Following Up: Podcast Now On-Line of Interview on Apple’s Souring Romance with China

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I’m pleased to announce that the podcast of my interview last night on the nationally syndicated radio host John Batchelor’s podcast is now on-line.

Click here for a timely discussion about the possibly sweeping implications for the futures of the U.S. and Chinese economies of Apple’s reported decision to speed up its efforts to move production out of the People’s Republic.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

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(What’s Left of) Our Economy: U.S. Manufacturing Job Growth is Down, but Don’t Count it Out

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As shown by the new (for November) official U.S. employment report, domestic manufacturing’s job creation has been so strong since the CCP Virus arrived state-side in force that even one lagging month didn’t change its recent status as a national hiring leader.

That said, Friday’s report on what are called non-farm payrolls (NFP – the U.S. government’s definition of the American jobs universe) also revealed that, as with the entire economy, manufacturing job creation has downshifted in recent months. Whether it will stall out or worse going forward, however, remains a very open question.

Domestic industry upped payrolls by 14,000 sequentially in November – its weakest performance since shedding 28,000 positions in April, 2021. Revisions were positive, but just mildly, with October’s initially reported gain of 32,000 now pegged at 36,000, and September’s increase remaining at a slightly upwardly revised 23,000.

These results are less impressive than those from the first half of this year, when manufacturers boosted employment by a monthly average of nearly 40,000, and three months saw gains of more than 50,000. Yet since February, 2020 – the last full data month before the virus began spreading rapidly and roiling the economy – industry’s employees have increased by 1.17 percent. That’s better than the gain for the private sector overall (1.16 percent) and for the non-farm economy (0.68 percent).

Manufacturing’s share of all private sector jobs and all non-farm jobs did dip in November – from 9.87 percent of the former to 9.86 percent, and from 8.43 percent to 8.42 percent for the latter. But both shares are still higher than in February, 2020 – which were 9.83 percent and 8.38 percent, respectively.

In addition, the November manufacturing employment advance kept its head count at the highest level (12.934 million) since November, 2008’s 13.034 million.

November’s biggest manufacturing jobs winners among the broadest sub-sectors tracked by the U.S. Labor Department were:

>transportation equipment, a big diverse sector that added 6,100 workers. And revisions were nothing less than spectacular. October’s initially reported advance of 4,700 is now estimated as a surge of 13,200. September’s result is now judged as a 6,300 jump after having been revised down from an initially reported 8,400 increase to one of 4,700. And August’s initially reported 2,400 jump was jaw-droppingly upgraded to one of 10,500 and then to a 20,900 burst, which is the final figure for now. This rocket ride has pushed transportation equipment employment to 1.08 percent above the levels of immediately pre-pandemic-y February, 2020 versus the 0.14% calculable last month;

>chemicals, another big, diverse sector which raised employment by 4,700 – its best monthly result since May’s 5,100. Revisions, however, were mixed. October’s initially reported 1,600 increase was revised up to one of 2,200. September’s initially reported rise of 3,400 was downgraded to one of 2,700 but then revised back up to a 3,200 increase. But August’s initially reported gain of 3,500, which was revised up to 3,900, was then downgraded to a final total of 2,700. Still, chemicals payrolls have now climbed by 7.32 percent since the pandemic’s arrival in force, versus the 6.64 percent calculable last month;

>machinery, whose 3,900 net new employees were especially encouraging bothnew because this hiring was the strongest since April’s 5,800, and because this industry’s products are used so widely througout the rest of manufacturing and the entire economy. Even better, revisions were considerably positive. October’s initially reported improvement of 3,000 was upgraded to one of 3,600. September’s initially reported 1,700 decrease (which had been the worst since last November’s 7,000) was revised up to a decline of 300 and then estimated as the same. And after being revised down from 2,800 to 2,200, August’s increase was revised back up to the now final figure of 2,800. Whereas machinery employment was off by 0.90 percent from February, 2020 levels as of last month, it’s now within 0.55 percent; and

>food manufacturing, another big sector, and one that hired 3,400 net new workers. Revisions were mixed here, too. October’s initially reported increase of 1,000 was cut in half, to 500. But September’s initially reported 7,800 pop (the best such performance since February’s 11,100) went unrevised and then was downgraded to a still impressive 7,600. And although August’s initially reported 2,400-job loss was first revised up to one of 1,000, it was then downgraded to a decrease of 2,700, which is where it’s stayed. Food manufacturing’s workforce has now grown by 3.52 percent since the pandemic began hammering the economy, versus the 3.36 percent calculable last month.

The biggest November jobs losers among the broadest manufacturing categories were:

>plastics and rubber products, whose 3,200 employment drop was its biggest since the 4,400 plunge in September, 2021 – and where revisions were negative, except for one that was in the “jaw-dropping” category, too. October’s initially reported increase of 3,000 was revised down to 700. September’s initially reported loss of 1,400 was upgraded to a gain of 600 before being revised way down to a decrease of 2,400. And after being revised down from an advance of 900 to one of 100, August’s job creation estimate soared to 4,400, where it remained Friday morning. But the post-February, 2020 increase in plastics and rubber products jobs fell from the 4.94 percent calculable last month to 3.76 percent;

>electrical equipment and appliances, whose 2,400 monthly employment decrease was the worst since May, 2020’s 6,100. Revisions, moreover, were significantly negative. October’s initially reported net new hiring of 300 is now judged to be a decline of 1,300. September’s initially reported rise of 3,000 has been downgraded twice – to one of 1,300 and then to 1,100. And August’s gains, which were first upgraded from 800 to 1,700, were then revised down to their final figure of 1,200. As a result of these setbacks, the payrolls of electrical equipment- and appliance-makers are now just 2.72 percent higher than in immediately pre-pandemic-y February, 2020, versus the 3.77 percent calculable last month;

.>paper and paper products, whose companies shed 2,000 jobs, their worst performance since the 2,800 drop in April, 2021. Revisions overall were negative. October’s initially reported increase of 900 was revised up to 1,300 (the best such performance since this past April’s 2,100). September’s initially reported rise of 100 was upgraded significantly to 1,200 before being downgraded to an advance of 700. And August’s initially reported loss of 700 was revised up to one of 500 but then downgraded to a 1,000 decline. Employment in this sector is now 1.10 percent lower than in February, 2020 versus the -0.52 percent calculable last month; and

>primary metals, where head counts weakened by 1,700 for the worst such result since the 9,200 nosedive in May, 2020 – as the Virus pandemic was just off its peak. Yet revisions were positive on net. October’s initially reported drop of 200 is now judged to have been a gain of 900. September initially reported decrease was upgraded even more – to an increase of 2,700 – before being revised back down to one of 2,300. And August’s initially reported improvement of 1,400 was downgraded to one of 600 before being upgraded to 900, where it remained today. Primary metals employment is now 3.95 percent lower than just before the pandemic’s arrival in force, versus the 3.68 percent calculable last month.

One industry followed closely by RealityChek throughout the CCP Virus period registered healthy solid employment gains in November. Job numbers in the automotive sector climbed by 1,900, and revisions were dramatically positive. October’s initially reported increase of 4,800 is now judged to have been 7,500. September’s initially reported growth of 8,300 was first downgraded to 7,400 but then revised up to 9,000. And August’s initially reported drop of 1,900 to a jump of 4,000 and then way up to a burst of 12,000 – its final figure for now and the best such result since March’s 18,400. This hiring wave left automotive sector head counts 4.17 percent higher than in immediately pre-CCP Virus February, 2020, versus the 3.54 percent calculable last month.

As known by RealityChek regulars, data for several other industries of special interest since the pandemic era began are always a month behind the figures for these broader categories, and these October results were generally good.

The shortage-plagued semiconductor industry added 2,300 jobs in October, possibly representing an early sign of the major Made in America incentives contained in the recently passed CHIPS and Science Act. The increase was the best since June, 2020’s 3,000, but revisions were only mixed. September’s initially reported advance of 800 is now judged to be a drop-off of 1,000, but August’s initially reported 1,200 increase was revised up to its now final figure of 1,500. Semiconductor industry employment is now 6.01 percent higher than in February, 2020, versus the 5.74 percent calculable last month.

The aerospace industry was hard hit by the pandemic because of all the national and worldwide travel restrictions put in place. In October, however, this sector’s jobs comeback generally continued strongly. Employment by aircraft manufacturers expanded by 3,900 that month, the best such result since June, 2021’s 4,400. September’s initially reported 1,300 increase was taken down a peg to 1,200, but August’s initially reported gain of 1,300 was revised up to 1,700 and left unrevised yesterday morning. As a result, aircraft manufacturing jobs are now 5.85 percent below their immediate pre-pandemic levels, versus the 7.41 percent calculable last month.

Aircraft engines- and engine parts-makers boosted payolls by 700 in October, their best such perfomance since July’s 800. Revisions were negative on balance, with September’s initially reported job decrease of 100 staying unrevised and August’s initially reported increase of 800 downwardly revised to a final figure of 400. Aircraft engines- and engine parts-makers employment consequently closed to within 8.07 percent of its pre-February, 2020 level, versus the 8.83 percent calculable last month.

Non-engine aircraft parts- and equipment-makers hired 100 net new workers in October, and revisions were mixed. September’s initially reported slip of 500 is now judged to have been one of 700 but August’s initially reported jump of 1,100 was revised up to a final figure of 1,300 – the best such result since January’s 1,400. The non-engine aircraft parts workforce is now 14.45 percent smaller than in since February, 2020 versus the 14.36 percent calculable last month.

The surgical appliances and supplies category contains the personal protective equipment, respirators, and other products central to the U.S. response to the CCP Virus, and kept on enlarging its workforce (by 400) in October. Revisions were mixed, as September’s initially reported job decrease of 200 was downgraded to one of 300, but August’s reported gains have been upgraded from.700 to 800 to 900 – the strongest such perfomance since March’s 1,100. Employers in this sector have now increased their workforce by 5.59 percent since just before the pandemic’s economic – and health – impact began to be fully felt, versus the 5.11 percent calculable last month.

The employment total for pharmaceuticals and medicines flatlined in October, and revisions were oveall negative. September’s initially reported employment expansion was revised up from 1,000 to 1,200 – the best since June’s 4,000. But August’s initially reported gain of 1,700 remained at a significantly downgraded 300. The head count in this sector is now 11.64 percent bigger than in immediately pre-pandemic-y February, 2020 versus the 11.58 percent calculable last month.

Finally, the medicines subsector containing vaccines added 600 net new workers in October in the strongest job increase since June’s 900. Revisions, though, were mixed, with September’s initially reported gain of 200 upped to 500 but August’s initially reported 900 increase now estimated at a decrease of 600 – the biggest drop since December, 2018’s 1,100. Vaccine-makers’ payrolls have now swelled by 26.29 percent since February, 2020, versus the 25.58 percent calculable last month.

The confusion surrounding the U.S. economy’s growth prospects for the foreseeable future inevitably create uncertainty about manufacturing’s outlook. As noted in this previous post, many forward-looking indicators look pretty worrisome, but at least through the end of this year, expansion seems to have  been continuing at a healthy rate.

Big questions about the Federal Reserve’s approach to inflation-fighting are also clouding the manufacturing forecast. But what may be especially revealing is that even during the first half of this year, when the economy tumbled into a recession, manufacturing, along with the rest of the private sector kept hiring, and kept reporting a strong desire to fill lots of empty positions. So until some convincing evidence appears that this striking, pandemic-era pattern will change if a slowdown does begin, I’ll be cautiously bullish about manufacturing job creation.

Making News: Podcast Appearance Tonight on Apple Diversifying Out of China

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I’m pleased to announce that I’m scheduled to be back tonight to the nationally syndicated “CBS Eye on the World with John Batchelor” – with a difference. Since it’s Saturday, the segment will appear tonight on the program’s podcast page, not on the radio. Our subject: The implications of a report that Apple has decided to speed up its plans to move some of its massive production out of China.

I’m not sure when the pre-recorded segment will be on-line, but I’ll post a link once it’s up.

And keep on checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: Peak U.S. Inflation Still Tough to See in Latest U.S. Figures

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Even for those who don’t put much stock in using baseline comparisons, the latest official report on U.S. inflation – which covers the Federal Reserve’s preferred measure of price changes – there wasn’t much to get excited about..

The strongest evidence optimism that inflation’s peaking in this latest release on what’s called the price index for Personal Consumption Expenditures (PCE) came from the monthly results for core inflation. These strip out the food and energy results because they’re volatile for reasons supposedly having nothing to do with the economy’s fundamental prone-ness to inflation.

The latest number (for October) showed a 0.2 percent sequential rise in prices. That was one of the tamer results for the year, but it followed two straight months of 0.5 percent increases – which were among the highest results of the year. And to add a bit of insult to injury, July’s original monthly flatline figure has been revised up to 0.1 percent.

As for the monthly headline inflation result, that came to 0.3 percent in October. This increase also was one of the year’s lowest, but was the third straight month of prices rising at this rate. So a wait-and-see attitude seems to be the best that’s justified.

The annual PCE data for October was considerably less encouraging, largely because of that baseline effect. Core PCE was up five percent that month – mid-range in terms of this year’s figures. But between the previous Octobers, this inflation gauge jumped by 4.2 percent – to that point, by far the worst result of 2021.

In fact, in September of this year, when core PCE worsened by 5.2 percent, its baseline figure was just 3.7 percent.

In other words, core annual PCE inflation was getting really hot at this point a year ago. And over the course of the next year, it got hotter. And that 5.2 percent annual result for this past September has been revised up, too (from 5.1 percent).

Intriguingly, the headline annual PCE numbers reveal a very similar pattern. The bg difference: The October read of six percent matched the year’s lowest figure (from January). But the previous October annual rate was 5.1 percent – also the fastest increase that year to that point.

The September baseline figure was just 4.4 percent, and the 2022 annual headline PCE increase for that month was revised up itself – from 6.2 percent to 6.3 percent.

The bigger picture isn’t especially encouraging, either. That’s because whatever hints of inflation slowdown may be in the air surely stem from weakening momentum for the economy as a whole. (To be sure, many economists, like the Atlanta Federal Reserve’s crew, keep forecasting solid expansion continuing. But many forward-looking indicators are sending exactly the opposite message.) And as I’ve noted (e.g., here), it doesn’t take a policy genius to end inflation by tightening credit so much that growth and employment get crushed.

Further, what’s worrisome about this demand-centric approach, and continued neglect of boosting the supply of goods and services, is that when the Fed loosens monetary policy once more, or when Congress and the administration reopen the net spending spigots, or both, there will be every reason to expect strong inflation to return.

(What’s Left of) Our Economy: The Good U.S. Trade and Growth News Continues – For Now

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In my post on the first official read on America’s economic growth in the third quarter of this year, I wrote that “You couldn’t ask for a better” set of results on the trade front “unless you’re into making unreasonable requests.”

As it turns out, I may need to change my definition of “reasonable” somewhat. For however encouraging that initial estimate’s news that the economy grew at a solid rate after accounting for inflation while the trade deficit shrunk, today’s second release showed that real growth was a bit stronger than first judged, and the trade deficit decline a bit greater.

That’s cause for celebration because an expanding economy and a falling trade deficit means that growth is getting healthier – and more sustainable. Specifically, the gross domestic product (GDP, the standard measure of the economy’s size) is increasing less because Americans’ borrowing and spending are up than because they’re boosting production. And in that vein, the trade gap shrank for the ideal combination of reasons: Exports rose and imports decreased.

In that prior report on third quarter GDP, the U.S. government pegged growth at 2.54 percent in real terms at annual rates, and the trade deficit’s contraction from second quarter levels at 10.94 percent ($1.4305 trillion at annual rates to $1.2740 trillion).

This morning, those numbers were revised up to 2.90 percent annualized real growth and a trade deficit that came in at $1.2647 trillion. That’s not a lot lower, of course, but so far (there’s another GDP revision coming in a month), it’s the smallest quarterly trade shortfall since the $1.2309 trillion of last year’s second quarter.

Moreover, the new figures confirm that the constant dollar trade deficit has now retreated for two straight quarters since the stretch between the fourth quarter of 2019 and the second quarter of 2020. That period of course immediately preceded the arrival in force of the CCP Virus and its deeply depressing impact on the economy.

The 11.59 sequential narrowing of the trade gap also was still the biggest such improvement since the second quarter of 2009, when the economy was still stuck in the Great Recession that followed the global financial crisis (17.95 percent).

It brought the price-adjusted trade deficit as a share of real GDP down to 6.31 percent – its lowest level since that second quarter of 2021 (6.16 percent). And as of this latest government data, 12.24 percent plunge in this ratio from the second quarter’s 7.19 percent was the biggest sequentially since the 17.89 percent registered in that Great Recession-y second quarter of 2009.

All the same, the overall real trade deficit has ballooned by 51.86 percent since the last full pre-CCP Virus for the U.S. economy (the fourth quarter of 2019).

Trade’s contribution to third quarter growth rose in absolute terms from 2.77 percentage points to 2.93 percentage points – the best such performance since the 2.96 percentage points generated in the third quarter of 1980. (I mistakenly reported last month that the initial figure was the biggest since the second quarter’s 3.99 percentage points. But it was, as I correctly noted, the largest absolute figure for a quarter in which the economy expanded since that third quarter of 1980.)

In relative terms, though, trade’s contibution to third quarter growth was far from a record. Indeed, during the second quarter of this year, the decline of the trade deficit added 1.16 percentage points of growth while the economy contracted by 0.58 percent in real annual terms. (As with any individual element of GDP, the trade contribution can be greater than the overall growth rate when other elements decrease.)

Put differently, without this trade boost to growth, the economy in the third quarter would have been 0.03 percent smaller than in the second quarter in real, annualized terms – not 2.90 percent bigger.

Today’s GDP data showed that inflation-adjusted total exports rose by 3.63 percent sequentially (from $2.5169 trillion to $2.6083 trillion), The latter total is a new record (surpassing the old mark of $2.5823 trillion in the first quarter of 2019). And U.S. overseas sales of goods and services are now 1.42 percent above their immediate pre-pandemic level.

Total imports dipped sequentially not only for the first time since the second quarter of 2020 (the peak pandemic quarte) but by more than first judged – 1.89 percent versus 1.78 percent – and from a record $3.9475 trillion to $3.8730 trillion. They’re now 13.73 percent greater than in the immediately pre-pandemic-y fourth quarter of 2019.

In goods trade, which dominates U.S. trade flows, today’s figures show that the deficit sank on quarter by 9.84 percent versus the 9.51 percent estimated initially. This second straight shrinkage was the biggest in percentage terms since the 12.63 percent fall-off in that Great Recession-y second quarter of 2009 and depressed the shortfall to $1.4286 trillion – the lowest level since the third quarter of last year ($1.4144 trillion).

But the goods trade deficit has still worsened since just before the pandemic by 33.94 percent.

The U.S. after-inflation services trade figures also improved from the initial GDP report’s results, with the longstanding surplus – by 9.97 percent, from $149.4 billion at annual rates in the second quarter to $164.3 billion. The previous release put the increase at 7.43 percent, and the latest widening is the biggest since the 12.90 percent in the fourth quarter of last year.

Yet reflecting the hit globally taken by services industries, the services surplus is down 30.32 percent since just before the pandemic became roiling the national and world economies.

Inflation-adjusted goods exports in the third quarter hit $1.9009 trillion at annual rates – their third consecutive all-time high and an increase of 4.16 percent versus the 4.04 percent figure in the first estimate. These overseas sales have now risen by 6.40 percent since the fourth quarter of 2019.

By contrast, their imports counterparts declined by more than first judged – by 2.35 percent versus 2.26 percent, to $3.3295 trillion annualized. This second straight quarterly decrease was the first back-to-back drop since the fourth quarter, 2019-second quarter 2020 stretch that encompassed the CCP Virus’ devastating first wave.

After-inflation services exports in the third quarter were revised up as well, increasing by 2.40 percent versus the initial estimate of 2.03 percent, and now stand at $726.5 billion annualized. Yet just before the pandemic’s arrival, they were $786.8 billion – 8.30 percent higher.

Real services imports followed this trade balance improvement pattern, climbing by just 0.37 percent on quarter in the third quarter versus the 0.59 percent reported in the first estimate. And this sixth straight quarterly increase, to $562.2 billion at annual rates, means that these purchases are now up just 2.03 percent since the fourth quarter of 2019.

All good things must come to an end, however, and I’m concerned that this may be the case for the recent span of higher growth and smaller trade deficits. Principally, the third quarter ended in September, and the monthly U.S. trade reports (which also so far only go through September, and which aren’t adjusted for inflation) reveal precisely this dimmer picture.

In addition, the government’s advance figures on October goods trade (which also came out today) report both a big jump in the deficit, and one powered by falling exports and rising imports – exactly the opposite of the ideal pattern. But at least we’re due for one more estimate (for now) on third quarter GDP and inflation-adjusted trade flows. So make sure to enjoy that (likely) good trade news while you can! 

Our So-Called Foreign Policy: Will China Dupe Washington Again?

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Well, that didn’t take long. Just two weeks after President Biden’s face-to-face meeting with Chinese dictator Xi Jinping in Bali, Indonesia raised hopes of improved Sino-American relations, Beijing is acting like it’s determined to dash them.

Not that the expressed hopes were especially high. Mr. Biden himself said he aimed “to ensure that the competition between our countries does not veer into conflict, whether intended or unintended.  Just simple, straightforward competition. It seems to me we need to establish some commonsense guardrails” to “manage the competition responsibly” (as the White House put it in post-meeting statement).

But this morning EST, the Chinese military announced that it had “Organised sea and air forces to follow, monitor, warn and drive away” a U.S. warship that had sailed into waters Beijing claims near a group of islands in the South China Sea.

China’s claim has been rejected by international legal authorities, and the United States Navy regularly sends ships into the area to reflect its “continued commitment to….every nation’s right to fly, sail, and operate wherever international law allow.” The Navy added that “At the conclusion of the operation,” the destroyer “exited [China’s] excessive claim area and continued operations in the South China Sea.”

The point here is that China’s reactions to what the United States calls “Freedom of Navigation Operations” represent exactly the kind of opportunity for a conflict-igniting accident or miscalculation that President Biden’s guard rails idea seeks to avoid – and that China isn’t especially interested.

Also today, China declared its readiness to “forge a closer partnership” on energy with Russia – surely a sign of Beijing’s continued defiance of U.S. and European efforts to deny Moscow resources for financing its invasion of Ukraine.

As also reported by the Associated Press, President Biden “has warned Xi of unspecified consequences if Beijing helps [Russia] evade sanctions,” but this announcement indicates that any “Spirit of Bali” doesn’t extend in Xi Jinping’s eyes to helping end this dangerous conflict. In fact, I suspect it reflects China’s ongoing happiness that Washington is tying up so many military resources to aid Ukraine’s resistance that it’s degrading America’s ability to counter China’s ambitions in Asia – and especially a possible invasion of Taiwan, the global leader in manufacturing the world’s most advanced semiconductors.

Early during the Cold War, then Chinese dictator Mao Zedong devised a strategy called “fight fight talk talk.” As explained by the New York Times,

The idea was that even as you seek opportunities to make gains on the battlefield, to expand your territory and gain in strength, you keep on negotiating even though you have no interest in a compromise solution and intend to win complete victory. The talk-talk part of the strategy gives mediators the sense that they are doing something useful, while, by holding theoretically to the possibility of a negotiated solution, you deter great- power military intervention in support of your adversary.”

As Times reporter Richard Bernstein explained, when it came to U.S. efforts to negotiate a deal between China’s nationalist forces and the Communists, the strategy was “a brilliant success.” Here’s hoping that President Biden doesn’t ignore the new hints that China is following the same course today – and that Beijing isn’t interested in conducting a “responsible competition.” It’s interested in winning.

Im-Politic: So Fauci Finally Gets It on Lockdowns?

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Retiring U.S. chief infectious disease specialist Dr. Anthony S. Fauci told us over the weekend that he’s just shocked by what he calls China’s pointlessly “draconian” Zero Covid policy to defeat the CCP Virus. And the Biden administration has been critical, too. To which the only reasonable response is, “Seriously?”

Not that Zero Covid hasn’t been an epic fail by Chinese dictator Xi Jinping. But the criticism from Fauci and the Biden presidency sure looks like the pot calling the kettle black.

If you’re skeptical, here’s Fauci’s response to a question noting perceptively that “you’re seeing things that we saw in this country when people didn’t like how Covid response — What is going on in China, and why do they seem to be in a worse place than anyone else in the world?”

[T]heir approach has been very, very severe and rather draconian in the kinds of shutdowns without a seeming purpose. I mean, if you’re having a situation, if you can recall, you know, almost three years ago when we were having our hospitals overrun, you remember the situation in New York City, you had to do something immediately to shut down that flow. So remember we were talking about flattening the curve and the social distancing and restrictions and shutdown, which was never really complete, is done for a temporary period of time for the purpose of regrouping, getting more personal protective equipment, getting people vaccinated. It seems that in China it was just a very, very strict extraordinary lockdown where you lock people in the house but without any seemingly endgame to it.”

No one can reasonably criticize any public official for urging extreme and sweeping anti-virus measures during the pandemic’s early days – before its nature and especially its highly granular lethality (overwhelmingly concentrated in seniors and others with major health problems) were understood. For it could have been like the Black Death.

But of course Fauci, the rest of the official public health establishment, and left-of-center leaders like Biden, were championing these policies long after these patterns became known.

And more important, when it comes to comparing U.S. policies during his tenure with Chinese policies today, Fauci’s claim that he was only urging “social distancing and restrictions and shutdown” essentially until vaccination was widespread ignores his stated belief in March, 2020 that “It will take at least a year to a year in a half to have a vaccine we can use.” And of course getting enough arms jabbed to turn the CCP Virus tide was always going to take months more even if the rollout went perfectly (which was far from the case). And what if the vaccines were major flops?

So Fauci himself clearly felt that pretty draconian policies – despite their devastating impact on the economy, on education, and on Americans’ mental health – would be needed over a very long haul. Therefore, when it counted, his differences with the approach taken recently by China (which lacks vaccines even as effective as America’s imperfect – especially against transmission – versions) was one of degree, not of kind.

Just as bad, as with Xi Jinping, this conviction of Fauci’s didn’t seem to be greatly affected by the proven potential of natural immunity per se to help end the pandemic (especially as variants, predictably, became more infectious but less lethal), or by the emerging evidence of sharp limits (to put it diplomatically) to the utility of social distancing in and of itself, and masking – and even of widespread lockdowns themselves.

Fauci’s declaration that “a prolonged lockdown without any seeming purpose or end game to it…really doesn’t make public health sense” comes way too late to impact America’s strategy during the pandemic era.  But hopefully it will dissuade both politicians and the public health establishment from repeating these grave mistakes when the next pandemic – inevitably – comes the nation’s way.

Im-Politic: Should an Assault Weapons Ban Really be Biden’s Gun Violence Priority?

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On the one hand, it’s easy to understand why, as the Associated Press just put it, “When President Joe Biden speaks about the ‘scourge’ of gun violence, his go-to answer is to zero in on so-called assault weapons.”

After all, a ban on these arms is a much more limited goal than most other gun control proposals. Therefore, in theory, it should be much easier to get Congress behind than broader measures. Indeed, such a ban was in effect from 1995 to 2004. And – again in theory – because assault weapons (however they’re defined) are such efficient killing machines, banning them should be an equally efficient way at least to reduce the fatalities caused by firearms.

On the other hand, some evidence has just appeared that an assault weapons ban would be a virtually empty gesture. And strangely, it came in a piece in the Washington Post that recommended the outlawing of these “weapons of war.”

But as author Robert Gebelhoff himself acknowledged, “mass shootings account for a small fraction of gun deaths, so any ban on these weapons and magazines would result in marginal improvements, at best….” Further, he reports, the best scholarly research shows that the previous ban played an “inconclusive” role in the dip in mass shooting casualties that did take place during those years.

And in what looks like a clincher, despite Gebelhoff’s claim that “banning so-called assault weapons was never meant to reduce overall gun deaths. It was meant to make America’s frustratingly common mass shootings less deadly,” his article reveals that even that contention looks weak.

That conclusion clearly stems from this graph he presents.

 

It didn’t reproduce here as completely as I’d like, but it’s titled “Three Decades of Mass Shooting Victims,” the first year on the far left is 1982, the last one on the far right is this year, the shaded area depicts the ban years, the dark bars are numbers of fatalities, and the lighter bars are numbers of wounded.

What you see is that mass shooting deaths this year so far have indeed been higher than they tended to be during the ban years. But the overall U.S. population is, too – by a little more than 15 percent. So has the problem even gotten worse at all?

Moreover, these deaths (and wounded) are way down from their peak in 2017 – when they were driven way up by the appalling Las Vegas nightclub shooting. And they’ve been falling considerably and consistently (except for the peak CCP Virus year 2020) even though the assault weapons legal regime hasn’t changed one iota.

I can’t be too harsh on Mr. Biden for wanting to “do something” about gun violence in the United States. Everyone of good will does. But he’s the President. So maybe he could show some leadership by identifying “something” that would actually make a meaningful difference.

(What’s Left of) Our Economy: And Now, Holiday Shopping Uncertainty

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So here I am watching the Michigan-Ohio State football game, not really planning to post anything today, but surfing around on the web anyway, and what do I come across? A Yahoo Finance report from yesterday presenting a decidedy upbeat picture of the new holiday shopping season – whose ultimate results will go pretty far toward influencing the final state of the U.S. economy during these inflationary times, and especially of lower-income consumers, who tend to get hit hardest by high inflation. (See, e.g., here.)

This post was noteworthy because it bucked that last piece of conventional wisdom. Indeed, veteran personal finance journalist Vera Gibbons emphasized the finding from one major consultancy that We’re seeing greater participation among lower-income households (those who earn less than $50,000 per year).

They’ve “settled into the ‘new normal,’” this analyst from Deloitte Insights told her “and are feeling more stable — and hopeful — given wage growth.” “They’re going to jump in and spend,” he declared.

And he had some numbers to back up his prediction, saying that (in Gibbons words) “this group of shoppers plan to spend an average of $671 this holiday season. That’s 25% more than last year. On the flip side, high-income earners (those who make more than $100,000 per year) plan to cut back by 7%, bringing their spending down to an average of $2,438.”

But this assessment left my head spinning not just because of its clash with the conventional wisdom. It also drew exactly the opposite picture that appeared in a New York Times article from the very same day. The header should explain why: “This Holiday Season, the Poor Buckle Under Inflation as the Rich Spend.”

Specifically, correspondent Jeanna Smialek spotlighted Federal Reserve data (which I described more generally here) showing that

after 18 months of rapid price inflation — some of which was driven by stimulus-fueled demand — the poor are depleting those cushions. American families were still sitting on about $1.7 trillion in excess savings — extra savings accumulated during the pandemic — by the middle of this year, based on Fed estimates, but about $1.35 trillion of it was held by the top half of earners and just $350 billion in the bottom half.”

Also showing that poorer Americans are feeling an especially tight inflationary squeeze:

Credit card data from Bank of America suggest that high- and middle-income households have replaced lower-income households in driving consumption growth in recent months. Poorer shoppers contributed one-fifth of the growth in discretionary spending in October, compared with around two-fifths a year earlier.”

And don’t expect the confusing reports on holiday shopping or the low-income consumer to stop any time soon. As noted in this post, “preliminary Black Friday reports contain almost no useful information about the state of the economy” and “early Black Friday sales figures are at best unreliable and at worst completely useless [even] for predicting overall holiday sales.”

Keep in mind, moreover: That last post was written in 2015 – well before the CCP Virus pandemic, the sharp economic downturn and blazing recovery that followed, and gargantuan stimulus programs began turning the U.S. economy into a $20-some-odd trillion mass of conflicting signals and developments.  As a result, all that seems certain going forward about the economy is that along with peak inflation uncertainty and recession uncertainty, for the time being we’ll have to deal with holiday shopping season uncertainty as well. 

Im-Politic: Americans Really Do Seem Split Down the Middle Politically

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As everyone is supposed to know, the United States has become a 50-50 country politically. As argued by this well known analyst,

The two parties have been neck and neck since long before this midterm. Despite wild gyrations in the economy, the terrifying rise of antidemocratic politics on the right, and yawning policy differences between Democrats and Republicans, recent national electoral results keep coming in remarkably close, as if decided by a coin toss.”

And for a change, this time the conventional wisdom seems to be right – at least when it comes to elections for the House of Representatives. I just examined the results of these races going back to 2014 (the final election before the advent of what seems to be the ongoing Trump Era in American politics), and the evidence is strong that they keep becoming more competitive.

My yardstick is a margin of victory of five percentage points or fewer. And my sources are the New York Times tabulations. Here are the totals for the last six House political cycles:

2014: 28

2016: 16

2018: 48

2020: 39

2022: 38

Although the sample size is small, there’s a clear inflection point. But what’s a little surprising is that it wasn’t 2016, when Donald Trump shocked the nation, the world, and himself by winning the White House.

Instead, it was 2018 – which could mean that his impact on national politics didn’t start becoming clear until Americans had seen him as President for two years.

The above numbers indicate that this trend crested in 2018, but I’m not at all sure for one big reason: That year saw major (40-seat) gains for the Democrats.

The following two House elections saw much smaller shifts – indeed, these shifts (13- and 7-seat losses for the Democrats, respectively), were in the neighborhood of the 2014 and 2016 results (a 13-seat loss and a six-seat gain for the Democrats). But the number of close races by my criterion was much greater.

Moreover, despite the smaller shift produced by last month’s voting, nearly as many 2022 House races were decided by margins of a single percentage point or less (nine) than in 2018 (ten).

These results are even more surprising given that elections where lots of seats change hands mean that relatively large numbers of incumbents lose. Since all else equal, beating incumbents is difficult, you’d expect more elections during those years to be nail-biters. So a relatively large number of races were extremely close in a year that was pretty good for incumbents further strengthens the “50-50” argument.

The nail-biter count of course isn’t the only lens through which to view House, or any other, elections. Other major influences are the numbers of incumbent retirements and therefore open seats; the effect of presidential popularity and other coattail factors; voter turnout and how it tends to vary between presidential election and non-presidential election years; the overall condition of the country and how it’s perceived; and the importance of local issues in these most local of all national elections.

But even considering these considerations, increasing numbers of close races does seem to be a recent trend. So if you’re a politics junkie, and you think you’ve been staying up ever later on Election Night before knowing the final results or having a pretty good idea of them, it’s not your imagination.

P.S. As of this morning, two House races are still undecided. And they look like nail-biters!