Im-Politic: So Much for the “Pandemic of the Unvaccinated”

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Biden administration, CCP Virus, CDC, Centers for Disease Control and Prevention, coronavirus, COVID 19, Im-Politic, vaccination, vaccine mandates, vaccines, Wuhan virus

Remember when President Biden was railing last fall that the CCP Virus crisis at that point was a “pandemic of the unvaccinated” that was needlessly stressing the hospital system, and inexcusably exposing to danger those Americans who had done the right thing? How he used this claim to justify his push for vaccine mandates as a condition of employment for much of the U.S. workforce? And how numerous businesses, universities, and numerous state and local governments had already been using the same reasoning to shut the unvaccinated out of workplaces (both as employees and customers) and classrooms?

As I explained back then, this contention was completely unfounded because natural immunity and asymptomatic Covid had created towering, and likely insuperable, difficulties, in knowing the percentage of unvaxxed Americans who had even contracted the virus, much less who had been killed or hospitalized from it.

But just the other day, I discovered that even by the misleading evidence cited by the President and other fearmongers to make their case, this argument has completely fallen apart. The evidence – from the U.S. Centers for Disease Control and Prevention (CDC) – ignores the above complications, and leaves out jurisdictions containing nearly 40 percent of America’s population.

In addition, its central supposed finding is presented – and has been ceaselessly parroted by much of the national media – without mentioning any of the context that all along would have made clear just how rock-bottom low the chances of being hospitalized or killed by the CCP Virus have been.

Specifically, claims such as “Recent CDC data shows unvaccinated people are 20 times more likely to die” left out the fact that this finding showed that in absolute terms, as of December (the latest CDC figures cited in this ABC News piece), about nine unvaccinated Americans per 100,000 were dying from the CCP Virus versus about half a vaccinated American per 100,000 dying. In other words, unvaccinated Americans had a 0.009 percent chance of dying of Covid, versus 0.0005 percent of the vaccinated. And these literally microscopic numbers warranted throwing the lives of tens of millions of Americans into turmoil?

But even if you’ve been in favor of such measures, the latest CDC figures (from April, which you can see at the above link) show that the gap has been cut in half since December in per-100,000 terms and virtually disappeared in absolute terms.

That is, 0.62 unvaccinated Americans per 100,000 were dying of the CCP Virus – about nine times greater than the vaccinated rate of 0.07 Americans per 100,000 versus the 20 times gap last December. That is, many fewer than one of every 100,000 unvaccinated and vaccinated Americans alike is now dying from the virus. And at least as interesting: These numbers mean that since December, the death rate for the unvaxxed has plummeted by 93.11 percent, while the rate for the vaxxed has barely budged.

In addition, and not so coincidentally, the CDC data on hospitalization rates for the vaxxed and unvaxxed display exactly the same trends.

Yet despite this evidence, many businesses are still insisting on some form of vaccine mandate and/or CCP Virus testing for employees, and the Biden administation is still pushing them for federal workers. So much, it seems, for “following the science” as well as for the always-dubious idea of a pandemic of the unvaccinated. 

 

(What’s Left of) Our Economy: A February Reprieve from Lousy U.S. Trade News

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CCP Virus, Census Bureau, China, coronavirus, COVID 19, Federal Reserve, goods trade, inflation, manufacturing, monetary policy, non-oil goods trade deficit, oil, services trade, trade deficit, Ukraine-Russia war, Wuhan virus, {What's Left of) Our Economy

It wouldn’t be accurate to start off this post with a statement on the order of “As bad as the full-year 2021 inflation-adjusted trade figures released last week were, the new pre-inflation data for February were good.” But a contrast was unmistakable, with yesterday’s latest monthly report from the Census Bureau containing some decidedly encouraging news – even though the numbers were pre-Ukraine war, and therefore pre- all the disruption to global supply chains – in particular in the food and energy sectors – that the conflict has already brought.

And the story even begins at the beginning. The combined goods and services trade deficit decreased sequentially for the first time since October. The slippage was only 0.05 percent, and the monthly total ($89.19 billion) was still the second highest ever (behind January’s $89.23 billion). But that January figure itself was revised down 0.52 percent.

Goods trade produced somewhat better results. February’s shortfall of $107.47 billion represented its first monthly drop since October, and the decrease was 1.04 percent. The February goods trade gap was the second biggest on record, too, but January’s $108.60 billion mark was downgraded by 0.24 percent.

When it comes to the broadest trade balance results, the only black mark was found in the service sector. In February, its long-time surplus shrank for the second straight month, decreasing by 5.62 percent, from $19.37 billion to $18.29 billion. That total was the smallest since November’s $18.30 billion. At least the January number was revised up by 1.05 percent.

More good news came on the export front. Total American sales abroad climbed 1.84 percent on month to $228.63 billion – a new record that nosed ahead of the previous all-time high (December’s $228.35 billion) by 0.12 percent.

Goods exports were up to on a monthly basis in February – by 1.79 percent, to $158.78 billion. That total was the second highest ever – 0.15 percent below October’s $159.02 billion.

Services exports improved, too in February. At $69.85 billion, they were 1.96 percent higher than January’s $68.51 billion. But reflecting the outsized hit this sector took from the CCP Virus and related lockdowns and behavioral changes, these totals remain below pre-pandemic levels.

Combined goods and services imports set their seventh straight monthly record in February, increasing 1.30 percent from $313.72 billion in January to $317.81 billion. The January total, however, was revised down by 0.12 percent.

Goods imports alone lengthened their string of monthly records, too, in February, with its $266.25 billion total topping January’s $264.59 billion by 0.63 percent. Their January total was downgraded fractionally.

The biggest relative imports increase came in services, where February’s $51.57 billion in purchases from abroad represented a 4.95 percent jump from January’s $49.13 billion. And the February total marked an all-time high – beating November’s $50.49 billion by 2.14 percent.

Oil was responsible for the overall February trade figures not being considerably better. The petroleum deficit soared by $2.67 billion on month, from a miniscule $115 million to $2.78 billion – the highest.monthly total since September’s $3.37 billion. And this surge was led by an 18.57 percent increase in oil imports. The monthly total of $23.11 billion, moreover, was the highest since December, 2014’s $25.01 billion.

Much higher prices per barrel of oil bought obviously deserve the blame for much of this news. But even adjusting for inflation, U.S. oil imports for February increased by 4.31 percent – the biggest relative rise since last May’s 6.47 percent.

In line with the improvement in the overall February trade deficit, the non-oil goods shortfall fell by 3.43 percent on month in February. At $103.56 billion, this deficit – which RealityChek regulars know covers the trade flows most affected by U.S. trade policy – was still the second highest on record, after January’s $107.24 billion. But the decrease was the first since October. And it resulted from the ideal combination of both a rise in exports and a decline in imports.

This ideal combination also encouragingly appeared in the February data for two long-term (and related) problem areas in U.S. trade flows – manufacturing and China.

The chronically huge American manufacturing trade gap shrank in February by 12.01 percent – from a record $121.03 billion to $106.49 billion. The decrease was the third straight and the biggest percentage-wise since the 12.70 percent plunge in November, 2019. In addition, the new level the lowest since April, 2021’s $103.60 billion.

As indicated, moreover, manufacturing exports were up on month in February – by 2.40 percent, from $92.33 billion to $94.55 billion. The increase, however, did follow a 7.80 percent sequential decrease in January that brought these foreign sales to their lowest level since last August.

Manufacturing imports, though, decreased for the third straight month – by 5.78 percent, from $213.36 billion to $201.03 billion. The monthly drop was the biggest in percentage terms since February, 2021’s 6.98 percent (amid the CCP Virus’ powerful second wave), and the new February total was the lowest since last April’s $198.06 billion.

America’s trade with China is dominated by manufactures, so it’s not surprising that its also chronically huge goods surplus with the United States plummeted by 15.69 percent sequentially in February, from $36.37 billion to $30.67 billion. This nosedive was the greatest in percentage terms since the 25.19 percent of February, 2020, when the Chinese economy was still seized up by sweeping CCP Virus-induced lockdowns.

Just as important, this monthly cratering was more than 4.5 times bigger than the monthly drop in the U.S. global non-oil goods deficit – the closest worldwide proxy for U.S.-China goods trade. It’s the latest evidence of the Trump tariffs’ effectivness at keeping enormous amounts of Chinese products out of the U.S. market.

As for the new February U.S.-China goods deficit’s level, it was the lowest since last July’s $28.65 billion.

And goods exports to and goods imports from China moved in exactly the right ways from an American standpoint. The former edged up 1.04 percent, from $11.48 billion to $11.59 billion – a performance that snapped a three-month losing streak. But the latter dropped for the second straight month, by 11.68 percent, from $47.85 billion to $42.26 billion. Decreases in imports from China are typical in post-holiday season February, and this latest drop-off was the biggest in percentage terms since last February’s 13 percent.

All the same, as promising as these February trade results are, one month’s worth of data alone reveal nothing about longer term trends and possibilities. And as mentioned at the outset, the Ukraine war impact is yet to be recorded. Further, more major changes may be in store in the U.S. and global economies, especially as the Federal Reserve is sounding more determined than ever to cool torrid inflation dramatically even if it means slowing growth dramatically. (Unless the central bank chickens out, if only because of the unmistakably political impact such tightening would have during an election year?) And as if all this uncertainty wasn’t enough, never forget that the trade figures are just about the most lagging-y set of indicators that the federal government releases.

So as with so many other dimensions of the U.S. economy, meaningful clarity on trade flows looks unlikely to emerge until the impacts of external shocks like the CCP Virus and the Ukraine war wear off.  That day will come at some point, won’t it?   

P.S. Yes, because my own schedule this past week has been disrupted nearly as much as the economy these last few years, this is my latest effort to catch up on reporting on recent economic releases.  More to come! 

 

(What’s Left of) Our Economy: U.S. Manufacturing Employment Powers Through Ukraine Jitters, Too

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aerospace, aircraft, aircraft engines, aircraft parts, appliances, automotive, CCP Virus, chemicals, China, coronavirus, COVID 19, electrical equipment, Employment, Federal Reserve, inflation, interest rates, Jobs, lockdowns, machinery, medicines, metals, monetary policy, non-farm employment, non-farm jobs, personal protective equipment, pharmaceuticals, PPE, recession, Russia, semiconductor shortage, semiconductors, supply chains, surgical equipment, tariffs, transportation equipment, Ukraine-Russia war, vaccines, Wuhan virus, {What's Left of) Our Economy

The Ukraine war looks like the latest disastrous development that’s failed to stop the impressive growth in U.S. domestic manufacturing employment – just as has been the case recently with the Omicron variant of the CCP Virus and surging inflation. And let’s not forget that the Federal Reserve has begun raising interest rates and signaled that steeper hikes are on the way – steps of course designed to cool off the economy, including the demand for manufactured goods.

U.S.-based industry added a strong 38,000 net new jobs on month in March, according to this morning’s monthly employment report from the Labor Department, and revisions were positive. February’s initially reported 36,000 sequential improvement was upgraded to 38,000, and January’s already upwardly revised 16,000 advance is now judged to have been 26,000.

In fact, domestic industry slightly outperformed the rest of the non-farm economy (the Labor Department’s definition of the U.S. jobs universe) job-wise in March, with its share of non-farm employment inching up from 8.38 percent to 8.39 percent. These results, moreover, show that manufacturing jobs have grown a bit faster than the overall economy’s throughout the pandemic period. In February, 2020, the last data month before the virus and related lockdowns and behavioral curbs began roiling and distorting the economy, manufacturing accounted for 8.38 percent of total non-farm jobs.

The comparison with the private sector isn’t quite as impressive, but satisfactory all the same. Manufacturing’s share of those jobs as of March was 9.83 percent – exactly the same as it was in February, 2020. And some context is essential here: U.S. manufacturing payrolls have held their own and then some even though the massive, sweeping Trump tariffs on imports from China – which were supposed to cripple domestic industry – are still almost entirely in place, as are many of the former president’s tariffs and other trade curbs on metals.

From another vantage point, manufacturing has now replaced 1.244 million (90.60 percent) of the 1.362 million jobs it shed in March and April, 2020 – the peak of the CCP Virus’ first wave.

That trails the 92.82 percent of non-farm workers and 95.46 percent of private sector workers hired back during this period. But the gap isn’t big at all, and manufacturers shrunk their headcounts proportionately less than the rest of the economy during that horrendous spring of 2020. So they didn’t have as much ground to make up.

February’s biggest manufacturing jobs winners among the major sectors tracked by the Labor Department were:

>transport equipment, where payrolls in March advances by 10,800 – their best such performance since last August’s 19,000. At the same time, this increase followed a 19,800 February jobs plunge that was the sector’s worst such performance since the automotive sub-sector’s semiconductor shortage woes led to a nosedive of 48,100 in April, 2021. All this volatility left this sector’s employment levels 4.05 percent below those in that final pre-pandemic data month of Februay, 2020 – versus the one percent decrease since then by manufacturing overall;

>chemicals, whose 7,200 monthly jobs jump was its best ever (or at least since figures began being tracked in 1990). The previous all-time high was the 6,600 gain of January, 2021. This huge industry’s headcount is now up 4.49 percent since February, 2020;

>electrical equipment and appliances, where employment rose sequentially by 3,800 for its strongest increase since March, 2021’s 4,200. Jobs-wise, these industries are now 2.82 percent larger than in Febuary, 2020;

>and automotive. This industry, a sub-sector of transportation equipment, boosted employment by 6,400 in March, the most in a month since last October’s 34,200 burst. But underscoring the volatility among vehicle and parts makers, This March increase followed a 16,000 drop-off in February that was the biggest decrease since the 49,100 jobs lost in April, 2021. These ups and downs still have left automotive employment 1.32 percent their February, 2020 levels.

Machinery’s 1,700 monthly jobs gain in March wasn’t exceptional by the above standards. But RealityChek regulars know it’s of special importance because its products are so widely used throughout manufacturing and the rest of the economy. And in a somewhat discouraging development, this sector’s initially reported 8,300 jobs growth was revised down to 6,600. And its payrolls are still 2.89 percent smaller than in February, 2020.

The only significant jobs loser in March was non-metallic mineral products, where employment sank by 4,500 on month. That was the sector’s worst such perforance since last May’s 5,300 decline, but the March downturn snapped a string of good gains for these companies, and their workforces are 2.81 percent above their February, 2020 levels.

As always, the most detailed employment data for pandemic-related industries are one month behind those in the broader categories, and as with the rest of domestic industry for February, their employment picture showed improvement overall.

In that shortages-plagued semiconductor and related devices sector, employment dipped by 100 on month, but January’s initially reported 200 increase was revised up to 300– its best such performance since October’s 1,000 advance. Since February, 2020, its headcount has climbed by only 0.86 percent, but these companies actually added jobs during the very steep CCP Virus-induced recession of spring, 2020.

Surgical appliances and supplies makers – whose products include personal protective equipment and similar medical goods – boosted employment by 800 in February. January’s initially reported 1,700 jobs increase was downgraded to 1,300, and December’s results were unrevised at 1,100. These health security-related companies have expanded their workforces by 3.79 percent since February, 2020.

The employment news was particularly good in the very big pharmaceuticals and medicines industry. Its February monthly employment increase of 1,300 was the best since September’s 1,600, and January’s initially reported dip of 100 now stands as an increase of 1,100. December’s downwardly revised 900 jobs gain remained the same, and these companies have now increased their employee numbers by 9.04 percent since February, 2020.

The medicines subsector containing vaccines didn’t perform nearly as robustly in February, but still grew jobs by 800. January’s initially reported 500 employment increase and December’s downwardly revised 2,000 expansion remained the same. The vaccine industry workforce is now 23.05 percent larger than in February, 2020.

The aviation cluster enjoyed a good hiring month in February, too. Jobs in the aircaft industry, dominated by Boeing and companies in its supply chain, rose by 500 – the best since the identical total in November. January’s initially reported downturn of 800 and December’s decrease of 400 remained unrevised. Aircraft employment is still off by 11.57 percent since February, 2020.

Makers of aircraft engines and engine parts expanded their workforces by 900 during February, and although January’s initially reported hiring figures were downgraded, the estimate went only from 1,000 to 900. December’s upwardly revised employment increase of 700 was unrevised, all of which helped these companies bring their payrolls to within 13.20 percent of their February, 2020 levels.

Jobs prospects in the deeply depressed non-engine aircraft parts and equipment sector keep looking up, too. Employment improved by 200 in February, and January’s initially reported job growth of 500 was revised all the way up to 1,500. December’s jobs losses stayed at 900, and although these industries’ headcounts are still 16.35 percent below February, 2020’s, that’s better than the 17.30 percent shortfall calculable last month.

Continuing headwinds are still imaginable for domestic manufacturing – like a dramatic escalation of the fighting in Ukraine (which could greatly heat up inflationary pressures and foster even greater Federal Reserve efforts to slow economic growth); a new CCP Virus variant that’s not only more infectious but more deadly; and more big China lockdowns that could further screw up global supply chains. But given the recent actual record, it’s even easier to imagine manufacturing employment continuing to improve.

(What’s Left of) Our Economy: A U.S. Productivity Report with Something for Everyone

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CCP Virus, coronavirus, COVID 19, labor productivity, productivity, stay at home economy, technology, total factor productivity, Wuhan virus, {What's Left of) Our Economy

As known by RealityChek readers, I’m always hesitant to make too much of official U.S. productivity statistics because many economists believe that these various measures of efficiency are unusually hard to measure. (Google “productivity,” “data,” “measurement,” and “problems” and you’ll see what I mean.)

Moreover, I’ve been especially hesitant during the CCP Virus era, because the pandemic and related lockdowns and behavioral changes have been so unprecedented, and it’s still far from clear how lasting the effects will be.

Having said that, these data surely aren’t completely meaningless either, and a major finding of theirs has been so dramatic that it’s tough to dismiss: Both the relatively narrow measure of labor productivity, or the broader measure of total factor productivity show a big slowdown in productivity growth in recent decades.

For total factor productivity, here are the figures that compare the performance of non-farm businesses in percentage terms during the last three economic recoveries (i.e., using the best apples-to-apples data) before the CCP Virus-era bounceback that began in the third quarter of 2020:

1990s expansion (1991-2000): +10.34 percent

bubble decade expansion (02-07): +6.91 percent

post-Great Recession expansion (10-19): +4.88 percent

The main evidence for the slowdown is the fact that even though the latest expansion was the same length as that of the 1990s, its cumulative total factor productivity growth was less than half as strong.

In this context, it’s noteworthy today’s Labor Department release on total factor productivity (which, unlike labor productivity, tries to show business’ success in using a wide range of inputs – not just workers – to improve efficiency) has something for both optimists and pessimists.

Glass-half-full types will observe that, in 2021, total factor productivity grew by 3.17 percent – a record in a statistical series going back to 1987. The previous fastest annual pace was 1992’s 2.88 percent.

The glass-half-empty types, though, can argue that even this big advance won’t be enough to end the long-running slowdown. In the first place, the excellent 2020-21 impovement followed a 1.97 percent 2019-20 decrease that was the worst performance of all time. And in that vein, because solid total factor productivity increases are typical of early stages of an economic recovery, the 2021 year-on-year jump may only be a post-CCP Virus reversion to a dreary long-term mean.

The optimists can counter by claiming that pandemic-driven trends like severe labor shortages, consequently rising wages, and the advent of a work-at-home era in both the public and private sectors will push employers to invest more in labor-saving and communications technology in particular. The result will be a turning point in the recent crummy U.S. productivity story.

The only certainty I can see is that the virus is becoming endemic and that its economic growth-depressing effects will fade steadily (at least until the next pandemic). Other than that, I’ll simply say that the force of inertia alone indicates to me that the burden of proof for a durable productivity upswing – and for a needed U.S. transition from prosperity based on government stimulus to well-being with sturdier foundations – still lies with the optimists.

Following Up: Podcast Now On-Line of National Radio Interview on the U.S., China, and De-Globalization

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CBS Eye on the World with John Batchelor, CCP Virus, China, coronavirus, COVID 19, Following Up, globalization, Gordon G. Chang, John Batchelor, manufacturing, near-shoring, reshoring, Russia, supply chains, Ukraine, Ukraine-Russia war, Wuhan virus, zero covid policy

I’m pleased to announce that the podcast of my interview last night on the nationally syndicated “CBS Eye on the World with John Batchelor” is now on-line.

Click here for a timely discussion with John and co-host Gordon G. Chang on whether the United States or China will hold the greatest advantages in a world where fragile international supply chains were de-globalizing even before the Ukraine-Russia war.

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

(What’s Left of) Our Economy: Americans’ Real Wages Keep Sinking

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CCP Virus, China, consumer price index, coronavirus, cost of living, COVID 19, CPI, energy, food, inflation, inflation-adjusted wages, living costs, lockdowns, private sector, real wages, Russia, sanctions, supply chains, Ukraine, Ukraine invasion, Ukraine-Russia war, wages, Wuhan virus, zero covid policy, {What's Left of) Our Economy

Last Thursday’s news coverage of U.S. inflation rates (as measured by the Labor Department’s Consumer Price Index, or CPI) rightly emphasized that the February headline figure hit its highest annual rate in 40 years. What such reports seem to have missed is something at least as important, especially for understanding why the American public seems so angry about these price hikes despite lots of other strong economic indicators.

Specifically, the same day the Labor Department released the new CPI numbers, it also posted data showing that after adjusting for inflation, wages for many major categories of U.S. workers saw their greatest drops in several months and in some cases longer than that. And much of the news was especially bad in manufacturing.

To start with the broadest grouping, in February, hourly pay for the average private sector worker fell on month by 0.80 percent, the worst such performance since the 1.72 percent decrease in June, 2020, early during the recovery from the CCP Virus’ first wave. (As known by RealityChek regulars, the Labor Department doesn’t track wages for government workers because those pay levels are mainly set by politicians’ decisions, and therefore say little about the fundamental state of the nation’s labor market or broader economy.)

For private sector production and nonsupervisory workers (who are often called blue-collar workers), the 0.86 real wage decline they experienced was also the worst since June, 2020 (1.30 percent).

On an annual basis, after-inflation wages in February sank for all private sector workers by 2.63 percent – the fastest pace since last May’s 2.67 percent. And for the blue-collar subset, they’re off by 1.93 percent – also the most since last May (2.69 percent).

Throughout manufacturing, these inflation-adjusted wages took major hits, too. For all workers in the sector, such pay dropped by 1.29 percent between January and February – the biggest falloff since May, 2020’s 1.76 percent. For industry’s blue-collar employees, they tumbled by 0.57 percent – the steepest since June, 2020’s 1.31 percent.

Much worse for manufacturing wages were the February year-on-year results. For manufacturing as a whole, they were down in after-inflation terms by 3.43 percent – the greatest decline since April, 2021’s 3.85 percent.

But the real stunner came for the production and nonsupervisory group. The 3.41 percent annual retreat in their real wages was the worst in more than 41 years – going back to July, 1980’s 3.90 percent.

And especially discouraging – with further price hikes in energy (and all the products and services that depend on it) and food seemingly certain because Russia’s invasion of Ukraine has disrupted global markets and supply chains anew, inflation-adjusted wages also seem likely to keep falling. The news that China has just locked down two big industrial cities in an attempt to fight a CCP Virus surge with its Zero Covid policy won’t help, either.

It’s true, as President Biden and his supporters keep noting, that growth is still strong, and that unemployment is way down.  But the former understandably can seem abstract, and high inflation means that even recent job gainers can’t be faulted for feeling that they’re falling behind economically despite paychecks resuming.  

 

(What’s Left of) Our Economy: #PutinPriceHike? Not Even Close – Yet

Tags

baseline effect, Biden administration, CCP Virus, coronvirus, COVID 19, energy, fossil fuels, gasoline, inflation, lockdowns, oil, Putin, sanctions, stay-at-home, Ukraine invasion, Ukraine-Russia war, Wuhan virus, {What's Left of) Our Economy

According to the Biden administration, it’s the #PutinPriceHike. That is, don’t blame anything Washington has or hasn’t done for the the bulk of the high gasoline prices Americans have been paying lately. Instead, blame Russian dictator Vladimir Putin, his aggression against Ukraine, and the global oil market turmoil it’s triggered.

The trouble is, if you look at these prices in a comprehensive, statistically legitimate way, scapegoating Putin in this case isn’t justified yet. But the same methodology shows that Mr. Biden and his aides are off the hook, too – at least until recently.

Critics (see, e.g., here) have countered the Biden claims by noting that strong U.S. gasoline inflation predates the Ukraine war and even Russian military buildup by many months, and they’re right. As known by RealityChek readers, however, that’s far from the whole story. In particular, they’re ignoring the impact on gasoline and other prices of the ongoing aftermath of the CCP Virus pandemic, the brief but sharp recession created by the disease and related lockdowns and voluntary behavioral changes, and ongoing stop-start U.S. economy that’s still resulting.

In other words, they’re ignoring the “baseline effect” caused by the economic shocks of the 2020 pandemic year in particular. These drove economic activity down to such low levels, and kept it there so long, that any major return to normal (and therefore normal prices) is going to produce unusually lofty inflation stemming from a catch-up effect. Therefore, it won’t be possible to determine the role of other contributors to inflation in gasoline or any other goods and services until this baseline effect fades significantly and finally disappears. And therefore, scapegoating Biden for soaring gasoline prices pre-Ukraine buildup isn’t justified, either.

RealityChek reported yesterday that the latest official U.S. figures show that the baseline effect has ended for headline inflation, and looks on the way out for core inflation (which strips out food and energy price. And roughly the same is true for gasoline prices.

The table below shows their monthly year-on-year percentage changes for last year (2020-21) in the middle column and for pandemic-dominated 2019-2020 (in the righthand colum). The numbers begin in March because March, 2020 was the first month in which the virus began significantly affecting the economy.

Gasoline price annual percentage changes      2020-21             2019-20

March:                                                               22.58                 -10.05

April:                                                                 49.68                 -32.03

May:                                                                  56.51                 -33.67

June:                                                                  45.42                 -23.41

July:                                                                   41.93                -20.12

Aug.:                                                                  42.76                -16.67

Sept.:                                                                  41.93                -15.43

Oct.:                                                                   49.52                -18.15

As is evident, starting in March, 2020, gasoline prices began nosediving from their levels of 2019, and steep annual drops continued (though at a slower pace) through October. It’s easy to understand why. The combination of lockdowns and stay-at-home behavior caused automotive travel to crater, and national demand for gasoline naturally plummeted as well. Further, that’s clearly a big part of the reason why during the following March-October period, gasoline prices prices skyrocketed on the same annual basis. They were returning to normal from an artificially low base. And as a result, it’s wrong to blame the Biden administration exclusively or even mainly for this hot gasoline inflation.

From that point, however, the Blame Biden case gets stronger. The above table stops in October, 2021 because November was when the Putin military buildup began – and according to the Biden argument, gasoline prices really began taking off. What happened to annual gasoline prices increases from then until the end of  2021, and how strong was the baseline effect? Here are the numbers for November and December, with the 2020-21 annual increases in the middle column and the 2019-20 increases in the righthand column:

Gasoline price annual percentage changes      2020-21             2019-20

Nov.:                                                                  57.76                 -19.53

Dec.:                                                                  49.34                 -15.34

The strong 2020-21 yearly price increases continued for these two months. But the baseline effect (from the big 2019-20 price drops) weakened. In fact, the December, 2019-20 annual 15.34 percent annual gasoline price decline was the smallest such figure since March, 2019-20’s 10.05 percent. And the annual increase for the following March (22.58 percent) was less than half December’s 49.34 percent.

What about this January and February? For these months, of course, the comparison years are 2021-22 (whose increases are presented in the middle column) and 2020-21 (in the right hand column).

Gasoline price annual percentage changes      2020-21             2019-20

Jan.:                                                                   40.02                  -8.90

Feb.:                                                                   38.01                   5.42

So the story for the first two months of this year – between the start of Putin’s buildup and the (late February) invasion – is that annual increases slowed, but the baseline effect vanished much faster. Indeed, between February, 2020 and February, 2021, gasoline prices actually rose. So the administration’s #PutinPriceHike claims hold much less water.

Blaming Putin will become more credible going forward, as sales of Russian oil worldwide are curbed by sanctions. Since the global oil market is so thoroughly integrated, U.S. oil supplies will be crimped and upward price pressures will strengthen. But this is also the point at which other major administration policies will rightly attract attention for their role in spurring torrid gasoline inflation. They include in particular measures and rhetoric that throughout the President’s term have convinced oil and other fossil fuel providers that their industries’ growth will keep facing ever greater policy obstacles, and whose cumulative effect has undercut their ability to ramp up output quickly to fill the Russia gap.(See, e.g., here and here.)

All of which means that, as is the almost always the case with major economic trends and developments, recent gasoline price inflation has many causes, not one. And they can change profoundly in their nature and respective importance with the kinds of changing circumstances that have shaken the global oil and U.S. energy policy landscapes since the CCP Virus pandemic began. Let’s all hope, therefore, that American leaders across the political spectrum begin spending more time developing effective responses to oil price inflation, and less on bombarding each other and the rest of us with facile talking points.

(What’s Left of) Our Economy: Pre-Ukraine War, Anyway, U.S. Manufacturing Employment Regained Momentum

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aircraft, aircraft engines, aircraft parts, automotive, CCP Virus, coronavirus, COVID 19, fabricated metals products, food products, Jobs, Labor Department, machinery, manufacturing, non-farm payrolls, personal protective equipment, pharmaceuticals, PPE, semiconductor shortage, semiconductors, surgical equipment, Ukraine-Russia war, vaccines, Wuhan virus, {What's Left of) Our Economy

As strong as U.S.-based manufacturing’s jobs performance looked on the surface in February, a closer look at the numbers released by the Labor Department this morning reveals that it was even better. The big reason? The 36,000 jobs that domestic industry gained last month came despite an 18,000 falloff in the automotive sector, which remained troubled not only by a global semiconductor shortage that will clearly end one of these days, but by a Canadian truckers’ protest that closed a bridge that’s a key transit route for Canadian-made auto parts needed by U.S. auto plants.

Moreover, revisions of previous months’ data were excellent. January’s initially judged 13,000 sequential employment pickup is now pegged at 16,000 and December’s advance was increased from an already upwardly revised 32,000 to 41,000.

Manufacturers didn’t quite keep pace with the rest of the country’s non-farm businesses in February (the Labor Department’s definition of the American employers’ universe). But given the torrid rate of recent economy-wide net job creation, that performance is hardly shabby, and it’s held its own – literally – during the entire sharp recovery achieved by the economy since its April, 2020 pandemic low point.

Before the CCP Virus began seriously distorting the economy’s behavior (in February, 2020), manufacturing jobs accounted for 8.38 percent of total non-farm payrolls. Including the new revisions, this figure had hit 8.40 percent in January of this year, but the February report showed a dip back to 8.38 percent.

The private sector story has been remarkably similar. Manufacturing employment represented 9.83 percent of that sector’s total jobs in February, 2020. Including the new revisions, the share had risen to 9.86 percent in January of this year, but as of Februay, it had retreated back to 9.83 percent.

Put differently, the entire non-farm economy has now replaced 19.886 million (90.43 percent) of the 21.991 million jobs lost during the terrible months of March and April, 2020. The private sector has replaced fully 20.092 million (fully 95.60 percent) of the 21.016 million positions it shed that spring. Manufacturing has replaced 1.184 million (86.93 percent) of its 1.362 million employment drop. But industry’s share of total jobs has stayed stable because its jobs depression in 2020 was less severe than the entire economy’s or the larger private sector’s

February’s biggest manufacturing jobs winners among the major sectors tracked by the Labor Department were highly concentrated – and all were among January’s stellar performers. They were:

>Fabricated metals products added 10,500 jobs on month – though January’s previously reported 5,000 advance is now estimated at 3,700, and the industry’s employment is still 2.95 percent below its immediate pre-pandemic February, 2020 levels (versus 1.39 percent for all of manufacturing);

>Machinery, whose 8,300 increase is especially encouraging, because its products are used so widely throughout the entire economy. But it’s still 2.92 percent shy of its job level in February, 2020;

>and food products, whose payrolls climbed by 7,200, and whose January results were revised up from a 5,200 improvement to 5,800. This progress brought pushed food manufacturing employment levels to 1.01 percent above those in February, 2020.

Meanwhile, automotive was February’s only significant jobs loser. Its 18,000 monthly employment nosedive was its worst such performance since last April’s 49,100 plunge (also due to semiconductor woes). At least its previously reported 4,900 January sequential jobs drop has been revised up to a 3,500 loss. But automotive employment is still 2.55 percent below immediate pre-pandemic levels.

As always, the most detailed employment data for pandemic-related industries are one month behind those in the broader categories, and their January employment picture showed improvement overall.

Payrolls in the semiconductor and related devices segment increased by 200 on month in January, consistent with their very slow growth over the last five years – including during the pandemic era. Interestingly, its companies actually hired more on net during the very sharp CCP Virus-induced recession of 2020 (by 0.59 percent). Since February, 2020, its payrolls are up by 0.86 percent.

Employment increases stayed strong in January in the surgical appliances and supplies sector, which contains personal protective equipment and similar goods. This industry added 1,700 jobs on net, December’s monthly advance remained at 1,100, and November’s results stayed at an upgraded 3,100 increase. Consequently, the surgical appliances and supplies workforce is now 3.41 percent bigger than in pre-pandemicky February, 2020.

January pharmaceuticals and medicines employment dipped by 100 sequentially, however, and December’s 2,400 hiring jump was downgraded to just 900. November’s 700 jobs growth figure was unrevised. Even so, employment in this sector is 8.23 percent higher than just before the major initial CCP Virus hit to the economy.

As for the medicines subsector containing vaccines, the January figures and revisions seem to reveal some lost hiring steam. January monthly job growth was just 500 – the weakest since July’s 100 – and December’s excellent initially reported 2,400 rise is now judged to have been 2,000. November’s own 2,000 increase was unrevised, though, and job growth in this sector since February, 2020 is still a robust 22.23 percent.

January was a much better month than December for the aviation cluster – except oddly for aircaft. That sector, dominated by Boeing, saw employment shrink by 800 sequentially – is worst such performance since July’s 900 drop. Yet December’s originally estimated 600 employment decrease was upgraded to a decline of 400, and November’s results remained at a downgraded 500 job gain. After these latest fluctuations, aircraft industry employment fell to 11.78 percent less than in February, 2020.

Aircraft engines and engine parts makers, however, hired 1,000 workers on net in January – theit best performance since May, 2020’s 4,700, which came early during the strong late-spring recovery from the virus-induced recession. December’s initially reported jobs gain of 500 was revised up to 700, but November’s loss of 300 stayed unrevised. So although employment in these companies in January was 14.07 percent less than in February, 2020, it’s been closing the gap lately.

A notable employment rebound came in non-engine aircraft parts and equipment, where payrolls rose by 500 in January sinking by an unrevised 900 in December. But November’s results were downgraded from no change to a decrease of 100. And the sector payrolls are still down 17.30 percent since Februay, 2020.

I’m holding off on my usual prognosis for U.S. manufacturing employment because of the Russian invasion of Ukraine and its likely non-trivial economic fallout for the United States, and its probably greater repercussions for the rest of the world (to which domestic manufacturers sell a great deal). U.S.-based industry’s resilience throughout the pandemic has been extraodinary, but big power conflict could create a new and much more formidable set of challenges entirely.

Im-Politic: Six Million

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CCP Virus, China, coronavirus, COVID 19, Holocaust, Im-Politic, Jews, lab leak, natural origin, Nazis, Wuhan virus

Even if the situation in Ukraine, including the actual on-the-ground state of the fighting, wasn’t fluid enough to warrant pausing with the commentary and analysis until more clarity emerges, the approach of a global CCP Virus milestone should command major attention, and it involves the number six million.

As known by anyone familiar with contemporary history, it’s one of the few numbers powerful enough to stand alone, without elaboration – something like “nine-eleven.” For others, it’s the number that’s enough to summon up all the horrors of the Holocaust, representing the number of European Jews widely thought to have been killed by the Nazis.

That’s why it’s important to point out that it already may describe the number of people killed worldwide by the virus – and that according to the reliable Washington Post and Worldometers.info pandemic trackers, if the victim count actually hasn’t hit this level yet, it’s certain to by tomorrow. Or the next day. (Nearly one million of these victims have been Americans.)

In many, and even most ways, of course, the Holocaust’s impact remains in a class by itself. The six million killed during the Holocaust accounted for an estimated 63 percent of the Jews living in Europe before 1933 – when Adolph Hitler became Germany’s Chancellor (via election, indirectly).

Moreover, with the continent’s surviving Jewish population literally in tatters in 1945, never to achieve critical mass again, it’s fair to say that an entire civilization or culture, developed over centuries, was wiped out. The effect on the pre-1933 global Jewry was extraordinary, too: Holocaust victims represented nearly 43 percent of that pre-1933 population. (The data in this and the preceding paragaph come from here.)

The raw numbers tell a different story about CCP Virus victims. That six million represents less than 0.08 percent of the entire world population (based on this current estimate of nearly 7.9 billion). And because of all the difficulties, legitimate and not so legitimate, in distinguishing deaths caused by the virus and deaths related to the virus, the six million figure probably shouldn’t be taken too literally.

But the raw numbers can never express the full extent of a genocide or an atrocity or a tragedy of any kind. So the ability of a pathogen to be as great a killer in this age of miraculous medical technology as the fanatically obsessed ruler of a major power equipped with that era’s state-of-the-art technology – and all within two years – should be enough to give anyone pause (even if the Spanish flu of a century ago was far deadlier).

And at least as bad as the death toll, at least in my view, is that efforts to affix responsibility for the pandemic – which almost certainly began in China, whether you believe in the natural origin theory or the variants of the lab leak theory – seem to have ended with a whimper. Unless you’ve heard anything significant lately about either a Biden administration or World Health Organization investigation?

Once the Nazi Holocaust was revealed, the world in general vowed “Never again” and brought the perpetrators to justice. Now its quantitative equivalent has happened again, and accountability – or even simple explanation of the origin – of any kind seems as remote a prospect as ever.

(What’s Left of) Our Economy: No Winter of Discontent for U.S. Manufacturing Production

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aerospace, aircraft, aircraft parts, automotive, CCP Virus, coronavirus, COVID 19, Federal Reserve, food products, inflation-adjusted output, machinery, manufacturing, medical equipment, Omicron variant, pharmaceuticals, real output, semiconductor shortage, semiconductors, supply chains, textiles, Wuhan virus, {What's Left of) Our Economy

Today’s Federal Reserve report on industrial production (for January) showed once again that if you’re looking for clickbait-y news about the economy, don’t look at U.S. manufacturing. The new figures showed not only that inflation-adjusted domestic manufacturing output grinded out another pretty good monthly gain (0.22 percent), but that whatever Omicron-related hit to industry’s growth was delivered in December was much smaller than first estimated (a decline of just -0.07 percent instead of -0.28 percent). And revisions overall for previous months were positive.

This performance left real manufacturing production 2.49 percent above the levels it hit in February. 2020 – the last full data month before the CCP Virus and its effects began impacting the economy (and everything else). December’s revision, moreover, pushed industry’s constant dollar expansion in 2021 up from 3.71 percent to 4.06 percent. That’s still the highest level since 2011’s 6.48 percent, but this strong growth also partly reflected one of those CCP Virus baseline effects – since between 2019 and 2020, domestic manufacturing shrank by 1.94 percent after inflation.

With January’s price-adjusted monthly production increases broad-based, the list of significant winners was longer than usual. For the major industry groupings tracked by the Fed, it includes (in descending order):

>the 1.43 percent monthly jump in textiles and products’ constant dollar production, which continued a strong recent run. All the same, these industries remain 1.61 percent smaller in real terms than in pre-pandemic-y February, 2020;

>an especially encouraging 1.37 percent real output rise in miscellaneous durable goods – a category that contains the personal protective equipment and respirators so crucial to the pandemic response. This advance did follow a big sequential production drop in these products in September, but at least it’s now judged to be 1.91 percent, rather than 2.68 percent. As a result, the miscellaneous durable goods industries put together are now 7.20 percent larger than in February, 2020;

>a 1.08 percent rise in inflation-adjusted machinery production that’s also encouraging because this sector’s products are used so widely throughout the rest of manufacturing and the non-manufacturing economy. This increase was the best since July’s 2.85 percent pop, and December’s good initially reported 0.68 percent improvement is now pegged at 0.87 percent;

>food products’ 0.90 percent after-inflation growth, which continues a long stretch of steady improvement. Inflation-adjusted output in this sector is only 1.25 percent higher than in February. 2020 – but it never suffered the huge downturn of spring 2020 that the rest of manufacturing and the economy experienced, So it’s never benefited much from any baseline effect;

>a 0.87 percent increase in the aerospace and miscellaneous transportation sector. January’s performance didn’t make up for the 0.97 percent December drop that was these industries’ worst since August’s 2.31 percent nosedive. But output in this cluster is still 13.08 percent greater after inflation than in February, 2020.

Manufacturing’s biggest January production losers included:

>petroleum and coal products, where a 1.47 percent monthly after-inflation slump was its second consecutive significant decrease (although December’s decrease is now judged to be 1.46 percent, not 1.58 percent). Price-adjusted production in this sector is now down by 5.92 percent since February, 2020, just before the pandemic rocked the economy;

>the 1.44 percent retreat registered by printing and related support activities. December’s initially reported 1.82 percent downturn is now estimated at just 1.02 percent, but real output in these sectors is still down 4.95 percent since Febuary, 2020;

>and a 0.89 percent constant dollar monthly production fall-off in automotive, which keeps struggling with the global semiconductor shortage. Both the December and November results received big upgrades (from a 1.29 percent decrease to a 0.38 percent slide in the former, and from a 1.69 percent drop to a 0.41 percent decline in the latter). But real output of vehicles and their parts is 6.25 percent short of their February, 2020 figure.

January’s generally good manufacturing output results carried over into industries that have been prominent in the news during the pandemic.

In aircraft and parts, price-adjusted monthly production rose 1.37 percent – the best rate since August’s 3.44 percent. Revisions were mixed, with December’s 0.38 percent decrease revised down to a 0.74 percent fall-off, and November’s once-upgraded 1.04 percent decrease pushed up again to a 0.69 percent dip. Even so, inflation-adjusted output in these industries is now 13.14 percent higher than in pre-pandemicky February, 2020, as opposed to the 10.71 percent growth calculable from last month’s Fed release.

Pharmaceuticals and medicines saw a January constant dollar output advance of 0.27 percent, and December’s previously reported 0.13 percent decrease was revised all the way up to a 0.81 percent gain. In real terms, therefore, these industries are 14.91 percent bigger than in February, 2020, as opposed to the 13.42 percent calculable last month.

In line with the pattern revealed in their miscellaneous durable goods super-sector, inflation-adjusted output of medical equipment and supplies rebounded in January, with its 2.50 percent increase representing the best monthly performance since July, 2020’s 10.78 percent burst. (In last month’s report, I mistakenly wrote that April, 2020 had seen the previous best.)

Moreover, the initially reported 2.75 percent after-inflation output swoon for December has been upwardly revised to a decrease of 1.97 percent. These developments were enough to leave real medical equipment and supplies production 4.43 percent above their levels of February, 2020. As of last month, they were 1.50 percent below.

Finally, let’s add semiconductors to the list of pandemic industries examined. In tandem with “other electronic components” (the joint category tracked by the Fed), their real output declined fractionally on month in January, which broke a streak of steady growth that resumed last June. Price-adjusted output in this group of industries is fully 20.66 percent above its immediate pre-pandemic level – and was never significantly depressed by the steep virus-induced recession of early spring, 2020.

Especially if the CCP Virus actually moves to the rear-view mirror in upcoming weeks and months (in the form of becoming endemic, not disappearing altogether), then the outlook seems bright for domestic manufacturing. Granted it’s benefited from gigantic stimulus from fiscal and monetary policy, and those spigots are being tightened and crimped. But historically speaking, they’re by no means tight or closed, and there’s no reason to believe that if smaller amounts of stimulus start slowing growth meaningfully, that Washington won’t open the floodgates again. In addition, consumers’ finances still seem healthy, and Americans’ determination to spend seems unchecked (which is in part why inflation has been so persistent).

A return to public health normality should further untangle supply chain snags, ease labor shortages, and open recovering foreign economies wider to U.S. exports (though U.S. imports can be expected to rise as well). Just as important, it will remove most of the unprecedented uncertainty manufacturers have faced for the last two years and counting.

And although inflation is still likely to be elevated (not least because of energy prices, which are a big major cost to many manufacturing industries), so far domestic industry has shown the ability to handle it. As they say on Wall Street, past performance is no guarantee of future returns. But it’s at the least impressive evidence for optimism.