Sunday, April 14, 2024

Since GOPs have no answers, and lose on real issues, they waste our time on non-issues

So Congress is back in session this week. With Ukraine getting bombarded by Russia and seeing their defenses run low, and with Israel and Iran exchanging hostilities, it seem like an important time for our lawmakers to get work done. Let's look at what the GOP-led House has planned for this week.

Yes, the GOPs in Congress are defending your right to...keep buying appliances and limit any kind of requirements to improve energy efficiency.

Oh, but I do see the Speaker of the House was dispatched to discuss things with the presumptive GOP nominee for President. So maybe there will be important policy items and reforms to come out of that.

Tired Big Lie stuff that doesn't exist anywhere beyond AM radio, Faux News, and GOP's BubbleWorld of BS.

But maybe things are better in the Senate. Given that Wisconsin's senior senator has 4 years before he has to fact the voters (if he doesn't retire), he has the latitude to do real work and governing. So let's see what's he's been up to.

As someone who has worked several elections in the last 4 years, this is NOT A THING in Wisconsin, and by law it is not a thing in America for elections to Congress or President. But we know why Ron Johnson says this garbage.

If 15,000 people had decided they were done with this clown show and chose to vote for the Black guy instead of RoJo in November 2022, us Sconnies wouldn't be saddled with this embarrassment, and we'd have a better functioning Senate today. Oh, but that was a bridge too far for some of you, wasn't it? (speaking of weak acts, why haven't Senate Dems ever tried to censure this Russian agent for his lies and abuses of power)?

When you see GOPs bringing up non-issues like this, it's a tell that they are losing on real issues, and are desperately trying to change the subject. This is especially true in Bubble World of BS, and The New Republic's Greg Sargent recently had an excellent podcast showing how this works in GOP-perganda broadcasts. He was joined by John Whitehouse of Media Matters on the pod, which was recorded right after Arizona's Supreme Court outlawed virtually all abortions by reactivating a law from 1864.

You can guess how that development was (not) covered by Faux.

Out of sight, out of mind, you know.

This is why Dems need a presence in every corner of the state and the country. Because if they're not being intrusive with media and messaging to try to burst the GOP's Bubble of BS, casual voters will think the Faux News non-issues are worth caring about and getting distracted by. And corporate media won't care to ask GOP politicians about real issues if Dems don't keep pressing with real questions and concerns.

But if Dems confront media and voters with how GOPs refuse to deal with real problems, and back actions that make everyday people's live worse, then they may make some inroads in Trump Country that will make it near-impossible for GOPs to win in this state, and nationwide.

Friday, April 12, 2024

UW audit says things have to change for campuses to stay afloat. But how should it change?

With several UW campuses facing layoffs and cutbacks, and some 2-year branch campuses ending in-person classes or closing up entirely, the UW System's central administration took the step of having a third party look into where things stand, and if/how this spiral can be stopped. We found out what the consultants had to say this week.
The University of Wisconsin System paid outside firm Deloitte $2.8 million to assess the financial health of its individual campuses. The reports released this week underscore the difficult financial forces facing most UW campuses and their unsustainable reliance on reserves to cover year after year of budget deficits.

None of the reports raised the possibility of consolidation or closure. UW System President Jay Rothman said he isn't entertaining the idea of closing any four-year campus. The struggle for chancellors is finding a path to remain financially sustainable while enrollment declines, concerns about college affordability grow and state funding in the most recent budget remained flat.

"I'm confident that all of our universities can get there," Rothman said. "The question is, what is the depth of those cuts going to have to be, because we have a responsibility on the expense side of the ledger to run as efficiently as we possibly can be. But in terms of having additional state support so that we can invest in things that are going to be important for our state going forward, I think that's what the balance is."
One of the reasons for the fiscal issues for many of these campuses is because of a consistent and significant decline in enrollment that has been going on since the early 2010s, reflecting the demographic challenges that many colleges have had to deal with.

The report looked at 7 of the 12 4-year schools in the UW System that aren’t Madison, with the other 5 being part of a separate report. But the 7 campuses listed in the first Deloitte report (Green Bay, Oshkosh, Parkside, Platteville, River Falls, Superior and Whitewater) seem to have the most immediate concerns, with the report saying of both Oshkosh and Platteville, "the future of the institution is at risk,", and it's not a coincidence that both campuses announced significant staff layoffs last October.

Deloitte also said River Falls and Green Bay were in need of "right-sizing" (cough -MORE LAYOFFS- cough), and that the other 3 schools also were in need of some kind of operational adjustment. I know that consultants are paid to report bad things and come up with solutions on how to fix them (no matter how necessary or useful those solutions may be), but I also note that the combined of enrollments of the financially analyzed campuses dropped by more than 5,000 between Fall 2017 and Fall 2022, before slightly recovering in this school year.

Then remember that all 4-year UW System schools have been under a tuition freeze for the past decade (one that is apparently going to end next year). So there is a general drop in tuition funds going to these schools, in a time period when costs have gone up, and especially accelerated in 2022 and 2023.

(Quick side note - River Falls is likely going to be the campus that will get the most help on the tuition side due to a recently signed law that will let them and all other UW campuses keep the additional tuition that students from Minnesota pay as part of the reciprocity agreement between those two states. So that's at least one UW financial reform that's coming in).

Not having Madison be part of Deloitte's financial analysis feels like the correct way of looking at it. because as I’ve harped on before, UW-Madison is a very different entity than the other schools, as it is a research-centered institution and flagship campus than now has more than 50,000 students, with enrollment rising by more than 8,000 since 2011.

And unlike many of the other UW campuses, Madison can draw a lot of funds from the much-higher tuition that out-of-state students pay. In fact, all of Bucky's increased enrollment (and then some) can be accounted for by out-of-staters.

Add in an alumni base that can do things like give $140 million for a new computer science facility or to chip in $150 million to replace and modernize its Engineering building, along with $1.5 billion in research grants from public and private sources, and Bucky stands alone among UW schools in the number of places it can find to help pay for its expenses. This is not to say that the Madison campus doesn’t deserve taxpayer investment - it adds a massive amount to this state’s economy and is a big reason why the Madison area adds more population than anywhere else in the state - but Bascom Hill has got a lot more in non-state financial resources to draw from than the other UW schools do.

You can even make a sizable amount of this separate state funding be designated as subsidies to ensure Madison charges significantly lower tuition to in-state students. So a key part of how I would stabilize and improve the UW System in the future would be in allowing Madison to be its own entity, with its own state funding stream (separate from what is distributed to the rest of the System). In return, I would have the State Legislature BACK THE FUCK OFF of its affairs.

The other UW System schools don't have the luxury of Madison's donor base, research funding, and rising enrollment, which makes them more reliant on state aid to make ends meet. But the GOPs also cut funding to the System during the Age of Fitzwalkerstan, leaving the campuses well below the national average when it comes to funding from state taxpayers.
The nonpartisan Wisconsin Policy Forum found Wisconsin's four-year university system ranked 43rd in the country in per-pupil funding. Rothman said it would take an additional $440 million annually to move to the median level of funding nationally.
OH? Perhaps we should lower that $440 million deficiency to help these schools' financial solvency as well? Maybe?

We're still slated to have $3 billion in the bank when the next state budget begins in July 2025. I think the non-Madison campuses can be shored up with some of that, if we actually care to stop the spiral of less revenue and higher costs that is crippling many of our UW campuses. But it likely will take more than just that to reverse the damage that has been done under the GOP's gerrymandered Reign of Error over the UW's purse strings.

Thursday, April 11, 2024

INFLATION WATCH heats up for March, which freaks out the Street

As 2024 began, there was an expectation that the calming of inflation that we saw in 2023 would continue, which would allow the Federal Reserve to cut its Fed Funds borrowing rate from the 5.25%-5.5% level that it’s at today.

But then the Consumer Price Index grew by 0.3% in January and 0.4% in February, and that made people look to this week’s CPI report for March to see if inflation was back on the rise, or if the interest rates were indeed going to come down soon.

The result?

Uh oh. Now a lot of people are worrying, and “inflation” is going to re-emerge as something the media is going to want to talk about. It’s the worst back-to-back month of increases since last Summer. Over the last 8 months, this means the CPI has risen by 2.5%, which comes out to an annual rate of around 3.8%.

Not great, but a check under the hood of the topline numbers doesn't indicate to me that inflation is going to any point that’ll limit our real economy. First of all, take a look at the large culprits behind March’s 0.4% increase in the CPI. In addition to the gas and rent increases, there also appears to be some convenient price hikes from big insurance and medical care.
The motor vehicle insurance index rose 2.6 percent in March, following a 0.9-percent increase in February. The index for apparel increased 0.7 percent over the month. Among other indexes that rose in March were personal care, education, and household furnishings and operations.

The medical care index rose 0.5 percent in March after being unchanged in February. The index for hospital services rose 1.0 percent over the month and the index for physicians’ services increased 0.1 percent. The prescription drugs index rose 0.3 percent in March.
Go out to 12 months, and we see that car insurance is up a whopping 22.2% in the last year, hospital services are up 7.5%, and home care for the elderly and disabled is up 14.5%. That’s something that seems worthy of public hearings on the state and federal levels, and in need of stiff regulation and/or added competition.

The apparel increase is especially odd, as men’s and boys’ apparel dropped by 1.0% in March, but women’s and girls’ apparel went up by 1.7%, and female-targeted clothing is apparently 55% more expensive than male-targeted apparel, according to the CPI market basket of goods and services.

And the 12-month inflation story for clothes is the opposite – men’s/boys’ apparel up 1.0%, and women’s/girls’ apparel down 0.1%. So I don’t think clothes’ prices are going to the roof, and that March’s fluke increase will not continue in the next CPI report.

I also note that prices for “food at home” stayed flat for the second straight month in March, and are only up 1.2% in the last year. Yes, it’s still up more than 20% since March 2021, and that’s something that everyday people still will notice (along with allowing for a lot of food companies and grocers to get strong profits). But the rate of increase has definitely gone back to pre-COVID normals since the end of 2022, while wages have increased by 2-3 times as much over that same time period.

The other item that makes me think that inflation isn’t going to stay at the 4-5% level for the rest of 2024 (at least in the current situation) is that the lagging indicator of shelter continued to run high in March at 0.4%. When you look at recent trends in new home and rental prices, those increases are ending, so we should see shelter’s CPI level off in the coming months.

However, Wall Street seems to think that this CPI report and the strong jobs numbers will scare off the Federal Reserve from lowering rates off of their 23-year highs anytime this Spring and Summer. And that reversal of belief is a main reason behind the selloff that we’ve seen throughout the month of April, with the DOW down as much as 1,500 points until some of those losses were pared in the second half of today's trading.

I think delaying rate cuts from these high levels is wrongheaded, and I have strong suspicions that much of these increases have little to do with shortages (well, beyond a shortage of competition and regulation). And today's report of a relatively tame 0.2% increase in March for producer prices backs up my thought that we aren't looking at a chain reaction of continued price hikes that have to work its way through in the future.

But we also have to admit that the economic news of the last week does mean that we’re getting another season of INFLATION WATCH, no matter how legitimate or BS the CPI increases may be.

Tuesday, April 9, 2024

"Job creator" Conagra takes Wis tax dollars, then cuts Wis jobs 5 years later

Remember how I referenced Conagra Brands’ improved earnings and profit margins last week, and how they credited “cost-saving” measures as a reason for their positive earnings outlook?

We got an example of those measures on Monday, to the detriment of a sizable amount of Wisconsinites.

Employees at the Conagra Brands’ Birds Eye facility in Beaver Dam learned Monday that the factory will be shutting its doors at the end of the summer, eliminating about 250 jobs.

“We continually evaluate our overall network of food production facilities to ensure that we are operating as effectively and efficiently as possible so we can remain competitive as a company,” Conagra media representative Daniel Hare said in a statement.

“We have determined that we can continue to meet the needs of the business by making these products in fewer facilities. Therefore, we informed employees that our Beaver Dam facility will close by the end of the summer, which will impact approximately 250 employees,” Hare said.
Gotta hit those numbers to “remain competitive” and make the shareholders happy, you know. And no, don’t count on these cost cuts to lead to lower food prices on Conagra products.

RIP Macho Man.

As I was googling for information and a link to the Conagra layoff story, I noticed some headlines of the past come up regarding the Beaver Dam outfit. And was reminded that the state of Wisconsin gave tax dollars to this same Conagra facility 5 years ago.

Conagra Brands plans to invest approximately $78 million to modernize and expand the current 350,000-square-foot cold storage and vegetable packaging facility on Green Valley Road, which supports the Birds Eye frozen vegetables operation. The Birds Eye operations are supported by almost 800 employees at both the Beaver Dam and Darien plants in Wisconsin.

The Wisconsin Economic Development Corporation (WEDC) is supporting the expansion by authorizing up to $750,000 in state income tax credits over the next five years. The actual amount of tax credits that Conagra Brands will receive is contingent upon the number of jobs created and the amount of capital investment during that period. Like all tax credit awards, the company must first create the jobs and make the capital investment before receiving the credits.

“Birds Eye frozen vegetables have been a fixture in freezers in Wisconsin and around the country for generations, and I applaud the company for continuing to invest and grow in our state,” said Mark R. Hogan, secretary and CEO of WEDC, the state’s lead economic development organization. “As a company with facilities all over the country, Birds Eye was looking at other options for this expansion. Its decision to expand in Wisconsin is a testament to the state’s strong business climate and outstanding workforce.”…
And take a look at who was supporting and promoting that assistance in early 2019.
“With the Wisconsin Economic Development Corporation leading the way, our state continues to remain open for business,” said Sen. Scott Fitzgerald. “Operations expansions like this one prove why Wisconsin is the best place in the country to work, live and raise a family. Thanks to the continued investment of Birds Eye Foods in Beaver Dam, more family-supporting jobs will keep our community prospering and keep Wisconsin moving forward.”

“This exciting expansion plan is another example of strong investments being made in Dodge County because of pro-growth policies enacted over the last eight years,” said Rep. Mark Born. “The 140 new jobs will help support families throughout the area and continue to strengthen our local economy, making Beaver Dam a more desirable place for businesses and families to locate.”
Way to reference the short-term scams and cronyism of the Walker years, guys. And notice Walker’s WEDC Secretary was still in charge at the time, instead of Evers’ choice of Missy Hughes. That seems telling to me.

Since then, Fitzgerald has shuffled off to Congress, and still has the nerve to spread this same “job creator” BS about businesses like Conagra. Born has been the co-chair of the Joint Finance Committee for the last 4 years, and has shot down multiple attempts by Governor Evers to get rid of a Walker-era tax giveaway that reduces the state tax liability of manufacturers like Conagra near zero percent. The “open for business” maneuvers of WisGOP in the 2010s continue to fail us in 2024. And we also need to stop trusting these companies to do the right thing when it comes to either keeping prices in check, or in creating any sustainable, long-term growth when their tax rates keep getting cut and profit-hoarding is encouraged.

You know what’s the best way to stop corporations from imposing greedflation on consumers, and from grabbing state tax dollars for a few years before leaving us with empty factories once the giveaways run out? NOT LETTING IT HAPPEN IN THE FIRST PLACE.

This also means we have to get a new crew in place at the Wisconsin Capitol that will make these businesses pay for a small part of all the stuff they have been taking from us.

Sunday, April 7, 2024

February brings another good month of construction numbers

One of the big policy and economic successes in the last year has been the growth in the construction sector, both in employment (up 270,000 jobs in the last 12 months measured), and in getting new single-family homes online, which can help with housing affordability.

The total value of construction put into place is up 10.7% year-over-year, and even with a seasonally-adjusted decline with overall construction in the last 2 months, single-family home construction kept rebounding in February, with that part of the sector up nearly 20% from its recent low in April 2023.

While the growth in construction of manufacturing facilities has leveled off in recent months, that part of the sector is still building double the value of facilities that it was building in June 2022.

And June 2022 is one month before the then-Dem controlled Congress passed the CHIPS and Science Act to encourage more tech manufacturing in America.

You can claim correlation isn't causation, but I don't think it's coicidence that this strength is construction has been ongoing in 2023 and 2024. And if we can get the Federal Reserve to stop chasing the ghost of inflation and get interest rates off of their 23-year highs, there might be even more building set to happen.

March jobs report shows things didn't slow down in Q1, but actually picked up

Looks like we rounded out the first quarter of 2024 with yet another strong US jobs report.

So job growth in Q1 2024 rebounded from what had been a steady drift downward (but was still at good levels).

Going back 3 years, you can see that the passage of the Biden stimulus in March 2021 along with COVID vaccinations becoming widely available led to more than 7 million new jobs in the first 12 months. That number has declined back toward normality as these measures faded away over time, but we've still been seeing job growth stay at rates of nearly 1.5 million over each of the last 2 6-month periods.

And much as we have seen in the last 2 years, health care led the way with hiring, with another 72,000 jobs added in March, and nearly 750,000 in the last year. And the health care sector now has more than 1 million jobs above what they had before the COVID pandemic hit the industry.

Construction also continued its winning streak in March, with another 39,000 jobs added to what was already an impressive group of gains in the last 2 years. Contrasting that, jobs in manufacturing remained flat for March, with slight downward revisions for January and February.

In the household survey, the drop in unemployment happened for the "good reason", 469,000 additional people in the work force, and 498,000 listing themselves as "employed". It's also a positive that we've seen a decline in Americans identifying themselves as "working part-time for econiomic reasons". However, we also saw an increase of 593,000 people working "part-time for non-economic reasons", which is listed as
...persons who usually work part time for noneconomic reasons such as childcare problems, family or personal obligations, school or training, retirement or Social Security limits on earnings, and other reasons. This excludes persons who usually work full time but worked only 1 to 34 hours during the reference week for reasons such as vacations, holidays, illness, and bad weather.
Which makes me wonder if this is due to a large amount of Boomers "downshifting" into part-time work because the economy has gotten good enough that they can retire (which would be good), or if it's because more people are having difficulties in handling child care and other "adult responsibilities", and it's keeping them from wanting full-time work (which would be bad).

The wage picture also had good news for both workers as well as people hoping for interest rate cuts in the near future.

Solid, but not spectacular. Which is what the Fed allegedly wants as part of the soft landing, right?

Interestingly, while the 4.1% overall increase in wage growth over the last 12 months is what we often hear cited, manufacturing, construction and warehousing jobs have had bigger pay raises than that.

Change in average hourly wages, Mar 2023 - Mar 2024
Construction +5.0%
Manufacturing +5.3%
Transportation and Warehousing +6.0%

Change in average weekly wages, Mar 2023 - Mar 2024
Construction +6.1%
Manufacturing +4.9%
Transportation and warehousing +6.5%

Increased construction jobs and higher wages in all 3 of these fields sure seem like something the Biden campaign should seize on, eh? Well, if a certain demographic wants to listen to it, and care about making ends meet instead of claiming they are blue-collar because of "culture".

But I don't think you can deny that America's jobs market was still in a very good place in March 2024. And the lame attempts by right-wingers to deflect from this reality should be seen as the desperation that it is.

Thursday, April 4, 2024

Corporate America still using "inflation" and market control to grab more profit

Before panic about an overly-good jobs report and Middle Eastern tension tanked the stock market today, there was other Wall Street news going on. And in particular this report about Conagra Foods’ strong profit report grabbed my attention.
Conagra Brands topped Wall Street estimates for third-quarter revenue and profit on Thursday, as demand for its pantry staples and frozen food items recovered with more consumers looking to cook meals at home in the face of sticky inflation.

Shares of the Slim Jim beef jerky maker rose about 5% after the company also raised its annual adjusted operating margin forecast and said its cost-saving attempts were paying off….

Easing supply chain concerns have also helped counter the impact from waning price hike benefits. Conagra raised its annual operating margin forecast to 15.8% from 15.6%.

"The efficiency of our operations in Q3 resulted in cost savings that enabled us to fund investment while maintaining gross margin," CFO Dave Marberger said in a statement.
Let me translate that into reality – “we raised our profits in prior years by raising prices of products, and now that costs are being leveled off and cut, we can keep the prices at that same, higher level, and cash in the difference!”

And that goes along with the general trend that we've seen in the country, as we found out last week that corporate profits rose as 2023 drew to a close.

In addition to the higher overall numbers, profit margins per unit also grew in Q4, to their highest marks on record.

That’s an indication of “market power”, aka “a lack of competition allowing a few big corporations to grab more profits”. And it's something the Biden Administration and DC Dems need to be all over this year, in case these corporations try to use that “market power” to jack up prices to anger consumers, and increase their chances of keeping the Trump tax cuts in place that has given added benefits to this profit-hoarding behavior since 2017.

Monday, April 1, 2024

Wisconsin's income and growth ended 2023 strong, but was weak earlier in the year

Saw this post from UW-Madison Professor Menzie Chinn on Wisconsin's economy at Econbrowser. It includes this graphic that sets the baseline in late 2021, and adjusts the state's wages/salaries and GDP for inflation.

It's quite a remarkable difference between GDP and the coincident indexes (both of which are measures of the overall economy). The GDP figures indicate the state was in recession for most of 2022 and part of 2023, but the coincident indexes show solid and steady growth in the state. So what's right?

I'd trust the coincident indexes, as the jobs numbers also have continued to rise (the NFP numbers), and we saw consistent wage and salary growth above inflation for all of 2023. But you can also see things level off in early-mid 2022 with the spike in inflation, indicating that there was an effect where people weren't necessarily losing jobs, but their wages weren't keeping up with the 10-12% annual rate of price hikes during the first half of that year.

But as inflation has faded, wages and jobs have kept on growing in Wisconsin, and we are generally better off than we were at the end of 2021. And Professor Chinn added the final numbers after last week's state GDP and income report from the Bureau of Economic Analysis. As the GDP figures indicate, growth in that category came back in the second half of 2023 in Wisconsin, and the state actually ended up tied with Indiana for the best GDP growth in the Midwest in the last 3 months of the year, at 4.3%.

But you can also see from the chart at the top of the post that Wisconsin's GDP (allegedly) fell in the first part of 2023, and it means that the state's annual-level GDP only went up by 0.2% for last year. Not great on the 12-month time frame, but pretty good in the last 6 months, creating momentum going into this year.

Unlike GDP, Wisconsin’s overall income grew in every quarter of 2023, and was pretty consistent throughout the year.

The finishing quarter's income growth of 4.2% was 2nd best in the Midwest, and in the top 20 for America.

And even better within that income stat, Wisconsin had the strongest growth in earnings in our part of the country over the last 3 months of 2023.

Change in net earnings, Midwest Q4 2023
Wis. +5.0%
Ohio +4.5%
Ind. +4.5%
Mich +4.4%
Minn +3.6%
Ill. +3.4%
Iowa -0.1%

But on an annual basis for growth in earnings, we are not as impressive - smack-dab in the middle of the Midwest at 4.6%. We also lagged the US rate of 5.6% for earnings growth. Likewise, our annual income growth of 4.4% falls behind the U.S. rate of 5.2%, which leaves us at 41st in the nation (although we are also penalized due to Wisconsin's lower population growth vs the rest of the US).

So to sum things up using these numbers, it appears that a slow first half of 2023 in the Wisconsin economy picked up steam in the second half of the year. I also noted that recent revisions placed Wisconsin job growth as lower in early 2023 compared to better numbers later in the year. So while we continued to have a slower-but-still growing economy and jobs market last year, the ending kick seems could be something that can build upon itself for the start of 2024.

Saturday, March 30, 2024

Who's growing and who's losing people in Wisconsin in the 2020s?

Earlier this month, the Census Bureau released their population estimates for all US counties for 2023, and it gives some valuable insights into what is happening in Wisconsin.

I'll let UW-Madison's Applied Population lab give a couple of the highlights, and then I'll discuss more about it.

No surprise that Dane County continues to be the leader among state counties for population growth. It's been that way for most of the last 20 years, and as the graphic shows, Dane County has added more than twice the amount of people as the next closest county. Heck, outside of Dane County the REST OF THE STATE only added 3,400 people over the last 3 years.

But Dane County's growth in the 2020s is dwarfed by what Milwaukee County has lost in the same time period. The state's most-populous county lost more than 23,000 people in this time period, while no other Wisconsin county lost more than 1,662.

As you can guess, a big reason behind that is people moving out of Milwaukee, and into the adjacent WOW Counties. And another big beneficiary of this trend is St. Croix County, the western edge of which is part of the Twin Cities metro area.

The other area of the state that's seeing a large influx of people moving in during the 2020s are areas of Wisconsin with lots of lakes and increasing numbers of reitrees.

Put these two trends together, and it's no surprise who are the state's largest gainers when it comes to net migration from within America.

I did expect Dane County to be on this list, but they just fell short with a domestic migration gain of 1,156. However, Dane County also gained nearly 6,500 people from international migration, and Milwaukee County added nearly 7,700. Those two counties make up well more than half of the nearly 25,000 that net immigration has added to the state's population since 2020.

Dane and Milwaukee Counties are also on the right side of the third leg of population changes, which is the "natural change" of births vs deaths. Both Dane and Milwaukee have sizable gains in this category, and the counties that house Green Bay and (most of) Appleton have also added more than 1,000 people in the 2020s through more births than deaths.

But the state as a whole has had over 2,300 more deaths than births, with much of those losses over this 3-year period being chalked up to the thousands of excess deaths that happened during the pandemic years of 2020 and 2021. I'll also note that this has mitigated some of the gains through migration that some of Wisconsin's counties have seen, with Waukesha County suffering the largest number of losses.

Put these stats together, and it indicates some interesting changes in where people live in Wisconsin compared to 2020. Dane County keeps growing while Milwaukee County keeps losing, and there is a clear replacement of older people in the WOW Counties (where Ozaukee and Washington Counties also had more deaths than births) with others moving in from Milwaukee County and elsewhere. In the rest of Wisconsin, much of the population is stagnant except for places with lots of natural beauty and overall attractiveness for people to relocate to. Might be a good tip for what to invest in to get more people to want to come here, eh?

Demographics in this state still aren't great for organic, long-term growth, but the large-population counties of Dane and Milwaukee buck that trend with favorable demos, if they can hold on to the people that live there. In Milwaukee this has been a challenge with losses that need to be reversed, but Dane County has been able to grow in all areas, with success building upon success.

If you look these numbers for all US states, it could be worse, as Michigan and Ohio still had more deaths than births in 2023, unlike Wisconsin. And the Badger State had the largest increase net domestic migation last year with 2023. Both are good signs for the future, and tells us that Wisconsin could be in a position to keep improving our demographics and population for the rest of the 2020s, if we push our advantages and keep our economy and quality of life in a strong place.

Friday, March 29, 2024

Higher spending, not-as-high incomes. But wages and salaries keep going up. I'll take it

The always-important income and spending reports for February came out on Friday, and it showed American consumers stepped up last month, but some other things that weren't so great to see.

That's a big jump in spending, and well past the rate of inflation, which shows a nice recovery from January's inflation-adjusted decline in consumption. It gets us back in line with the upward trend that we've been in since the end of 2022.

But the strong spending and the PCE number of 0.3% wasn't something that certain Wall Streeters were looking for, as they want weaker numbers on both fronts to further encourage the Federal Reserve to cut rates from the two-decade highs they are currently at.

Yeah, I'm not so sure about that. To begin with, the last two months of core PCE increases are listed as 0.5% and 0.3%, but it’s really only 0.45% for January and 0.26% for February, so you wonder what these experts would be saying with a tiny fraction allowing the numbers to round down to 0.4% and 0.2%. Yes, it's still a bit hot (it places the annual rate somewhere around 4.3%), but also 1% below what our Fed Funds rate is right now. And if you go out to the last 6 months and the last 12 months, our annualized PCE increase still comes in around 2.8-2.9%.

And The only real concern I’d have in this report is that the 0.8% and $145.5 billion (annualized) jump in spending was far above the 0.3% and $66.5 billion increase in incomes, leading to a sizable drop in the savings rate from 4.1% to 3.6%. But even that doesn’t seem so bad when you realize that wages and salaries went up by $92 billion last month, the best in more than a year for that category.

And then I was looking inside the numbers at the full report and saw that income growth was only restrained last month because a big jump in dividends that happened in January wasn’t repeated in February. Take out dividends and interest income, and you see that we had continued strong growth in income from all other factors (aka “the ones that most non-rich people get their funds from”).

Increase in income LESS dividends and interest income
January 2024 +0.83% (+162.9 billion)
February 2024 +0.72% (+144.1 billion)

I don’t anticipate underlying income growth to stay at a 9% annual pace for the rest of 2024 (although that would probably be awesome), but I do think it means our overall economy is still in a very good place. Yes, we need to see inflation stay around that 3% annual rate and we also need to have wage increases continue above that level. But if this holds, and especially if the Fed starts getting rates back toward the reality of a 3% inflation world, we have a good chance of continuing the good numbers we saw in 2023.

Tuesday, March 26, 2024

Wis adds jobs in February 2024, and new revisions show faster 2022 and slower 2023.

Came down with a case of March Madness where I needed to travel out of state last weekend. But I'm in recovery now, and I noticed that while I was out, we got a Wisconsin jobs report for February.
Place of Residence Data: Wisconsin's unemployment was 3.0% in February. The number of unemployed people decreased 4,800 over the month to 95,600. The labor force decreased 4,900 over the month and increased 35,500 over the year to 3,143,300. The number of people employed decreased 100 over the month and increased 21,000 over the year.

• Place of Work Data: Total nonfarm jobs increased 3,200 over the month and 22,400 over the year to a record high 3,030,900 jobs in February. Private sector jobs increased 15,700 over the year and held steady over the month at 2,621,500.
Not bad, although I'll note that the drop in the unemployment rate from 3.2% to 3.0% was entirely due to those 4,900 people leaving the Wisconsin labor force. Still, a pretty good situation overall.

What's more interesting to me is that we also have received updated jobs data for Wisconsin over the last few years, based on more refined data. The losses of 2020 and gains of 2021 are basically the same as we had reported before, but the newly released revisions show that Wisconsin’s job growth was faster in 2022 than we originally knew, and leveled off significantly in 2023.

This helps fill in some of mystery as to why Wisconsin’s tax revenues kept growing well beyond what would be expected in 2022 and into early 2023. It also helps explain to me why revenue growth has disappointed in the year after that, because we didn’t grow as many jobs, and nominal wage growth and inflation also moderated over the same time period.

Looking at the sectors, we see that there was more hiring in manufacturing in early 2022 than what was first indicated, but employment in that sector started falling off earlier than we thought. On the positive side, manufacturing jobs in the state seem to have bottomed out 6-8 months ago, and is now back on the rise.

The newly benchmarked figures reiterated the strength in construction hiring in Wisconsin over the last 2 years, improving on an already-strong number.

We also see that Wisconsin’s leisure and hospitality employment rebounded even quicker from its COVID-era losses, with those gains continuing at the start of 2024.

So we should look at these newly revised numbers and perhaps re-evaluate where we are in Wisconsin. It seems to me that we had two strong years of job growth in 2021 and 2022, but 2023 saw that slow down. While we are still adding jobs, and having a 3.0% unemployment is unquestionably a good thing, we need to make sure that we are expanding our capacity and attractiveness to workers and families to want to come here and stay here. Or else we could well stagnate in 2024, and be limited in how much more we can keep this good thing going.

Wednesday, March 20, 2024

Powell, Fed soothe worries, and seem to understand that jobs and paying bills >>>> CPI at 2% vs 3%

There was quite a bit of nervousness around Wall Street and everyday investors over what officials at the Federal Reserve might say today. Not that there was any expectation of a change in the central Fed Funds rate, but they wanted clues as to when (or if) the Fed might start cutting rates from their 23-year highs.

The worries got elevated after a couple of reports from last week showed inflation has had a bit of a pickup from the sub-2% rate that it was running at the end of 2023. So Fed Chair Jerome Powell and the rest of the Open Markets Committee released their statement, in which they said....

And the response to that statement and Powell's 2:30pm press conference reiterating that guidance was...

Woo-hoo! Things haven't changed! Good show, Mr. Fed Chair!

I thought was stupid that some were thinking that things had fundamentally changed, and that this would change the interest rate outlook. Job growth is strong, but not at the boom levels we've been at. Inflation may not be at 2%, but it's still hanging at around a 3% rate, as wage growth is at 4-5%, while the Fed Funds rate has stayed at a punitive 5.25%-5.5%.

I'd argue that one of the few overhangs in the economy is an offshoot of the high interest rates, and that's the increasing cost of debt.
Two years after the Federal Reserve began hiking interest rates to tame prices, delinquency rates on credit cards and auto loans are the highest in more than a decade. For the first time on record, interest payments on those and other non-mortgage debts are as big a financial burden for US households as mortgage interest payments.

The figures suggest a difficult reality for the millions of consumers who are the engine of the US economy: The era of high borrowing costs — however necessary to slow price increases — has a sting of its own that many families may feel for years to come, especially the ones that haven’t locked in cheap home loans. And the Fed, which meets next week for a policy decision, doesn’t appear poised to cut rates until later in 2024.

As monthly debt payments take up more of workers’ paychecks, those consumers are more exposed to potential economic contractions.

And the cost of money affects people’s perception of their own prosperity: A February paper from IMF and Harvard University researchers posits that the recent high cost of borrowing — which isn’t captured in inflation figures — is key to understanding why consumer sentiment remains lackluster even as inflation has moderated and businesses are hiring at a healthy pace.
This is where the Fed can really make a difference by putting interest rates back toward the middle of what we've had most of the last 30 years. And at the same time, lowering rates can lessen the chances of people having to make significant cutbacks to their spending habits, and businesses from seeing more defaults that can lead to the downward cascade that ends up in recession and job loss.

Sure, some may think there's a "mandate" to get inflation down to 2%, and that should be emphasized over jobs or paying bills. But as I've mentioned in the past, that 2% goal was something that was just made up in the last 20 years, and that most growing times in the late 20th century had inflation of 3-4%.

With that in mind, I'd rather err on the side of minor inflation over recession and job loss. And given the circumstances in 2024, the best ways to stave off even the possibility of economic decline is to start lowering rates from the high levels that they're at today. Hopefully it comes sooner than later.

Tuesday, March 19, 2024

With oil and gas rising, at least the US has improved on supply and demand to limit any damage

As gas prices have consistently risen in the last two months (some of it being seasonal, but some of it beyond seasonal), I've been keeping an eye on the oil markets to see where things may be going with this. And I can't say that this week's headlines are making me feel good.
Oil prices rose to multi-month highs for the second straight session on Tuesday as traders assessed how Ukraine's recent attacks on Russian refineries would affect global petroleum supplies.

U.S. West Texas Intermediate crude futures gained 75 cents, or 0.9%, to settle at $83.47 a barrel, the highest since Oct. 27. Global benchmark Brent crude settled 0.6% higher at $87.38 a barrel, the highest since Oct. 31.
The article goes on to say that that the attacks may reduce Russian gas output by 350,000 barrels a day, but since we're not really buying Russian stuff as it is, should it jack up availability of oil or gas in the US?

Yes, I know "world price" and everything, but I also want to look at the supply and demand situation here in the US, to see if we can adjust to these price rises, and to see if we've already made adjustments in the face of 2022's gas price gouging increase.

At the same time, I noticed that the last data we have goes through the 2nd week in March, and in 2020, that was the last full week before much of America began to shut down due to COVID restrictions. So let's do two things at once, and see how much gasoline was available and being used before the we went into pandemic mode, and how much we have today.

Even with gas usage going up in early 2024, consumption is still significantly lower than the peak usage that we were seeing in early 2020, despite more Americans working now than then.

In addition, despite some suspiciously-timed refinery shutdowns in our country the first quarter of 2024, gasoline is more plentiful in America now than in most of the last 10 Marches.

But yet we see Wall Street continuing to bet up oil and gasoline futures, which likely means that pump prices will go higher in the next couple of months. Which likely means an annoying INFLATION WATCH combined will continue through early Summer.

Because people are already likely to be unhappy about gas prices through the Spring, they may misdirect their rightful anger at a President and Democratic Party who will be facing the voters in 7 1/2 months. But it does seem that the White House is in an improved position to step in and bulk up our already-sizable supply of oil and gasoline.

U.S. crude oil stockpiles in the Strategic Petroleum Reserve (SPR) at year-end will be at or exceeding the level prior to a massive 180 million barrel sale two years ago, U.S. Energy Secretary Jennifer Granholm said on Monday.

The U.S. is replenishing the SPR, after President Joe Biden's administration announced a sale of 180 million barrels of oil over six months from the reserve, the largest ever SPR sale, in an attempt to lower gasoline prices after Russia invaded Ukraine.

While the Department of Energy only expects to replenish by the end of this year about 40 million barrels since the 180 million sale, another 140 million barrels that would have been drained from 2024-2027 will stay in the SPR due to the cancellation in 2022 of congressionally mandated sales.
I would add that the Biden Administration needs to be ready for any future sabotage by overseas countries (Saudi Arabia didn't pay Jared Kushner all that money for nothing), and supply manipulation by oil companies at home. The White House needs to get and stay ahead of the curve on this, and show the public you're going to take action to limit gas price increases at home. Both in putting more oil onto the market (to increase supply and cool off speculation) and in warning the American people about any attempts for manipulation from oil oligarchs at home and abroad.

Tuesday, March 12, 2024

Decent February job growth. But the boom times may be ending

Been out of town so can't write too much, but I wanted to give a quick rundown on the February US jobs report that came out last Friday.

If you look at the topline, the nunbers are an odd mix of job growth and higher unemployment.

But note the reference to 229,000 jobs in January and 290,000 in December. That's quite a bit less than the 353,000 in January and 333,000 in December that were reported in the previous jobs report. Which makes me wonder how this report would have been received if it was 108,000 jobs added and no revisions (which is the net change). Ironically, Wall Street probably woud have liked it more, since those numbers might have encouraged the Federal Reserve to cut rates sooner rather than later.

On the flip side, the average increase of 265,000 jobs a month since December is the fastest 3-month growth period since last Summer. And while average hourly wages only rose by 0.14% in February, the average weekly wage rose by 0.44%, due to a longer average work week. That's the reverse of January's report, which had hourly wages up by 0.52%, but weekly wages were down by a little less than 0.1%.

I also noticed that the strong growth in construction jobs continued in February, with 23,000 more jobs that month and 215,000 over the last year. It also contrasted with a loss of 4,000 jobs in the manufacturing sector, continuing a trend where hiring in manufacturing has mostly flatlined over the last 18 months even as construction keeps rolling along.

The leading sector in US job growth continues to be health care, with more than 66,000 jobs added in February, and more than 720,000 over the last year. After losing sizable amounts of employees during the COVID pandemic, health care employment finally got back into its pre-COVID levels in late-2022. And since then, it's been a strong and steady rise up, as nearly a million more people are working in the health care sector than they did before the pandemic.

To me, things are still in a decent place in the US job market in early 2024. Hiring continues, even if the pace is a bit slower than the boom times of 2021-early 2023. And while we should keep an eye as to whether unemployment keeps nudging higher, a 3.9% rate is still nowhere near a danger zone of recession. Wage growth is staying decent, and generally ahead of the rate of inflation (February was an exception for hourly wages...although not for weekly wages).

Can't complain too much, but it also feels like things won't be as easy as they were. Suppose that's to be expected when things have been so good for so long, but that doesn't mean people haven't started to get used to it, and it'll be interesting to hear the spin if/when job growth falls to the 178,000-a-month pace that we had in the first 3 years under Donald Trump.

Wednesday, March 6, 2024

Updated "gold standard" jobs report show a big North/South difference in Wisconsin

Got the new, thorough figures from the "gold standard" Quarterly Census of Employment and Wages (QCEW) today. This includes all sectors of the US jobs market, and goes down all the way into the county level for all states, including Wisconsin.

In the numbers for our state, we had decent-but-not great gains in jobs between September 2022 and September 2023 - 27,736 total jobs added, a rate of slightly under 1.0%. What strikes me is the geographic disparity in job stats among Wisconsin counties. Most counties in the southern third of the state had gains, and some by quite a bit. But most counties in central and northern Wisconsin weren't doing as well, and many lost jobs.

Those areas in orange and red are many of the areas of Wisconsin that have turned toward Republicans in the Trump era, which sounds like a great example of the conditions that seed the White Rural Rage phenomenon that has been well-summarized in a new book by Paul Waldman and Tom Schaller.

But if you try to pin this as a Biden-era trend, you're missing that the same thing was happening over the 12 months that ended in September 2019, when Donald Trump was allegedly presiding over "the greatest economy ever".

And given that Republicans are apparently going to try to play the "are you better off than you were four years ago" card (vs 2020? Bold move there, Cotton!), let's compare to where we were in the pre-COVID times of September 2019, and where we were on September 2023.

Overall, the QCEW says the state has gained a little over 41,500 jobs between September 2019 and September 2023 (+1.43%). But some places have gained quite a bit more than 1.43%.

On the numerical side, stop me if you've heard this before, but Dane County's growth is nearly twice as large as anyone else's. Most of the other largest gainers in the state are in either suburbs/exurbs, or counties on the border of another state.

But we also saw more than half of the state's counties lose jobs over those four years. The highest percentage losses were in rural counties in western, central and northern Wisconsin, with the biggest drop in Jackson County, which shed more than 1 out of the 10 jobs they had.

However, those large % losses are in small-population counties. When you look at the raw numbers, Milwaukee County had by far the largest deficit in jobs out of all of the counties in the state. Down 18,680 jobs in the QCEW reports.

Maybe that whole "defund Milwaukee" thing that WisGOP used as a strategy to stir up MAGA voters isn't something that works out well for an economy (note how Ozaukee County is also on that chart). Maybe the new sales tax and added investments into the state's largest City could reverse the bad numbers on jobs in the area as well.

These new numbers illustrate that while the state is in better economic shape than it was 4 years ago, and continued to grow in 2023, there are places that have lagged behind. And just like how economic success often leads to more success and attractability for workers and businesses, lagging performance and job losses become something that requires a lot of effort to reverse. And Wisconsin lawmakers should be aware of the different outcomes and figure out ways to improve the laggards while keeping the good times going in the places that have been winning.