar funding) hasn't increased by nearly as much. None of these numbers are adjusted for inflation over the 40 years, by the way.

This is while UW System enrollment is slightly less than it was 40 years ago.

So lots of areas to start from when trying to figure out which way to go with the future of the UW System. And among the suggestions of this UW Study Committee is that it may be time to allow Bucky to go out on his own.

The first proposed recommendation was separating UW-Madison from the twelve UW System campuses.

The proposal would create a new Board of Regents to oversee UW-Madison, while maintaining the separate Board of Regents to oversee the other comprehensive universities. Two separate state appropriations to provide general purpose revenue (GPR) funding specific to UW-Madison and for the other comprehensive universities in the UW System are also included in the proposal.

Robert Venable, President and CEO of Miami Corporation Management, said that a Board of Regents that could “focus just on the comprehensive is actually more important in helping deal with those existential issues. Madison is not facing existential issues.”

That's correct, Mr. Venable. Madison has many more sources of revenue than the other UW schools do, because Madison has a higher donor base, many more research grants, and a large number of self-supporting entities.

We got an illustration in late November how things are different in Madison in the form of a move up in the national rankings for research spending.

The state flagship ranked No. 6 in research spending among more than 900 institutions, according to the latest figures released Nov. 25 by the National Science Foundation.

UW-Madison's research ranking has been a sore spot on campus since 2016, when the university fell out of the top five for the first time in nearly 45 years....

UW-Madison spent more than $1.7 billion in the 2023 fiscal year, a 14% increase from the previous year. Nearly half of the money comes from federal awards grants from agencies such as the National Institutes of Health and the Department of Defense.

“UW-Madison has been a research powerhouse for generations,” UW–Madison Chancellor Jennifer Mnookin said in a statement. The rise in ranking and increased spending is "further evidence of our deep commitment to bringing incredible UW–Madison expertise across disciplines to the grand challenges of our time and to translating our discoveries to improve lives at home in Wisconsin and beyond.”

A whole lot of that System-wide increase in gifts and federal contracts comes from UW-Madison through initatives such as the Carbone Cancer Center, and donations like the $175 million the Morgridges were able to raise and leverage in 2021 for a new Madison School of Computer, Data and Information Sciences. Madison also continues to see increasing enrollment (reaching nearly 52,000 this year!), and more than half of those students are from out of state and paying higher tuition, increasing the amount of money available through the tuition funding stream.

This is not the case at the other UW campuses, where more than 3/4 of the students come from Wisconsin, and another 8% of the students at those schools come from Minnesota and pay near in-state rates due to the reciprocity agreement between the two states. In addition, the other UW campuses have generally seen declines in ernollment in the last decade while the number of students in Madison has grown by more than 20%.

Change in student headcount
Fall 2014
UW-Madison 42,865
All other UW campuses 138,114

Fall 2024
UW-Madison 51,791
All other UW campuses 112,640

Those UW campuses also do not have anything resembling the amount of research focus and donor base that Madison has. So those other UW campuses need state funding a lot more than Madison does, and those schools are a key source of access to higher education, skill-growing and jobs in areas of the state that otherwise might not have a lot of that going on.

An admission that Madison has a different purpose than the rest of the UW System isn't arrogance or elitism, and neither is it a bad thing to admit that its enrollment trends are heading up while the rest of the System is not. These are facts, and we should still have the state chip in to make sure Madison's tuition is affordable for in-state students and remains an acheivable place where graduates of Wisconsin high schools can pursue higher education (in fact, maybe that's where a whole lot of Madison's state funding should go to under this separate GPR fund).

At the same time, Madison doesn't need to be put in the same pool of state aid as the other UW schools, because Madison ends up being part of an Systemwide allocation that ends up lowering the amount of state aids the non-Madison campuses (who instruct 2/3 of the students in the System) get. This also requires separate leadership that deals with Madison's unique circumstance, and doesn't try to force-feed the other UW campuses into a Madison-type research-and-donor funding system when the other campuses do not have anything close to the outside resources to be able to do what Madison does.