Im-Politic: Fauci Doctors the Facts Again

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Anthony S. Fauci, Biden administration, Bureau of Labor Statistics, CCP Virus, Centers for Disease Control and Prevention, Chris Wallace, coronavirus, COVID 19, essential workers, Fauci, Fox News, Im-Politic, law enforcement, mortality, Officer Down Memorial Page, police, vaccine mandates, vaccines, Wuhan virus

Dr. Anthony S. Fauci, President Biden’s chief medical adviser, had a ready answer this past Sunday when a news anchor asked him whether or not he bears any responsibility for the growing criticism he’s attracted during the CCP Virus pandemic:

“[I] have stood — always making science, data, and evidence be what we guide ourselves by. And I think people who feel differently, who have conspiracy theories, who deny reality that’s looking em straight in the eye, those are people that don’t particularly care for me.

“And that’s understandable because what I do and I try very hard is to be guided by the truth. And sometimes, the truth becomes inconvenient for some…people, so they react against me. That just is what it is. There’s not much I can do about that…”

Actually, here’s something he can do about it. He can stop presenting facts that are not only completely free-floating but so devoid of any context that they become completely misleading – as he did on the same program.

Asked by Fox News‘ Chris Wallace whether vaccine mandates should be enforced for essential workers like police – many of which oppose the requirements, Fauci declared,

“We now know the statistics, more police officers die of COVID than they do in other causes of death. So, it doesn’t make any sense to not trying to protect yourself as well as the colleagues that you work with.”

Fauci’s claim is correct strictly speaking – at least according to this organization that tracks police deaths in the line of duty. But comparing police virus deaths with other causes of police fatalities has zero to do with how especially susceptible or not officers are to Covid. In fact, the only valid way of determining the relative vulnerability of these law enforcement personnel is to compare their CCP Virus experiences – in this case, mortality – versus that of their closest population-wide peer group.

And what these data make plain as day is that police nationwide are much less likely to die of the virus than those most like them demographically.

The peer group in question is working age adults, and this source pegs their population at 170,975,648 as of last year. The U.S. Centers for Disease Control and Prevention report that through October 13, they’d suffered 233,965 deaths. “involving” the CCP Virus (which RealityChek regulars know is a problematic concept). So that’s a mortality rate of 0.14 percent.

The number of police officers whose deaths have been attributed to having contracted the disease on duty is 479 according to the aforementioned Office Down Memorial Page. And the U.S. Bureau of Labor Statistics has pegged the nationwide number of police and sheriff’s patrol officers at 654,900. Do the math, and you get a death rate of 0.07 percent. That’s only half the level for the working age adult control group.

Surely one big reason for this disparity is that law enforcement personnel are healthier as a rule than their closest demographic peers. But far from “explaining away” Fauci’s mistake, it’s a point so obvious that he should know it. He should also realize that because, like other essential personnel, policemen and women stayed on the job during the worst of the virus, stayed on it long before vaccines were available, and worked jobs that required lots of personal contact, many surely contracted Covid – and recovered, thereby acquiring natural immunity. Despite his enthusiasm for the mandates, as even Fauci has admitted, this inconvenient (for vaccine zealots) truth of virology is tough to square with calls for mass, indiscriminate, and forced jabbing.

I’m enough of a believer in vaccines’ effectiveness and in the seriousness of the CCP Virus that I cringe every time I hear some pundit or news talker argue that members of the public health establishment like Fauci and the politicians that follow them have supported vaccine mandates and other forms of anti-virus business and behavioral curbs primarily because they’re control freaks. But every time I hear such folks so blatantly and sanctimoniously peddle this kind of misinformation, it makes me wonder.

(What’s Left of) Our Economy: Headwinds Finally Undercut U.S. Manufacturing Output

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aircraft, aircraft parts, automotive, Boeing, CCP Virus, coronavirus, COVID 19, Federal Reserve, health security, Hurricane Ida, machinery, manufacturing, medical devices, personal protective equipment, petrochemicals, petroleum refining, pharmaceuticals, plastics, PPE, printing, supply chains, {What's Left of) Our Economy

The new Federal Reserve industrial production figures indicate that all the headwinds it’s faced recently are finally proving too much for U.S. domestic manufacturing – at least for the time being. Moreover, revisions show that they – started taking a significant toll earlier than previously reported.

There’s still a case for optimism, as the numbers showed that damage inflicted by Hurricane Ida to the petrochemicals, plastics resins, and petroleum refining sectors originally revealed in the previous industrial production release (covering August) continued depressing the overall September figures (which came out this morning). Presumably, those effects have already begun to wear off.

The main argument for pessimism? The supply chain snarls that have been hamstringing manufacturers – especially in the automotive industry – seem certain to persist for many more months.

At the 30,000-foot level, U.S.-based manufacturing’s recent struggles can be seen by the 0.76 percent monthly drop suffered by its real output in September, and the new 0.40 percent decline now estimated for August – a significant downward revision from the previous 0.11 percent growth number. Moreover, such back-to-back after-inflation sequential production decreases are the first since the brief but savage recession triggered by the CCP Virus’ arrival in force in the United States in the spring of 2020.

Behind both these last two contractions have been Ida and supply chain woes.

Specifically, in August, the automotive sector was originally judged to have grown fractionally over July levels. Now this fall-off is pegged at 3.19 percent. And in September, constant dollar production tumbled another 7.17 percent – the worst sequential result since April’s 7.23 percent.

As for the most Ida-affected industries, the revisions left their dreary August performances intact overall, but real monthly output shrinkage accelerated in September for the petrochemicals-related organic chemicals sector (from 2.98 percent to 6.63 percent). It moderated somewhat in the resins and synthetic rubber segment (from 3.08 percent to 2.54 percent). And it turned from growth to contraction in petroleum refineries (from a 1.03 percent gain to a 2.64 percent drop).

Domestic manufacturing’s biggest September monthly growth winners among the broadest industry categories tracked by the Fed? The champ hands down was printing and related support activities, which expanded by 2.69 percent in price-adjusted terms. Next came textiles at 1.72 percent (although its fractional August decrease was revised way down to 1.68 percent); followed by electrical equipment, appliances and components (up 1.34 percent, though its August decline was also downgraded, from 1.16 percent to 1.56 percent, and its previously upgraded 3.95 percent July surge was knocked way down to 1.13 percent); miscellaneous durable goods, which contains many key healthcare related products (up 1.29 percent); and fabricated metal products (up 1.22 percent).

Another important winner – the machinery sector, whose products are used throughout the rest of manufacturing and in big non-manufacturing industries like construction and agriculture. Its August monthly contraction was revised down from 0.80 percent to 1.01 percent, but in September it eaked out a 0.18 percent gain. And its big July jump stayed above three percent.

The biggest losers, aside from the aforementioned automotive and hurricane-affected industries? Non-metallic mineral products (down 0.87 percent on month); wood products (off by 0.61 percent); and the very big food products sector (a 0.56 percent slide).

Manufacturing industries that have been prominent in the news turned in overall fair performances in September. Aerospace giant Boeing’s manufacturing troubles continue, but inflation-adjusted aircraft and parts production climbed by 1.83 percent on month and revisions to these sectors’ strong recent results were generally even stronger. As a result, real output in this complex is now 16.33 percent above the levels it hit in February, 2020 – the last full data month before the pandemic struck.

After-inflation production slipped on month in phamaceuticals and medicines by 0.74 percent, but this decrease might be a breather following their August growth – which was revised all the way up from 0.89 percent to 2.75 percent. Thanks to this big upgrade, the sector is now 14.14 percent bigger now than in February, 2020.

The crucial medical equipment and supplies sector – which includes virus-fighting items like face masks, protective gowns, and ventilators – generated almost precisely the opposite results. Price-adjusted production increased sequentially by 1.53 percent in September, but August’s initially reported 1.73 percent real output decline is now estimated to have been a 2.22 percent fall-off. Consequently, real output of these products has grown by just 5.54 percent during the CCP Virus period.

Manufacturing bulls can point to future growth catalysts – like Congressional passage of a “hard” infrastructure bill, an end to the CCP Virus as a public health emergency (however anyone wants to define that goal), and a resulting new boost to American and global growth. But these catalysts seem unlikely to arrive quickly, meaning that further growth struggles could mark at least the short-term future for domestic manufacturing.

Im-Politic: A Biden Administration Whopper on Vaccinations

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Biden, CCP Virus, CDC, Centers for Disease Control and Prevention, coronavirus, COVID 19, Im-Politic, Jeff Zients, vaccinations, vaccine mandates, Wuhan virus

It’s a good thing for Jeff Zients that social media’s policies on spreading misinformation are so one-sided. If they weren’t, the White House CCP Virus response coordinator (no, not his official title!) would be suspended or banned.

This past Wednesday, Zients told reporters that President Biden’s vaccination requirements, announced in a September 9 speech, had “increased vaccination rates by 20-plus percentage points.” And he continued, “Higher vaccination rates make workplaces, schools, and communities safer; accelerate our path out of the pandemic; and strengthen our economy.”

There’s no doubt that the latest virus wave has been receding by the most important measures – as I wrote October 1. Do higher vaccination rates make the above places safer? That’s entirely plausible. Will they strengthen the economy? We’ll just have to wait on that one, since the data aren’t in yet.

But the claim that since Mr. Biden’s speech, U.S. vaccination rates are up by 20-plus percentage points is just untrue. Indeed, it’s not close to being true. Further, it’s not close to being true even if our gauge is eligible Americans who are at least only partly vaccinated. This measure would take into account that not all of those eligible for vaccinations haven’t yet had the chance to complete the two-shot regimens, and that vaccines have not yet been recommended for childen younger than twelve.

And we know how untrue Zients’ contention is because it’s completely contradicted by the federal government’s own Centers for Disease Control and Prevention (CDC).

The agency’s COVID Data Tracker monitors vaccination rates over time, and it’s interactive, so changes since the Biden announcement can easily be calculated. And here’s what’s happened with at-least-partial vaccination percentage rates by age group from the day of the Biden announcement through this past Wednesday.

                        Sept. 9 rate        Oct. 13 rate

12-15:                  51.2                    55.5

16-17                   59.3                    62.8

18-24                   60.9                    64.9

25-39                   64.2                    68.2

40-49                   73.3                    76.7

50-64                   81.3                    83.8

65-74                   94.9                    97.8

75-plus                89.6                    92.3

In fact, these official figures make clear just how wildly un-close to being true Zients’ claim is. The biggest percentage point change in the at-least-partial vaccination rates during this period hasn’t been twenty.  It’s been 4.3 – for the 12-15 group. The next biggest is four – for the 18-24 and the 25-39 groups.

Of course also crucial to point out (as I did in that October 1 post) – the substantial improvements in the virus picture have taken place despite this unimpressive vaccination progress. Which raises the questions of just how effective the vaccines actually have been in influencing the course of the pandemic, and how effective the mandates – which could come into force as early as today – actually are and will be going forward. After all, if an administration can’t or won’t describe this key piece of the pandemic story so inaccurately, why should anyone trust in their ideas to fight it effectively?       

(What’s Left of) Our Economy: A Healthcare Jobs Milestone and Real-er U.S. Private Sector Hiring

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CCP Virus, coronavirus, COVID 19, Employment, healthcare services, Jobs, private sector, subsidized private sector, Wuhan virus, {What's Left of) Our Economy

Here’s the latest example of how completely weird the CCP Virus has made the U.S. economy, and it’s been confirmed by the latest official monthly jobs report (for September): The pandemic and its various knock-on effects have put a real crimp in hiring in the nation’s healthcare sector, which has been an American employment creation superstar literally for decades.

This period has also seen a reversal in the rise of what I’ve called the subsidized private sector (which is dominated employment-wise by the healthcare services industry, and whose employment levels depend largely on politicians’ decisions, not market forces) in the national employment picture at the expense of the remaining “real” private sector. This shift to date has been small but it’s genuinely historic given how quickly it’s emerged, and given the duration and power of the prior subsidized private sector (SPS) surge.

Regarding recent weakness in hiring in healthcare services and its fellow SPS industries (social services and the for-profit educational institutions), the September jobs report was startling enough. Payrolls in this entire complex fell on-month by 7,000 and in healthcare, the dropoff was 17,500.

Want to know how often that happens? Data are available for the whole SPS sector going back to 1939, and the answer is 45 times leaving out the World War II years. And since then, through September, 936 non-World War II months have passed. So we’re talking 4.81 percent of the time.

Not surprisingly, sequential SPS hiring decreases have been even less frequent since government got into civilian healthcare provision in 1966 with the beginning of Medicare and Medicaid coverage. Since then, 657 months have come and gone, and SPS jobs have declined in 26, or 3.96 percent of them.

But here’s the kicker. Of those 26, five have taken place during the pandemic period (in March, April, and December, 2020, and in this January and September – whose results so far are preliminary).

For healthcare employment alone, the official numbers begin only in 1990, but the picture they draw is even starker. Since then, 369 months have passed, and employment in this sector has fallen on month in eight of them – or 2.17 percent of the time. And five of those eight occasions have occurred during the CCP Virus period (March and April, 2020, and this January, June, and September.

Moreover, as indicated above, the pandemic has produced a major change in the role played by the SPS in U.S. job creation. Between the mid-2009 beginning of the economic recovery from the Great Recession that followed the global financial crisis and the last pre-pandemic data month (February, 2020), the SPS’ share of all U.S. jobs rose from 14.97 percent to 16.37 percent, and the SPS’ share of real private sector employment climbed from 22.08 percent to 23.84 percent.

But since then, through September, the SPS share of all U.S. jobs retreated to 16.04 percent, and of “real” private sector jobs to 23.22 percent.

What’s it all mean for the economy? It’s complicated. The downside is that so many of the subsidized private sector jobs, especially in healthcare services, are urgently needed for the nation’s overall well-being and particularly given how its population keeps aging. And it can’t be good news that employment in this industry is still down 3.18 percent since February, 2020, whether because lots of healthcare workers have become burned out from the pandemic, or because they’re leaving the field because of vaccine mandates.

The possible upside of this recent trend is that real private sector jobs in general are more productive than government jobs or SPS jobs (because the latter are more responsive to changes in economic fundamentals rather than government spending levels). Consequently, if their comparative momentum is growing, then so are the nation’s chances for solidly based prosperity, rather than the bubble-ized kind that’s been too abundant lately.

Indeed, just this kind of momentum shift is clear from the data, too. During the pandemic months, SPS employment is off by considerably more (5.21 percent) than real private sector employment (2.69 percent). During the full post-financial crisis recovery, the former jumped by 27.28 percent versus 19.60 percent for the real private sector.

As with all economic forecasts these days, though, it’s impossible to tell whether any of these trends will hold once the pandemic dust settles. What is clear, though, is that more U.S. labor market history is being made nowadays than generally recognized, and it’s by no means entirely devoid of promising potential.   

(What’s Left of) Our Economy: A Strong Fall Kickoff for U.S. Manufacturing Employment

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aircraft, aircraft engines, aircraft parts, aluminum, automotive, Boeing, CCP Virus, coronavirus, COVID 19, Employment, fabricated metals products, health security, Jobs, machinery, manufacturing, manufacturing trade deficit, metals, metals-using industries, NFP, non-farm payrolls, personal protective equipment, pharmaceuticals, PPE, private sector, semiconductor shortage, steel, supply chains, tariffs, Trade, vaccines, Wuhan virus, {What's Left of) Our Economy

Although the disappointing official September U.S. jobs figures released this morning might have been depressed significantly by “strange [CCP Virus-related] statistical quirks around school reopening,” it’s still noteworthy that manufacturing employment rose nicely during the month – by 26,000 workers. These results are all the more impressive given all the supply chain and semiconductor shortage headwinds faced by domestic industry, especially in the automotive sector.

Moreover, revisions of the strong July and August payroll figures for U.S.-based manufacturers were only slightly negative, with the former’s upgraded 52,000 sequential gain now judged to be 57,000, and August’s initially reported 37,000 improvement downgraded to 31,000.

As a result, in September, domestic industry closed still more of the gap that had opened up in its hiring performance versus that of the total American non-farm sector (the government’s definition of the U.S. employment universe, which includes government jobs), although it lost some additional ground against the private sector.

According to this latest jobs report, manufacturing had regained 74.51 percent of the 1.385 million jobs it lost during the steep pandemic-related recession of March and April, 2020 – up from the 72.71 percent reported in the August jobs release. That’s a faster rate of improvement than for the non-farm sector (whose payroll recovery grew from 76.60 percent of jobs lost during that early spring of 2020 to 77.77 percent) but slower than that of the private sector (which has now seen an 80.71 percent employment recovery from the spring, 2020 lows – up from 78.72 percent).

It’s certainly plausible that the non-farm jobs recovery has been most recently held back by those school reopening problems, and therefore manufacturing’s laggard status will resume once they’re cleared up. At the same time, the relatively slow industry employment rebound is also explained by its superior jobs performance during the CCP Virus recession. Specifically, its payroll levels fell then by 10.82 percent, versus 16.46 percent for private employers and 17.18 percent for the non-farm sector.

And indeed, since February, 2020 (the last full data month before the pandemic and related lockdowns and behavior changes began seriously distorting the economy), manufacturing’s share of non-farm jobs has risen from 8.39 percent to 8.43 percent. In addition, it’s increased as a share of private sector jobs fromThe 9.87 percent to 9.91 percent.

Among the manufacturing sector categories broken out in the official monthly U.S. jobs reports, the biggest September employment winners were fabricated metals products (up 8,200 on month – its best performance since March’s 10,100 jump); machinery (a 6,300 sequential advance); printing and related support activities (4,200 – its best since March’s 5,300); and food products (up 3,500).

Strong machinery hiring is always particularly encouraging, as the sector’s products are used so widely in the rest of manufacturing, as well as in big non-manufacturing industries like construction and agriculture. Almost as important, whereas its August monthly job creation was previously reported as having flatlined, now its estimated to have climbed by 2,600. And fabricated metals products good recent jobs increases are noteworthy given the continuing U.S. tariffs on the steel and aluminum on which they rely so heavily – which supposedly are decimating metals-using industries.

The aforementioned U.S. vehicles and parts-makers were by far the biggest monthly jobs losers recorded in the September release, shedding 6,300 positions on month. That sequential drop was their worst since semiconductor shortage-induced layoffs plunged their employment levels down by 41,600 in April. No other major manufacturing category mentioned in the September jobs report lost more than 800 jobs.

The most detailed employment data for pandemic-related industries is one month behind those in the broader categories, but their job creation performance remained mixed in August.

In surgical appliances and supplies (the sector containing PPE – personal protective equipment – and similar goods), payrolls fell by 2,500 – their worst monthly performance since the previous August’s identical number. July’s 500 sequential jobs gain was upgraded to 900 and June’s 500 improvement remained the same, but jobs in these industries are now just 7.03 percent more numerous than in pre-pandemic February, 2020. As of last month’s jobs report, the figure was 9.22 percent.

The overall pharmaceuticals and medicines industry saw hiring dip by 400 in August – its worst monthly result since May’s 300 decrease. July’s job gains were revised up from 400 to 500, but June’s losses remained at a downgraded 2,300.

These sectors’ payrolls, therefore, have now risen by only 4.62 percent since February, 2020 – not the 4.72 percent published last month.

The pharmaceuticals subsector containing.vaccines fared better. Employment rose by 400 sequentially in August, July’s flatline was upgraded to an increase of 200, and June’s 1,000 jobs improvement remained unrevised. Whereas as of last month, this sector’s payrolls had grown by 10.21 percent since just before the pandemic hit, that figure is now 10.82 percent.

U.S. aircraft producer Boeing continues to suffer from manufacturing and quality problems, but jetliner employment inched up on month in August anyway – by 200. But July’s 1,500 sequential jobs decline was revised down to 1,600, while June’s upwardly revised 4,700 jump remained the same. All told, aircraft employment is now down by 8.04 percent since February, 2020 – a bit better than the 8.08 percent shortfall reported in last month’s jobs report.

The story was similar in aircraft engines and engine parts. These industries added 600 workers seqentially in August, and July’s previously reported payroll increase of 200 is now estimated at 300. June’s downgraded 400 jobs gain was unrevised, and so employment in these sectors is now off by 14.04 percent since February, 2020 – some progress over the 14.80 percent reported last month.

Non-engine aircraft parts and equipment are still stuck even deeper in the doldrums. August’s 500 jobs loss drove its payrolls down to 16.60 percent lower than in February, 2020, versus the 16.17 percent drop reported as of last month.

With manufacturing employment still powering ahead even with its supply chain issues (which reportedly don’t seem likely to end till sometime next year), and with the CCP Virus threat still hanging over the economy, betting against more of the same going forward seems foolish. And interestingly, industry’s jobs prospects look bright despite signs that its mammoth trade deficit is heading back up, at least in absolute terms. (We don’t yet have recent enough figures to know whether it’s rising in relation to manufacturing output, which is the much more important measure.)

As they say in the investment world, past performance is no guarantee of future results.  But domestic manufacturing’s recent employment performance has overcome so many obstacles over the past year-plus that it might be the best basis we have right now for prediction.  

(What’s Left of) Our Economy: U.S. Inflation Still Looks Transitory No Matter How You Look at It

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CCP Virus, consumer price index, coronavirus, COVID 19, CPI, Fed, Federal Reserve, inflation, Jerome Powell, PCE, personal consumption expenditures index, supply chain, transitory, Wuhan virus, {What's Left of) Our Economy

I’m still in the “U.S. inflation is transitory” camp and still not overly worried about recent price increases because they look to be products of the CCP Virus and the sudden stop-start pattern is produced in the economy and not stronger, more lasting changes. But it’s important to note that my arguments have been based on only one of two major groups of official statistics – the consumer price index (CPI) kept by the Labor Department. (See, e.g., here.) 

The continuing growth of inflation worries among economists and the public indicates that this is a good time to look at that other data set – the personal consumption expenditures (PCE) price index tracked by the Commerce Department. Another good reason: This is the inflation measure preferred by the Federal Reserve, one of whose two main missions is preventing hot inflation (the other being maintaining employment), and of course this central bank’s monetary policy decisions are central to the nation’s success at keeping prices under control.

My bottom line: The PCE figures seem to support the transitory viewpoint as well.  The Fed believes this, too. But many other serious students of the economy, as indicated above, have taken exactly the opposite interpretation of the latest PCE results, so let’s try and identify what’s troubling them, and in the process, see how they differ from their CPI counterparts.

A big part of the answer comes from these side-by-side comparisons. The table below shows how both gauges have measured month-to-month price increases this year so far (through August) in percentage terms.

                          CPI                          PCE

Jan.                    0.3                            0.3

Feb.                   0.4                            0.3

March               0.6                             0.6

April                 0.8                             0.6

May                  0.6                             0.5

June                  0.9                             0.5

July                  0.5                              0.4

August             0.3                              0.4

Interestingly, although the PCE changes are steadier, they show that, at least on a monthly basis, inflation’s momentum displays no signs of speed-up – which matters greatly because inflation is a problem that can so easily feed on itself (as expectations of ongoing price increases spur businesses and consumers to increase their purchases more, boosting demand and thus pushing prices yet higher). In fact, the PCE numbers reveal deceleration, too on this basis.

Also worth stipulating: both these inflation measures include food and energy prices, which often have little to do with the economy’s underlying inflation prone-ness (but which certainly do impact price changes overall). And as known by anyone who’s gassed up a vehicle lately, energy prices in particular have been surging recently.

But inflation watchers also look closely – often more closely – at year-on-year price increases, and that makes sense because data over longer timeframes is less susceptible to random or otherswise misleading fluctuations than data over shorter timeframes. So here are those year-on-year results for both inflation indices in percentage terms for the first eight months of this year:

                          CPI                          PCE

Jan.                    1.4                            1.4

Feb.                   1.7                            1.6

March               2.6                             2.5

April                 4.2                             3.6

May                  4.9                             4.0

June                  5.3                             4.0

July                  5.3                              4.2

August             5.6                              4.3

These numbers clearly are the cause of the inflation concerns, as they do show not only strong but accelerating momentum.

But they don’t show it conclusively or, in my view, in any way that undermines the transitory school of thought. And the reason is that inflation was so low in pandemic-dominated 2020 that a combination of mean reversion and virus-induced supply chain disruptions and consequent shortages was bound to generate higher than normal price increases.

This table makes the point, by showing how low the yearly inflation increases in percentage terms were for the bulk of last year, and especially during the early spring, when the economy fell into a deep (but short) recession.

                          CPI                          PCE

Jan.                    2.5                            1.9

Feb.                   2.3                            1.8

March               2.6                             1.3

April                 0.3                             0.5

May                  0.2                             0.5

June                  0.7                             0.9

July                  1.0                             1.1

August             1.5                             1.4

It’s still possible to argue that, however low 2019-2020 inflation became, it quickened to some extent starting in June (according to both measure). And because the 2020-2021 results also show increasing post-June momentum, inflation is still worsening.

My rejoinder – the post-June inflationary momentum this year so far is much slower than last year’s. Between June and August, 2019, for the PCE, the yearly inflation rate increased by 55.56 percent (from 0.9 percent to 1.4 percent). Between this June and August, that increase was just 7.5 percent (from four to 4.3 percent).  For the CPI, you can see that this difference was even bigger.

Moreover, even this year’s modest post-June inflation speed-up has only lasted for two months.

But don’t think for a minute that the inflation news is all good. Principally, even the optimistic Fed now believes that the transitory developments that have pushed inflation higher this year will last longer than it had been expecting. Just last week, Chair Jerome Powell said it was “frustrating to see the bottlenecks and supply chain problems not getting better — in fact at the margins apparently getting a little bit worse. We see that continuing into next year probably, and holding up inflation longer than we had thought.”

In other words, “transitory” may be pretty long-lasting, and the longer it lasts, the more pressure the Fed will face to cool the economy off faster, probably slowing job creation and wage increases, whether it holds to its diagnosis or not.

(What’s Left of) Our Economy: Another U.S. Trade Deficit Surge on the Way?

Tags

Biden administration, Canada, CCP Virus, China, coronavirus, COVID 19, Delta variant, exports, goods trade, imports, lockdowns, manufacturing, manufacturing trade deficit, merchandise trade, semiconductors, services trade, South Korea, Taiwan, tariffs, Trade, trade deficit, Wuhan virus, {What's Left of) Our Economy

A day after the Biden administration began laying out its “strategic vision” for trade policy toward China (which looks an awful lot like the tariff-heavy Trump administration policies decried by candidate Biden), this morning’s latest official U.S. monthly trade figures reminded that the predatory People’s Republic is hardly the only obstacle to an improved national trade performance.

Some of the distorting effects of the stop-start nature of the CCP Virus-era U.S. and global economies can be seen in the statistics. Principally, the last three data months have seen a month-on-month increase in the overall U.S. deficit in June, a decrease in July, and the rebound reported in today’s August release.

At the same time, through May, the growth of this total goods and services deficit was pretty sluggish. Since June, though, it’s remained above $70 billion for three straight months. (as will be detailed below).

At least as troubling – the rates of change in trade deficit increases and decreases, and in the economy’s rates of growth and shrinkage never match up exactly in the short run, because of lag times between orders and the receipt of supplies of traded goods in particular. But it’s not good news that whereas the U.S. economy grew at after-inflation annual rates topping six percent in each of the first and second quarters (ending in June) while the trade gap’s growth was pretty sluggish, third quarter growth could well be much slower (see, e.g., here), and the trade deficit seems to be settling in at higher levels.

To return to the China data – not that they were good. The S$31.74 billion U.S. merchandise deficit with the People’s Republic was the biggest monthly total since July, 2019’s $32.68 billion, and was up sequentially by 10.79 percent. Goods imports rose 6.51 percent on month to just under $43 billion for their highest level since last November. But merchandise exports sank month-to-month by 3.94 percent, to $11.26 billion – their lowest level since February.

Even so, the August trade report showed again that, longer term, the Trump tariffs are bringing and keeping America’s huge and longstanding China goods trade gap under control. Specifically, this deficit is up 13.65 percent year-to-date – much more slowly than the closest global proxy, America’s non-oil goods deficit (19.11 percent).

As for the headline U.S. combined goods and services trade deficit, it rose in August by 4.19 percent, from a slightly upwardly revised $70.30 billion to a new record $73.25 billion.

The merchandise trade shortfall increased, too – but by just 1.82 percent sequentially. And the $89.41 billion total, while high by historic standards, still trailed the $93 billion-plus top-two levels hit in March and June (the latter’s $93.26 billion remaining the record).

The August services trade surplus of $16.16 billion, however, was the lowest since December, 2011, and fell by 7.74 percent from July.

Several other records were set by the August results in the broadest U.S. trade flow categories. On the negative side, total U.S. imports hit an all-time high of $286.99 billion during the month, as did goods imports ($239.11 billion). But at $149.69 billion, August goods exports hit their second consecutive historical best.

And speaking of records, manufacturing’s $116.88 billion trade shortfall represented another. The August total was 5.76 percent greater than July’s $110.05 billion and exceeded the previous all-time worst (June’s $114.06 billion by 2.47 percent).

Delving more deeply into the manufacturing numbers, industry’s exports did improve by 1.95 percent sequentially, from $95.22 billion to $97.13 billion. But the much greater amount of imports jumped more than twice as fast – by 4.03 percent, from $205.72 billion to $214.01 billion.

On a January-August basis, the manufacturing deficit has ballooned by 23.77 percent, from $686.36 billion to $849.50 billion – making a fourth straight trillion-dollar trade gap for industry all but certain.

Year-to-date, manufacturing exports have grown by 19.28 percent, but imports remain more than twice as great, and they’ve swelled by 21.64 percent.

Some more records and notable results:

>At $3.73 billion, the August goods trade deficit with global semiconductor manufacturing superpower Taiwan set a fifth straight monthy record.

>The merchandise gap with South Korea, another leading semiconductor manufacturer, soared by 51.18 percent to $3.15 billion – its third highest total all-time.

>And the goods shortfall with Canada, America’s third largest goods trade partner (after the European Union and China, respectively) surged 24.48 percent, to a $5.33 billion level that was the loftiest monthly amount since October, 2008 ($5.65 billion).

The bear case for the trade deficit is easy to identify: For example, if it’s been rising even as the CCP Virus’ highly contagious Delta variant and related economic and behavior curbs are depressing growth, it’s sure to rise higher and faster as the Delta wave keeps showing signs of weakening, and growth picks up again. Further, whenever unsnarling begins of the kinds of logistical snags that have disrupted supplies of semiconductors and created long backups at ports on America’s West Coast and elsewhere, U.S. imports in particular will rise even more rapidly.

The bull case seems to depend mainly on the winding down domestically and internationally of the virus – which will help America’s trade partners finally to start catching up with the United States recovery-wise, and therefore to step up net buys of U.S. imports. (See, e.g., here.) There are also the arguments that supply chain normalization will help restore domestic U.S. business’ export potential; and that the Biden administration has just made clear that the vast bulk of the steep and sweeping Trump China tariffs will remain in place for the foreseeable future – which will keep pricing enormous amounts of imports from China out of the U.S. market.

At this point, the fence looks like the safest place to be analytically, as has often been the case for the pandemic economy. So that’s where I’ll sit regarding future prospects for the trade deficit – but leaning a little toward the bearish side for now.

Glad I Didn’t Say That! Vaccine Derangement Syndrome

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Associated Press, CCP Virus, coronavirus, COVID 19, Delta variant, Glad I Didn't Say That!, Mainstream Media, MSM, vaccination, vaccines, Wuhan virus

“Tens of millions of Americans have refused to get vaccinated,

allowing the highly contagious delta variant to tear through the

country….” 

– Associated Press, October 2, 2021

 

“Virus surge hits New England despite high vaccination rates”

– Associated Press, October 3, 2021

 

(Sources: “COVID-19 deaths eclipse 700,000 in US as delta variant rages,” by Tammy Webber and Heather Hollingsworth, Associated Press, October 2, 2021, https://apnews.com/article/coronavirus-pandemic-dead-us-milestone-80209c66802902e42adfbe075ff5272b and “Virus surge hits New England despite high vaccination rates,” by Wilson Ring, Associated Press, October 3, 2021, https://apnews.com/article/coronavirus-pandemic-health-pandemics-vermont-d25aae90b2dda65b3d1c2c0d5d00156c)

Im-Politic: Anti-Pandemic Economy Clamps Could Be Strengthening Just as the Virus Threat is Weakening

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Andrew Jackson, Battle of New Orleans, Biden, CCP Virus, CDC, Centers for Disease Control and Prevention, coronavirus, COVID 19, data, hospitalizations, Im-Politic, Jobs, lockdowns, mortality, OurWorldinData.org, stay-at-home, vaccination, vaccine mandates, vaccine passports, vaccines, War of 1812, Washington Post, Wuhan virus

What a stunning and thoroughly depressing point the U.S. fight against the CCP Virus may be at. Governments at all levels, private businesses, and non-profit institutions of all kinds are imposing all sorts of vaccination mandates on employees that could result in significant layoffs for the recalcitrant (including those with natural virus immunity) and equally important damage to the economy. And at the same time, the most reliable data now show that the virus’ destructive impact – recently renewed by the highly infectious Delta variant – is easing once again, and for reasons that look completely unrelated to vaccination rates.

Not that the most reliable CCP Virus data are incredibly reliable. As I’ve previously written, there are some awfully dubious definitions of “Covid-related deaths” being used across the country, and major holes in the coverage achieved by the official record keepers. In addition, serious problems have been revealed even in the hospitalization numbers – which I’d considered the most accurate gauge of the virus’ effects on human health.

All the same, the proverbial statistical curve for both indicators is now bending down for the first time since Delta began dominating the American virus scene in mid-summer.

As often the case, my source for the death and hospitalization figures are the Washington Post‘s very user-friendly CCP Virus databases. For this post, I’m also using some hospitalization figures for the U.S. Centers for Disease Control and Prevention’s (CDC) website. Unless otherwise mentioned, the specific numbers here are changes in seven-day averages (7DA), which smooth out random fluctuations that tend to occur on a day-to-day basis.

Regarding mortality, the 7DA for daily reported covid-related deaths bottomed out on July 6 at 209 and it had plummeted by nearly 30 percent during the previous week. And through July 27, the 7DA stayed below 300. But by August 16, it hit 651 and thereafter began soaring rapidly.

By the 18^th, the 7DA average had jumped by nearly 32 percent week-on-week, and the rate of increase continued surging until it peaked on the 24^th at an appalling 77.90 percent. But thereafter, these increases dropped dramaticaly. A week later, they were down to just over 21 percent. That is, consistent with the “bend the curve” criteria, the problem kept worsening, but it was worsening much more slowly, which counts as welcome progress.

This encouraging development continued through September 9, by which time the 7DA was rising on a weekly basis by just 3.17 percent. In other words, it nearly stopped rising altogether. But this fall-off proved to be a head fake. Almost immediately, the weekly increases in the 7DA for covid-related mortality bounced back, and reached a discouraging 27.49 percent in less than a week (by the 15^th).

Yet another decline has followed, and this one has been considerably deeper. By September 21, the weekly 7DA increase was back below ten percent, and just four days later, hit zero for the first time since the second half of July.

Since then, and through yesterday, the 7DA has not only been decreasing on a weekly basis. It’s been decreasing faster and faster. Yesterday, the decline stood at 6.74 percent.

The hospitalization story has been somewhat different, and brighter, especially since early September. The 7DA for daily new hospital admissions for CCP Virus-related reasons bottomed out on June 25 at 1,824 and at that point, it was down on week by just under 5.20 percent.

By August 9, the situation had turned around completely – and then some. The 7DA had soared by 34 percent. Afterwards, however, came a consistent decline. By the 20^th, the weekly rate of increase in the 7DA had fallen to ten percent, and by September 1, the increases had stopped. The weekly 7DA registered its first weekly decline on September 6 (down two percent), and its first double-digit decrease on the 21^st (ten percent).

Since then through the 30^th, it’s fallen by ten percent or more twice, and the weekly decrease in the 7DA hasn’t dipped below seven percent.

Given the mushrooming of vaccine mandates and widespread claims – including by President Biden – that the nation is now facing a “pandemic of the unvaccinated,” you’d think that the above improvements stemmed overwhelmingly from increased vaccination rates. But the data – in this case, from the OurWorldinData.org website, provide no support for this conclusion.

Specifically, on August 24, when the 7DA of daily covid-related deaths was skyrocketing at that awful 77.90 percent weekly rate, 51 percent of Americans were fully vaccinated against the CCP Virus, and 9.1 percent were partly vaccinated. By yesterday, these figures were only 55 percent and 8.8 percent, respectively.

On August 9, when the 7DA for covid-related hospitalizations was growing by 34 percent week-on-week, half of Americans were fully vaccinated and 8.5 percent were partly vaccinated. Through yesterday, those numbers hadn’t changed dramatically, either.

Could mask-wearing be responsible? Trouble is, I haven’t seen any figures on how this practice has changed in recent months. (If you have, let me know.) As far as I’m concerned, the real reasons for this good CCP Virus news have to do with rising levels of natural immunity (especially important given Delta’s virulence), the distinct possibility that the CCP Virus is one of those pathogens whose lethality wanes as it mutates (an important Delta consideration, too), and the nation’s better treatment record – due to a combination of more experienced doctors and new therapeutics.

In early 1815, then-General Andrew Jackson led American forces to a great victory over the British in the Battle of New Orleans. But due to that era’s painfully slow communications, the triumph came about two weeks after the United States and Great Britain signed the treaty ending the War of 1812.  It makes me wonder how long the U.S. public and private sectors — which don’t have the communications excuse — will keep threatening the economy’s recovery with redoubled anti-virus measures just as the pandemic tide appears to be turning.   

(What’s Left of) Our Economy: New U.S. GDP Data Still Show Trade Normalization — Pre-Delta

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CCP Virus, China, coronavirus, COVID 19, exports, GDP, goods trade, gross domestic product, growth, imports, inflation-adjusted growth, lockdowns, real growth, real trade deficit, services trade, Trade, trade deficit, vaccine mandates, Wuhan virus, {What's Left of) Our Economy

Today’s third (and final, for now) official read on U.S. economic growth in the second quarter confirms that at least as of June, the nation’s trade flows had made impressive progress toward returning to a pre-CCP Virus form of normality. The trouble still is, though, that these data cover a three-month stretch that came just before the highly infectious Delta variant of the virus arrived state-side in force, kicking off a new round of mandated and voluntary curbs on business and consumer behavior that will clearly impact the third quarter’s exports, imports, and trade balances – among other measures of economic performance.

The key sign of such trade normalization – the dramatically slowing rate at which the total U.S. deficit is increasing. It’s the same pattern that U.S. public health authorities spoke about early in the pandemic when they focused on “bending the curve.” The idea is that huge, powerful trends rarely reverse themselves overnight, or even quickly. When they’re harmful, the most realistic early aim policy- and other decision-makers can seek is slowing the rate at which they become worse.

And these latest second quarter numbers add to the evidence that trade deficit worsening has nearly stopped. Last month’s previous government estimate of the gross domestic product (GDP), its change, and how its individual components have grown or shrunk in inflation-adjusted terms (the terms most widely watched) revealed that the combined goods and services trade shortfall was only 1.71 percent wider ($1.2471 trillion at annual rates) than in the first quarter ($1.2261 trillion).

This morning, though, the overall trade gap was pegged at a smaller $1.2445 trillion – just 1.50 percent more than in the first quarter. The absolute level of the deficit remains enormous. In fact, as such, it’s still the biggest ever (and still the fourth straight record quarterly total). More important, at 6.43 percent the size of the total economy, it’s still the biggest trade gap ever in relative terms, too.

In addition, the second quarter’s inflation-adjusted overall trade deficit was a full 46.83 percent greater than the $847.6 billion annualized figure recorded in the fourth quarter of 2019 – the last full quarter before the CCP Virus began distorting U.S. trade flows by weakening the economy of enormous trade partner China.

But between the second and third quarters of last year, when the economy was rebounding strongly from its short but dizzying pandemic- and lockdown-induced recession, the real trade deficit skyrocketed by 31.81 percent. So the curve has not only been bent – it’s nearly flattened. And in price-adjusted terms, the government’s U.S. economic growth estimate for that April-through-June period this year came in this morning at 6.56 percent at annual rates – a bit better than last month’s 6.40 percent.

Slightly better trade deficit improvement coupled with slightly stronger economic growth is definitely good news, and it’s confirmed by the figures on the impact on growth of the trade deficit change. Last month, the Commerce Department (which compiles and reports the GDP statistics) announced that the constant dollar trade gap’s modest sequential increase over the first quarter level cut after-inflation U.S. growth by 0.24 percentage points. In other words, had the deficit simply remained the same, second quarter growth would have been 6.64 percent annualized, not 6.40 percent.

The new numbers show that the deficit’s smaller increase reduced second quarter growth by just 0.18 percentage points. So if the trade gap hadn’t worsened at all, real economic growth would have hit 6.74 percent, not 6.56 percent.

The manner in which the second quarter’s constant dollar trade gap improved over the second read was encouraging, too – although the pattern was not quite as positive as that reported last month.

That GDP release judged that total exports improved by 1.60 percent (to $2.298 trillion annualized) over the first quarter’s level, not by the originally reported 1.47 percent. Total imports, by contrast grew more slowly – by l.64 percent, not 1.90 percent (and reached $3.5457 trillion).

According to today’s GDP report, the total sequential export increase was a faster 1.85 percent (to $2.3042 trillion at annual rates), but the total import increase was as well (1.73 percent, to a slightly higher $3.5487 trillion).

Just as important, after-inflation total exports are still 9.76 percent below their immediate pre-virus (fourth quarter, 2019) levels, but total imports are 4.35 percent higher, and the latest second quarter figure is still a second straight quarterly record.

Goods trade accounts for the vast majority of U.S. trade flows and today’s second quarter revisions saw the longstanding constant dollar deficit level rise marginally, from $1.4014 trillion annualized to $1.4020 trillion. This figure remained the fourth straigh all-time high for this indicator, but was a mere 0.44 percent worse than its first quarter counterpart, and thus represented a major slowdown from the 20.40 percent spike seen during last year’s third quarter GDP boom.

For a change, even though the service sector has been the hardest hit by the virus by far, its new real trade surplus figures improved over the previous read – from $151.2 billion at annual rates, to $152.4 billion. Nonetheless, this still represented the weakest quarterly performance since the third quarter of 2010’s $161.7 billion – when the economy’s recovery from the 2007-2008 financial crisis and Great Recession remaine in early stages.

The rapid spread of the Delta variant and consequent business restrictions and renewed consumer caution are widely forecast to depress U.S. growth considerably (see, e.g., here) – which usually heralds a considerable reduction in the trade deficit. But even if economic form follows, the unpredictability of the pandemic and the responses it generates means that it’s anyone’s guess as to how long any particular trend will last.