Weekly Indicators for June 29 - July 3 at Seeking Alpha

 - by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

There is a theory of the “wisdom of the crowd.” It refers to a situation where a mass of people, all taking their best guess as to a true fact, are all individually wrong, but averaged together are correct.

As to the economy, presently the “wisdom of the crowd” may be a ghastly, cold-blooded determination that there can be reasonable growth even with millions of infections and hundreds of thousands of deaths on an ongoing basis. Maybe.

As usual, clicking over and reading will bring you virtually up to the moment on the economy, and reward me a little bit for my efforts.

P.S. This coming week will feature only two noteworthy pieces of data: the May JOLTS survey on Tuesday, and jobless claims on Thursday. So I will probably take a day or two off from posting. But I do want to update my map of the Electoral College based on State polling, and the coronavirus dashboard.

Frederick Douglass’s oration on the 4th of July (abridged)

 - by New Deal democrat

The middle portion of Douglass’s famous speech, delivered in 1852 to white abolitionists in Rochester, NY, where Douglass lived at the time, and is buried — “What, to the American slave, is your 4th of July?” — is best known.

But in the first portion he allowed for celebration of the principles enunciated by the Founders in the Declaration of Independence: “your fathers, the fathers of this republic, did, most deliberately, under the inspiration of a glorious patriotism, and with a sublime faith in the great principles of justice and freedom, lay deep the corner-stone of the national superstructure.”

And in the Concluding portion, he “dr[e]w[ ] encouragement from the Declaration of Independence, the great principles it contains, and the genius of American Institutions” for the future.

In our own moment of critical trial and literal iconoclasm, Douglass’s ability to see the Founding Fathers as 3 dimensional, lauding their accomplishments as well as damning their collusion in evil, and for girding one’s loins to the crisis of the present, with abiding hope for the universality of decency and justice in the future, is particularly inspiring. 
____________________

The papers and placards say, that I am to deliver a 4th [of] July oration. 

The fact is, ladies and gentlemen, the distance between this platform and the slave plantation, from which I escaped, is considerable—

This, for the purpose of this celebration, is the 4th of July. It is the birthday of your National Independence, and of your political freedom. This, to you, is what the Passover was to the emancipated people of God. It carries your minds back to the day, and to the act of your great deliverance; and to the signs, and to the wonders, associated with that act, and that day. This celebration also marks the beginning of another year of your national life; ... The eye of the reformer is met with angry flashes, portending disastrous times; but his heart may well beat lighter at the thought that America is young, and that she is still in the impressible stage of her existence. May he not hope that high lessons of wisdom, of justice and of truth, will yet give direction to her destiny? Were the nation older, the patriot’s heart might be sadder, and the reformer’s brow heavier. Its future might be shrouded in gloom, and the hope of its prophets go out in sorrow. There is consolation in the thought that America is young. ....

... there was a time when to pronounce against England, and in favor of the cause of the colonies, tried men’s souls. They who did so were accounted in their day, plotters of mischief, agitators and rebels, dangerous men. To side with the right, against the wrong, with the weak against the strong, and with the oppressed against the oppressor! here lies the merit, and the one which, of all others, seems unfashionable in our day. The cause of liberty may be stabbed by the men who glory in the deeds of your fathers. But, to proceed....

....

On the 2d of July, 1776, the old Continental Congress, to the dismay of the lovers of ease, and the worshipers of property, clothed that dreadful idea with all the authority of national sanction. ....

Citizens, your fathers made good that resolution. They succeeded; and to-day you reap the fruits of their success. The freedom gained is yours; and you, therefore, may properly celebrate this anniversary. The 4th of July is the first great fact in your nation’s history—the very ring-bolt in the chain of your yet undeveloped destiny.

Pride and patriotism, not less than gratitude, prompt you to celebrate and to hold it in perpetual remembrance. I have said that the Declaration of Independence is the ring-bolt to the chain of your nation’s destiny; so, indeed, I regard it. The principles contained in that instrument are saving principles. Stand by those principles, be true to them on all occasions, in all places, against all foes, and at whatever cost.

From the round top of your ship of state, dark and threatening clouds may be seen. Heavy billows, like mountains in the distance, disclose to the leeward huge forms of flinty rocks! That bolt drawn, that chain broken, and all is lost. Cling to this day—cling to it, and to its principles, with the grasp of a storm-tossed mariner to a spar at midnight.

....

Fellow Citizens, I am not wanting in respect for the fathers of this republic. The signers of the Declaration of Independence were brave men. They were great men too—great enough to give fame to a great age. It does not often happen to a nation to raise, at one time, such a number of truly great men. The point from which I am compelled to view them is not, certainly, the most favorable; and yet I cannot contemplate their great deeds with less than admiration. They were statesmen, patriots and heroes, and for the good they did, and the principles they contended for, I will unite with you to honor their memory.

They loved their country better than their own private interests; and, though this is not the highest form of human excellence, all will concede that it is a rare virtue, and that when it is exhibited, it ought to command respect. He who will, intelligently, lay down his life for his country, is a man whom it is not in human nature to despise. Your fathers staked their lives, their fortunes, and their sacred honor, on the cause of their country. In their admiration of liberty, they lost sight of all other interests.

They were peace men; but they preferred revolution to peaceful submission to bondage. They were quiet men; but they did not shrink from agitating against oppression. They showed forbearance; but that they knew its limits. They believed in order; but not in the order of tyranny. With them, nothing was “settled” that was not right. With them, justice, liberty and humanity were “final”; not slavery and oppression. You may well cherish the memory of such men. They were great in their day and generation. Their solid manhood stands out the more as we contrast it with these degenerate times.

How circumspect, exact and proportionate were all their movements! How unlike the politicians of an hour! Their statesmanship looked beyond the passing moment, and stretched away in strength into the distant future. They seized upon eternal principles, and set a glorious example in their defense. Mark them!

Fully appreciating the hardship to be encountered, firmly believing in the right of their cause, honorably inviting the scrutiny of an on-looking world, reverently appealing to heaven to attest their sincerity, soundly comprehending the solemn responsibility they were about to assume, wisely measuring the terrible odds against them, your fathers, the fathers of this republic, did, most deliberately, under the inspiration of a glorious patriotism, and with a sublime faith in the great principles of justice and freedom, lay deep the corner-stone of the national superstructure, which has risen and still rises in grandeur around you.

Of this fundamental work, this day is the anniversary. ....

....

I leave ... the great deeds of your fathers to other gentlemen whose claim to have been regularly descended will be less likely to be disputed than mine!

....

We have to do with the past only as we can make it useful to the present and to the future. To all inspiring motives, to noble deeds which can be gained from the past, we are welcome. But now is the time, the important time. Your fathers have lived, died, and have done their work, and have done much of it well. You live and must die, and you must do your work. You have no right to enjoy a child’s share in the labor of your fathers, unless your children are to be blest by your labors. You have no right to wear out and waste the hard-earned fame of your fathers to cover your indolence. .... 

But, .... The blessings in which you, this day, rejoice, are not enjoyed in common. The rich inheritance of justice, liberty, prosperity and independence, bequeathed by your fathers, is shared by you, not by me. The sunlight that brought life and healing to you, has brought stripes and death to me. This Fourth [of] July is yours, not mine. You may rejoice, I must mourn. To drag a man in fetters into the grand illuminated temple of liberty, and call upon him to join you in joyous anthems, were inhuman mockery and sacrilegious irony. ....

....

What, to the American slave, is your 4th of July? I answer: a day that reveals to him, more than all other days in the year, the gross injustice and cruelty to which he is the constant victim. ....

.... Americans! your republican politics, not less than your republican religion, are flagrantly inconsistent. You boast of your love of liberty, your superior civilization, and your pure Christianity, .... You glory in your refinement and your universal education yet you maintain a system as barbarous and dreadful as ever stained the character of a nation—a system begun in avarice, supported in pride, and perpetuated in cruelty. .... You profess to believe “that, of one blood, God made all nations of men to dwell on the face of all the earth,” and hath commanded all men, everywhere to love one another; yet you notoriously hate, (and glory in your hatred), all men whose skins are not colored like your own. You declare, before the world, and are understood by the world to declare, that you “hold these truths to be self evident, that all men are created equal; and are endowed by their Creator with certain inalienable rights; and that, among these are, life, liberty, and the pursuit of happiness”; and yet, you hold securely, in a bondage which, according to your own Thomas Jefferson, “is worse than ages of that which your fathers rose in rebellion to oppose,” a seventh part of the inhabitants of your country.

Fellow-citizens! I will not enlarge further on your national inconsistencies. The existence of slavery in this country brands your republicanism as a sham, your humanity as a base pretence, and your Christianity as a lie. It destroys your moral power abroad; it corrupts your politicians at home. It saps the foundation of religion; it makes your name a hissing, and a by word to a mocking earth.....

.... I differ from those who charge this baseness on the framers of the Constitution of the United States. It is a slander upon their memory, at least, so I believe. ....

.... I hold there is neither warrant, license, nor sanction of the hateful thing; but, interpreted as it ought to be interpreted, the Constitution is a GLORIOUS LIBERTY DOCUMENT. Read its preamble, consider its purposes. Is slavery among them? Is it at the gateway? or is it in the temple? It is neither. ....

Now, take the constitution according to its plain reading, and I defy the presentation of a single pro-slavery clause in it. On the other hand it will be found to contain principles and purposes, entirely hostile to the existence of slavery....

Allow me to say, in conclusion, notwithstanding the dark picture I have this day presented of the state of the nation, I do not despair of this country. .... “The arm of the Lord is not shortened,” and the doom of slavery is certain. I, therefore, leave off where I began, with hope. While drawing encouragement from the Declaration of Independence, the great principles it contains, and the genius of American Institutions, my spirit is also cheered by the obvious tendencies of the age. Nations do not now stand in the same relation to each other that they did ages ago. No nation can now shut itself up from the surrounding world, and trot round in the same old path of its fathers without interference.

Initial and continued claims show stalling progress in rehiring

 - by New Deal democrat

Weekly initial and continuing jobless claims give us the most up-to-date  snapshot of the continuing  economic impacts of the coronavirus on employment. Going on four full months after the initial shock, the overall damage remains huge, with large spreading new secondary impacts. The best that can be said is that the damage is not accelerating - but as is shown below, there is has been negligent progress in the past few weeks.

Here are initial jobless claims both seasonally adjusted (blue) and non- seasonally adjusted (red). The non-seasonally adjusted number is of added importance since seasonal adjustments should not have more than a trivial effect on the huge real numbers:

There were 1.445 million new claims, only 15,000 less than one week ago. After seasonal adjustment this became 1.270 million, “only” 59,000 less than last week’s number. While the trend of the past 45 days of slight declines in new claims continues, this is the smallest weekly decline since the worst reading in April. Further, this objectively continues to show huge second-order impacts continuing to spread.

The same flattening trend is apparent in continuing claims, which lag one week behind. In the past six weeks, both the non-seasonally adjusted number (red), and the less important seasonally adjusted number (blue) have both remained essentially stationary. This week the former rose by 266,400 to 17.921 million, still 4.873 million below its peak of 22.794 million six weeks ago; while the latter rose by 59,000 to 19.290 million, 5.622 million below its peak of 24.912 million reading six weeks ago:

In other words, the spreading new damage shown by the continued huge numbers of new jobless claims is about equal to the callbacks to work from various sectors “reopening.”

The stalled progress of both new and continued claims is apparent in the graph below, showing the percent change week over week in new (blue) and continued (red) claims:

For the last three weeks in initial claims, and the last six in continuing claims, on a percentage basis there has been little change.

Finally, it is interesting to compare this with the payrolls numbers, including yesterday’s jobs report, which currently shows a loss of 14.661 million jobs from peak. This is less than the number of continuing claims alone, which strongly suggests that the jobs report is underestimating the damage done to the jobs market by the pandemic, as shown in the graph below:

Since claims are actual counts by the States vs. a sampled estimate in the jobs report, I am inclined to factor the former.

We’ll get a better look on Tuesday, when we get the JOLTS report, which shows both the  hiring and discharges sides of the jobs ledger. Since this will be for May, the first month of job gains after the pandemic started, it will better show us how much rehiring has been occurring.

June jobs report: the last hurrah of the wished-for “V-shaped” coronavirus recovery

 - by New Deal democrat

HEADLINES:

• 4,800,000 million jobs added. This makes up about 22% of the 22.1 million job losses in March and April.
• U3 unemployment rate improved 2.2% from 13.3% to 11.1%, compared with the January low of 3.5%.
• U6 underemployment rate improved 3.2% from 21.2% to 18.0%, compared with the January low of 6.9%.
• Those on temporary layoff declined 4,778,000 to 10.565 million.
• Permanent job losers increased by 588,000.
• April was revised downward by -100,000. May was revised higher by 190,000 respectively, for a net of 90,000 more jobs gained compared with previous reports.

Leading employment indicators of a slowdown or recession

I am still highlighting these because of their leading nature for the economy overall.  These were uniformly very positive: 

• the average manufacturing workweek rose 0.5 hours from a downwardly revised 38.7 hours to 39.2 hours. This is one of the 10 components of the LEI and will be a positive.

• Manufacturing jobs rose by 356,000. Manufacturing has still lost 757,000  jobs in the past 4 months, or 6% of the total.
• construction jobs rose by 158,000. Even so, in the past 4 months 472,000 construction jobs have been lost, or about 6% of the total.
• Residential construction jobs, which are even more leading, rose by 19,100. Even so, in the past 4 months there have still been 45,900 lost jobs, or about 5% of the total.

• temporary jobs rose by 148,900. Since February, there have still been 696,100 jobs lost, or 24% of all temporary help jobs.
• the number of people unemployed for 5 weeks or less declined by 1.037 million to 2.838 million, compared with April’s total of 14.283 million. This is similar to the “less awful” readings of the weekly initial jobless claims.
• Professional and business employment rose by 306,000, which is still 1.830 million, or about 8% below its February peak.

Wages of non-managerial workers

• Average Hourly Earnings for Production and Nonsupervisory Personnel: declined $0.23 from $24.97 to $24.74, which is still a gain of over 2.6% in 4 months. This reflects that job losses were primarily among lower wage earners, who have been disproportionately recalled to work.

Aggregate hours and wages:

• the index of aggregate hours worked for non-managerial workers rose by 4.2%. In the past 4 months combined this has nevertheless fallen by about 11%.

•  the index of aggregate payrolls for non-managerial workers rose by 3.2%. In the past 4 months combined this has nevertheless fallen by about 8%.  

Other significant data:

• Full time jobs were responsible for 2.418 million of the gains.
• Part time jobs were responsible for 2.438 million of the gains.
• The number of job holders who were part time for economic reasons declined by 1,571 million to 9.062 million. This is still an increase since February of 4.744 million.

SUMMARY

The most important fact to know about this report is that it covers the payroll period from May 13 through June 12. During that time initial jobless claims continued to decline strongly, so it was no surprise that this jobs report included a strongly positive headline number.

With only one exception, all of the important internals were also positive. This was a reflection of a broad-based recall to work in many States that “reopened” their economies. Even the decline in average hourly wages was actually a positive, since it reflected lower paid workers being recalled to work.  

The only negative was that the number of permanent job losses increased by over 1/2 million. This tells us that the underlying damage to the economy from the pandemic is spreading out and becoming more long-lasting.

Since June 12 both initial and continuing jobless claims have declined only slightly. More States that recklessly reopened are having to partially shut down businesses like restaurants and bars again. So this report - which shows a total recovery of about 1/3 of the job losses since February - is going to be one of the last hurrahs of the wished-for “V-shaped” recovery from the coronavirus lockdowns. 

June data starts out with a bright spot in manufacturing

 - by New Deal democrat

Earlier this week the last of the regional Fed Districts, Dallas, reported their manufacturing indexes for June. The overall picture has been a strong rebound:

Regional Fed New Orders Indexes

(*indicates report this week) 

• Empire State up +41.8 to -0.6
• Philly up +42.4 to +16.7
• Richmond up +30 to +5
• Kansas City  up +32 to +7
• *Dallas up +33.5 to +2.9 

On a month over month basis, the average is up +36 from -30 to +6

The regional Fed indexes almost always telegraph the direction, and sometimes the amplitude, of the ISM manufacturing index for the entire country. That was certainly the case for June.

This morning the ISM reported that manufacturing in the US rebounded strongly, up +9.5 from a contracting reading of 43.1 to an expanding reading of 52.6. The even more forward-looking new orders subindex rose from a horrible 31.8 to a strongly expansionary 56.4:

This is good news in an important indicator. Unfortunately, whether it will remain that way in the face of renewed restrictions in States that had recklessly reopened is very much open to question.