Sunday, August 25, 2024

"Migrants" aren't taking jobs from working Americans in 2024. Foreign-born replacing Boomers? Maybe

You've probably heard Donald Trump trying to inflame voters when he gives this type of state about the US job market in recent years.

So what is Trump trying to say when he claims “all new jobs have gone to migrants”, and is it BS? CBS Marketwatch looked into it, and the answer is “kind of, but not in the bad way.”
Foreign-born employment is up over the past year, while native-born employment is down, as measured by a Bureau of Labor Statistics household survey. That results in a figure above 100%, which stems from native-born workers retiring as well as a spike in immigration, as MarketWatch’s Steve Goldstein noted in posts on social media.

However, the term “migrants” is not typically used interchangeably with “foreign-born workers.”

The first term can conjure up images of people who recently crossed the southern U.S. border illegally and are working in construction or on farms, though it can cover migrant workers in white-collar jobs. The second term applies to undocumented immigrants as well, but also to naturalized U.S. citizens who have lived in the country for years — in some cases for decades, and in some cases since childhood. An Associated Press report made the same point, saying that “foreign born” is not the same as “migrant.”

About half, according to a recent estimate from Standard Chartered economists Steve Englander and Dan Pan. They offered that estimate in a note dated May 30 as they looked at data covering the federal government’s current fiscal year, which started Oct. 1.

The closely watched monthly U.S. jobs reports might look “moderate” or “hardly boom time” if undocumented workers were not counted in them, the economists wrote. Federal Reserve officials who determine interest rates “might be less hawkish if the impact of undocumented immigrants on [the jobs reports] was well estimated and understood,” the Standard Chartered team added.
Here's Goldstein's tweets on those stats.

There could be an argument that there’s a bit of a dampening in wages due to the increased immigration, but we also likely wouldn’t see nearly as many people working in America in general (both among the foreign born as well as those born in the US). And as the Congressional Budget Office recently noted, the wave of immigration from 2021-2023 should raise the US’s economic output for future years, and reduce its budget deficit.

In addition, America has had a nearly equal amount of births vs deaths in the 2020s, and 2022-2024 are the peak years for Baby Boomers turning 65. So we'd have real capacity problems in this country if it wasn't for more immigration, and likely we'd have seen more shortages and inflation than we had in the post-COVID supply crunch that first jumped prices in 2021.

Let's also point out that the percentage of working-age people in America that have jobs is staying at or above the pre-COVID highs of 80.6%. The only time this number was bigger was at the end of the Dot-com Boom in early 2000, which was also when the first Boomers were 54 and aging out of this stat. So it's not like there are many Americans that have had career opportunities being taken away during the 2021-2023 immigration surge.

Sure, maybe more of those people working between ages 25-54 are foreign-born compared to prior years, but
1. That doesn't mean they're not American citizens, and
2. Even if some of them are not citizens, many immigrants pay into Social Security and Medicare, and almost all take part in transactions in the States outside of work that add to the overall economy.

What is likely is that while the number of native-born Americans in jobs has been stagnant in the last year, that doesn't mean Americans have lost jobs to the foreign born, as it is likely a reflection of younger workers born in America and in other countries that are replacing native-born Boomer-aged retirees. But like a lot of other things in Trump/MAGA world, they mash a couple of mostly-unrelated stats together to create a story that sounds right to them, regardless of whether that matches reality.

But you don't have to be weak, straw-graspers like those SUCKERS. Know that the increase in immigration in the early 2020s has helped the US economy recover faster than almost any other industrialized country from the wreck of the COVID pandemic. And even if you think there needs to be limits on immigration and safeguards on who is coming into the country (as most sensible people do in America), know that Donald Trump and the GOP are the only ones that stopped significant reforms in immigration policy from happening in 2024.

Saturday, August 24, 2024

Powell admits it - rate cuts are coming

Looks like Federal Reserve Chair Jerome Powell has finally seen the light and will adjust policy to match US economic reality.

Under Powell, the Fed raised its benchmark rate to the highest level in 23 years to subdue inflation that two years ago was running at the hottest pace in more than four decades. Inflation has come down steadily, and investors now expect the Fed to start cutting rates at its next meeting in September — an expectation that essentially got Powell's endorsement Friday.

“My confidence has grown that inflation is on a sustainable path back to 2%,” Powell said in his keynote speech at the Fed’s annual economic conference in Jackson Hole.

He noted that inflation, according to the Fed's preferred gauge, had fallen to [a 12-month rate of] 2.5% last from a peak of 7.1% two years ago. Measured by the better known consumer price index, inflation has dropped from a peak 9.1% in mid-2022 to 2.9% last month. Both are edging closer to the Fed's 2% target.

Powell sounded confident that the Fed would achieve a so-called soft landing — containing inflation without causing a recession. "There is good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market,'' he said.
I still think a goal of 2% inflation is arbitrary and off-base, given that (as I've mentioned before) the US economy grew plenty of jobs and output with inflation of 3-4% throughout the 1980s and 1990s. But regardless, inflation has cooled off after the profiteering and shortages price spikes of 2021 and 2022, and PCE inflation has been pretty consistently below 3% for a year now, other than when business got one last chance to re-set prices at the start of this year.

We still have to wait until September 17 to get those lower rates on credit cards and other Fed-connected items, and that's still a few months too late. And the real question is whether the rate cut will be a catch-up of 50 basis points, or only 25 points, which allows for more cuts as we move toward 2025.

But it is nice for the Fed to acknowledge that we are in a spot where caring about recession is at least worth worrying about as much as price levels, which is a bias I have in general (it's more important to have jobs, wages and growth), and it'll be fun to watch Trump's head snap off when the Fed does that overdue cut in 3 weeks.

Thursday, August 22, 2024

Wis loses jobs in July. But no need to panic yet.

As US job growth slowed in July, we had an outright step backward for jobs in Wisconsin in that same month.
Preliminary employment estimates for July 2024 showed Wisconsin's seasonally adjusted unemployment rate was 3.0%, which is 1.3 percentage points below the national unemployment rate of 4.3%. The state's labor force participation rate held steady at 65.5% in July while the national rate was 62.7%.

• Place of Residence Data: Wisconsin's unemployment rate was 3.0% in July, 1.3 percentage points below the national rate of 4.3%. Wisconsin's labor force increased 2,800 over the month and increased 1,800 over the year. The number of people employed increased 1,300 over the month to a record-high 3,049,700 employed.

• Place of Work Data: Total nonfarm jobs decreased 6,500 over the month and increased 25,700 over the year to 3,035,100 jobs. Private sector jobs decreased 8,500 over the month and increased 17,900 over the year to 2,625,700 private jobs.
That is not good, and it mostly wipes out the gains we saw since March.

However, I also don’t think this jobs report means we plunged into recession last month, and not only because month-to-month variances at the state level can be jumpy. I’ll note that the biggest drop in jobs in July happened in the Leisure and Hospitality sector, with a seasonally-adjusted decline of 4,400 jobs. However, I’ll note that this isn’t due to a wave of bars, restaurants and hotels closing, but instead is due to the sector having an lower-than-normal increase in positions for July (+3,400 overall, and +3,700 in accommodations and food services).

We’ll see if this reverses in the coming months when the seasonal adjustments count on layoffs in this sector as the Summer ends. Likewise, while it’s concerning to see the previously-growing Construction (-1,000 jobs, seasonally adjusted) and Manfacturing (-200) sectors lose out in July, it also reflects lower-than-normal seasonal hiring. So while I don't like to see the seasonally-adjusted decline in Construction since March, let's see if that is just a lack of hiring instead of cutbacks. And the overall trend of manufacturing is still in a good direction.

So while Wisconsin did have a bad jobs report for July, I’ll hold off on the panic until we see the seasonal-adjusted numbers in September and October.

And in the wake of lower revisions for US job growth after the release of the Quarterly Census of Employment and Wages (QCEW), I wanted to see if Wisconsin's past job growth might also be reduced. It looks like there is a slight difference, but nothing that changes the overall story (+0.6% in the QCEW, +0.75% in the monthly job reports).

So to summarize, July's jobs report for Wisconsin was lacking, but I'll wait for the coming months of data before I think it shows any kind of turning point from what had been decent job growth in 2024 before last month.

Wednesday, August 21, 2024

Job growth revised down by a lot, makes Fed delay in rate cuts look worse

Wednesday morning, the US Bureau of Labor Statistics released the newest update of the “gold standard” Quarterly Census of Employment and Wages (QCEW), taking us through the 1st Quarter of 2024. This report said that overall jobs in the US grew by 1.3% between March 2023 and March 2024. Taken in isolation, this means that growth was decent, but nothing special.

However, the 1st Quarter QCEW numbers also are accompanied with preliminary revisions of the monthly job reports that grab the headlines when they come out. And that news was concerning, since it says job growth wasn’t nearly as good as what was first reported in those monthly reports.
Each year, the Current Employment Statistics (CES) survey employment estimates are benchmarked to comprehensive counts of employment for the month of March. These counts are derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. For National CES employment series, the annual benchmark revisions over the last 10 years have averaged plus or minus one-tenth of one percent of total nonfarm employment. The preliminary estimate of the benchmark revision indicates an adjustment to March 2024 total nonfarm employment of -818,000 (-0.5 percent).

Preliminary benchmark revisions are calculated only for the month of March 2024 for the major industry sectors in table 1. The existing employment series are not updated with the release of the preliminary benchmark estimate. The data for all CES series will be updated when the final benchmark revision is issued.
Breaking it down by month, you can see that the bigger monthly revisions will likely come with the second half of 2023, as 12-month job growth was closer to 1.5% than the 2%+ rate that was originally reported.

The financial media especially took note of this, because the booming job growth that was being reported in late 2023 and early 2024 (something I was guilty of touting at the time) has now been reduced to just over 2 million for the 12 months between March 2023 and March 2024.

Now let's take a step back and admit that 2 million jobs added and a 1.3% rate of growth is still pretty good, especially when we consider unemployment was at 3.5% in March 2023, so there was only so much more we could have grown. It’s no different as the 12-month rate and amount of job gains that we saw in 2019 and pre-COVID 2020 under Donald Trump, when we had a similarly low level of unemployment, and just below what we did in 2018.

But the difference is that when job growth slowed down in a full-employment situation in 2019 (as shown by the red line), the Federal Reserve caved to Donald Trump and began cutting the Fed Funds rate that Summer from a not-that-high 2.25%-2.5% down to 1.5%-1.75%. Those 3 rate cuts happened before we even knew COVID-19 was a thing.

In 2024, despite clear signs that job growth, inflation, and nominal wage growth have been going lower, the Fed has refused to cut interest rates from a level that is more than double where we were in 2019. The economic situation isn’t much different than what it was 5 years ago, except that in 2024 unemployment has been slowly rising in the last few months (albeit still low at 4.3%), unlike 2019, when the unemployment rate stayed below 4% all year.

The downward revisions in job growth means that the Fed is even more behind the curve on reducing these punitive interest rates than we first thought, which fed even more speculation on Wall Street as to how fast and how much the Fed will cut starting in September.

Then the Fed released the minutes of their last Open Markets Committee meeting from 3 weeks ago, which gave insights as to what they felt was the economic situation, and why they chose not to start cutting rates. In reading those minutes, it looks committee members at the Fed acknowledged that things had slowed down, with some members wanting a cut last month, but they were outnumbered by the rest of the FOMC, and held off for another 6 weeks.
In their consideration of monetary policy at this meeting, participants observed that recent indicators suggested that economic activity had continued to expand at a solid pace, job gains had moderated, and the unemployment rate had moved up but remained low. While inflation remained somewhat above the Committee's longer-run goal of 2 percent, participants noted that inflation had eased over the past year and that recent incoming data indicated some further progress toward the Committee's objective. All participants supported maintaining the target range for the federal funds rate at 5-1/4 to 5-1/2 percent, although several observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at this meeting or that they could have supported such a decision. Participants furthermore judged that it was appropriate to continue the process of reducing the Federal Reserve's securities holdings.

In discussing the outlook for monetary policy, participants noted that growth in economic activity had been solid, there had been some further progress on inflation, and conditions in the labor market had eased. Almost all participants remarked that while the incoming data regarding inflation were encouraging, additional information was needed to provide greater confidence that inflation was moving sustainably toward the Committee's 2 percent objective before it would be appropriate to lower the target range for the federal funds rate. Nevertheless, participants viewed the incoming data as enhancing their confidence that inflation was moving toward the Committee's objective. The vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting. Many participants commented that monetary policy continued to be restrictive, although they expressed a range of views about the degree of restrictiveness, and a few participants noted that ongoing disinflation, with no change in the nominal target range for the policy rate, by itself results in a tightening in monetary policy. Most participants remarked on the importance of communicating the Committee's data-dependent approach and emphasized, in particular, that monetary policy decisions are conditional on the evolution of the economy rather than being on a preset path or that those decisions depend on the totality of the incoming data rather than on any particular data point. Several participants stressed the need to monitor conditions in money markets and factors affecting the demand for reserves amid the ongoing reduction in the Federal Reserve's balance sheet.

In discussing risk-management considerations that could bear on the outlook for monetary policy, participants highlighted uncertainties affecting the outlook, such as those regarding the amount of restraint currently provided by monetary policy, the lags with which past and current restraint have affected and will affect economic activity, and the degree of normalization of the economy following disruptions associated with the pandemic. A majority of participants remarked that the risks to the employment goal had increased, and many participants noted that the risks to the inflation goal had decreased. Some participants noted the risk that a further gradual easing in labor market conditions could transition to a more serious deterioration. Many participants noted that reducing policy restraint too late or too little could risk unduly weakening economic activity or employment. A couple participants highlighted in particular the costs and challenges of addressing such a weakening once it is fully under way. Several participants remarked that reducing policy restraint too soon or too much could risk a resurgence in aggregate demand and a reversal of the progress on inflation. These participants pointed to risks related to potential shocks that could put upward pressure on inflation or the possibility that inflation could prove more persistent than currently expected.
Now what if the Fed knew that the number of jobs in America was quite a bit less than what was being reported at the time? I got a feeling they would have cut, to the relief of many Americans and businesses. Even with the data that we had at the time, it made little sense to me why the Fed wasn't cutting earlier this year.

Data for July that has come out since that Fed meeting include a disappointing jobs report, tame inflation figures, and a significant drop in housing starts. All of these items support a move to lower interest rates.

So now the question becomes whether the decision-makers at the Fed have to catch up to the interest rate cut that they should have made 3 weeks ago, and put in a cut of 50 basis points in mid-September. It would be a drastic move, but given that the new data indicates the Fed made the wrong choice in July based on what the economic situation dictated, it would only be fair if they doubled a 25-point cut to make up for it.

Sunday, August 18, 2024

Inflation stays tame in July, and any econ panic is now gone.

As it’s been for much of the last 18 months, inflation is still in check in America.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis, after declining 0.1 percent in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.9 percent before seasonal adjustment.

The index for shelter rose 0.4 percent in July, accounting for nearly 90 percent of the monthly increase in the all items index. The energy index was unchanged over the month, after declining in the two preceding months. The index for food increased 0.2 percent in July, as it did in June. The food away from home index rose 0.2 percent over the month, and the food at home index increased 0.1 percent.

The index for all items less food and energy rose 0.2 percent in July, after rising 0.1 percent the preceding month. Indexes which increased in July include shelter, motor vehicle insurance, household furnishings and operations, education, recreation, and personal care. The indexes for used cars and trucks, medical care, airline fares, and apparel were among those that decreased over the month.

The all items index rose 2.9 percent for the 12 months ending July, the smallest 12-month increase since March 2021. The all items less food and energy index rose 3.2 percent over the last 12 months and was the smallest 12-month increase in that index since April 2021. The energy index increased 1.1 percent for the 12 months ending July. The food index increased 2.2 percent over the last year.

The low increase in inflation also means that the tepid gain in average hourly wages still beat the CPI for July, allowing for a third straight month of higher real hourly wages.

We also got an indication this week that businesses aren’t being constrained by higher costs either, as the Producer Price Index had a mild increase of 0.1% for July. In addition, the PPI has only gone up by 0.3% in the last 3 months, and 2.2% over the last 12 months.

Oh, and remember all the panic less than 2 weeks ago after a subpar jobs report (that still showed we added jobs) and fears of a blowup in the tech sector caused a big selloff? The DOW Jones lost more than 2,100 points in 4 days at the time.

What's happened since then? No further panic or bad news in the sector, unemployment claims have stayed low, and the DOW has already regained more than 90% of what was lost in that decline.

The DOW is now back above 40,000, and while the Fed still bungled this by not cutting sooner (as shown by shelter prices staying high in no small part due to a lack of supply, as higher rates are discouraging the selling and construction of homes), we are also in a steady enough place that we don’t need an inter-meeting cut (which would have caused even more panic on Wall Street because it would indicate things were falling apart). But in all, we are in a good place, and unless the Fed decision-makers are completely in the bag from Trump, the only question is how big next month's rate cuts will be.

No wonder why Mitch McConnell’s dark money group is going to pollute our state’s airwaves with millions of ads that seem to say nothing beyond “SCARY DARK PEOPLE. BLAME TAMMY BALDWIN.” They really can’t counter much when it comes actual policy that Baldwin has supported, and can’t moan about inflation any more (especially since GOPs have no clue how to slow it down beyond screwing workers), except to complain about what happened 2 years ago. So racism and fearmongering for shut-ins it is!

Saturday, August 17, 2024

Consumers still spending, but housing falling. All the more reason to cut rates

After a couple of weak months of retail sales and a soft jobs report for July, how have American consumers been holding up?

Turns out they were glad to go to the stores and buy stuff at a surprisingly high rate.
Consumer spending held up even better than expected in July as inflation pressures showed more signs of easing, the Commerce Department reported Thursday.

Advanced retail sales accelerated 1% on the month, according to numbers that are adjusted for seasonality but not inflation. Economists surveyed by Dow Jones had been looking for a 0.3% increase. June sales were revised to a decline of 0.2% after initially being reported as flat.

Excluding auto-related items, sales increased 0.4%, also better than the 0.1% forecast.

There was also good news on the labor market front: Initial unemployment benefit claims for the week ended Aug. 10 totaled 227,000, a decrease of 7,000 from the previous week and lower than the estimate for 235,000.

Gains in sales were propelled by increases at motor vehicle and parts dealers (3.6%), electronics and appliance stores (1.6%), and food and beverage outlets (0.9%). Miscellaneous retailers saw a plunge of 2.5% while gas stations saw receipts climb just 0.1% and clothing stores were down 0.1%.
With consumers being around 70% of US economic growth, it's a good sign that Americans keep spending at the stores.

But there was one dark cloud on an otherwise bright week of economic news. We found out on Friday that there were a sizable decline in new housing activity for July.
Housing starts fell to a 1.24 million annual pace from 1.33 million in June, the government said Friday. That's how many houses would be built over an entire year if construction were at the same rate each month as in July….

Housing starts fell to the lowest level since May 2020. Outside of the pandemic, new-home construction was at its lowest level since March 2019.

A big drop in single-family construction pulled the overall figure down, even as multi-family starts moved up.

Building permits, a sign of future construction, fell 4% to a 1.4 million rate.
It's a 5th straight month of declining single-family housing starts, and single-family and multi-unit permits have also been down in recent months.

That's noticeable deterioration, and all the more reason to show that the Fed screwed up by not cutting interest rates at its meeting last month. Home-building and home affordability continues to suffer with these excessive rates, and it’s the biggest drag on our economy at this time. In addition, with the lack of new housing being built, we also need lower rates to encourage more existing homes to go on the market (since selling out of a 3-4% mortgage isn't worth it when you have to borrow at 6-7%).

That home-building and affordability drag is being overcome for now by the fact that the overall US economy is still in a good place. Wages are still exceeding a dwindling amount of inflation, unemployment claims are staying low, and consumer spending continuing to grow. But if the housing sector isn’t turned around soon, and activity does stop sliding, that’s the kind of thing that then starts tipping over into job losses and real problems.

Wednesday, August 14, 2024

When it comes to WisGOP tricks, Wisconsin voters say HELL NO

Another nice election night for the good guys in Wisconsin, as Marquette Professor Philip Rocco breaks down at Dan Shafer's site.

The “No” campaign was thus wise to go beyond partisan appeals and to focus on the substantive implications of the legislation for the release of federal emergency aid, as well as their violation of core small-d democratic values, including the legislature’s use of the constitutional amendments to undermine “checks and balances.” Well-timed ads by groups opposing the amendments were buoyed by a raft of op-eds and letters to the editor in publications around the state. The voices opposing the amendment included not just popular Democratic Party leaders but small-business owners, first responders, and farmers. This not only dragged the amendments into the harsh light of day, it illustrated a broad, cross-cutting coalition of Wisconsinites opposed to them for a variety of reasons.

By casting a spotlight on the amendments’ effects, the opponents also forced the “Yes” side to identify themselves, and to put their arguments into the public sphere. This expanded the scope of conflict further still by illustrating that the only visible public constituency in support of the amendments were the allies of Republican legislators, who would gain greater power if they were enacted.
And it further ID'd the amendment as self-absorbed partisan BS that didn't have any principles behind it beyond being yet another power grab by a soon-to-be-ungerrymandered Legislature. Putting the vote in August instead of November made it seem even more sleazy, and the tactic likely backfired on Robbin' Vos, Tyler August Devin LeMahieu and other Koched-up GOP dweebs who think they are much more clever than they actually are.

the And as is habit when Dems win big in this state, the NO votes didn't just come from Milwaukee and Madison, but from throughout the state.

I'll especially note that NO went down in all three of the BOW counties in the Fox River Valley (Brown, Outagamie and Winnebago), even though much of that area had a heavily contested Republican primary for Congress.

Yesterday's vote also continued a big movement toward Dems and Dem-supported positions in Milwaukee suburbs that has happened over the last 10 years. It has turned an area that used to be the bedrock of the state's GOP and a source of huge statewide Raepublican margins into an increasingly purple area that more than offsets any losses Dems have taken in rural Wisconsin.

Hey Duey Stroebel, I see that you're trying to stay in the Legislature for another 4 years by taking a Senate seat that is largely made up of Ozaukee County and the very blue Milwaukee County North Shore suburbs. And you're the public face of the type of behind-the-scenes WisGOP legislative obstruction that everyday voters overwhlemingly rejected yesterday. Good luck running on that record this Fall, Due-bag.

As Professor Rocco notes, Wisconsin voters are tired of the GOP's games, and Ben Wikler and other WisDems made the public aware of what's going on behind the scenes at the Capitol. When the voters were given the plain facts about what the GOPs were trying to sneak behind their backs, they revolted, and the GOP went down hard.
First, it shows that Wisconsin voters simply do not support the aggrandizement of the legislature’s power. We saw a similar result in Janet Protasiewicz’s victory in the 2023 State Supreme Court election — a result which led to the historic reversal of the state’s legislative gerrymanders. Even in a sleepy, low-turnout August primary, a majority of voters in the Badger State came out to derail a legislative power grab.

Second, Tuesday’s vote illustrates the value of expanding the scope of conflict. Over the last few decades, the safe bet is that if a constitutional amendment is on the ballot, Wisconsin voters will support it.

... [but] [w]ith a strong enough “No” campaign, voters could more easily see — and resent — vagueness and obfuscation in constitutional amendments. Strategic ambiguity can only be called “clever” and only works in the absence of a mobilized electorate.
Sure seems like a theme of "get a Legislature that listens and gets things done that you want" is a good way for Dems to clean up this November. GOPs at all levels have to be reeling, and especially this guy, who "represents" a district that overwhlemingly voted NO yesterday.

Dumb, wrong and LOSING. That's Small-D Van Orden for ya! It's really gonna hurt that guy when he gets Cooked this Fall. And I am here for it!