Final jobless claims of 2020 continue to show lack of progress

 

 - by New Deal democrat

New jobless claims declined for the second week in a row this week, but are still significantly above their recent pandemic lows, while continuing claims, seasonally adjusted, once again made a new pandemic low. There is a sizable but by no means certain likelihood that December’s jobs number will be negative.

On a unadjusted basis, new jobless claims declined by 31,736 to 841,111. Seasonally adjusted claims also declined by 19,000 to 787,000. The 4 week moving average, however, rose again by 17,750 to 836,750. All of these are above their recent lows. 

Here is the close up since the end of July (for comparison, remember that these numbers were in the range of 5 to 7 million at their worst in early April): 

Because of the huge distortions caused by the pandemic in seasonally adjusted numbers, and because we are at a time of year when seasonality causes the most distortions in any event, here are the YoY changes in all of the above metrics:

There is now a 7 week trend in the seasonally adjusted data of YoY% increases, while the trend has been rising slowly for the unadjusted data. I still won’t be sure about a renewed upward trend unless and until seasonally adjusted new claims rise over 900,000 and the 4 week average over 850,000, which would take both out of the range they have been in over the past 4 months. We’re not quite there yet.

The story is different with both seasonally and non-seasonally adjusted continuing claims, which historically lag initial claims typically by a few weeks to several months. Seasonally adjusted continuing claims declined again by 103,000 to a new pandemic low of 5,219,000. On an unadjusted basis, they declined by 171,035 to 5,258,073, still about 10,000 above their recent pandemic low:

Because these lag initial claims, I continue to suspect we will see an upward reversal in the next few weeks.

Both initial and continued claims remain at or above their worst levels from the Great Recession.

Finally, for the month of December new jobless claims were about 95,000, or 13%, higher than in November. That much of a spike has only happened 4 times previously in the past 50 years outside of a recession - in March 1967, April 1979, September 2005, and October 2013. On 3 of those 4 occasions, either that month’s or the following month’s jobs report showed actual job *losses.* In the exception, 2005, September showed only a 68,000 gain. As I have written for the past 2 weeks, because we are in uncharted territory all I really feel comfortable saying is that I suspect that the December jobs report is going to be the weakest since May.  A negative number is very possible, and if there is a positive number, it looks likely to be well under 200,000.  

This winter looks like it will be uniquely bleak. If there is a bright side, it is that George Harrison’s “Here Comes the Sun” is likely to be equally uniquely appropriate for the coming vaccination spring.

Coronavirus dashboard for December 29: a final look back at the pandemic disaster in 2020

 

 - by New Deal democrat

Total US confirmed cases: 19,132,726*
Average cases last 7 days: 184,005
Total US deaths: 333,118
Average deaths last 7 days: 2,207 

Total vaccinated: 2,127,143 (per CDC via Bloomberg)

*Because many asymptomatic people probably never get tests, actual cases are probably more like 26 million, or about 8% of the US population

Source: COVID Tracking Project

The good news is, we finally have started the process of vaccination, and 1% of the population should be vaccinated by the end of this week. The bad news is, at the current rate, it would take over 4 years to vaccinate everyone in the US. I do expect this to ramp up, both as more States get more efficient at administering the vaccine, and because the Biden Administration will be much more activist and competent at ramping up production and improving the supply chain.

As we end 2020, let’s take a look at total infections and deaths per capita so far.

Here are infections and deaths for the US as a whole (note separate scales):

Roughly 1 in 16 Americans has had a *confirmed* infection; 1 in 1000 Americans has died from COVID this year.

Here are total infections by State:

12% of North Dakotans and 11% of South Dakotans have had *confirmed* infections. Between 8% and 9% of the total population of Wisconsin, Iowa, Nebraska, Utah, and Tennessee have also had *confirmed* infections.

At the other end of the distribution, only about 1% to 2% of the populations of Maine, Hawaii, and Vermont have been infected. That is a success story.

Here are total deaths by State:

New Jersey and New York, which had horrible outbreaks early, still lead the pack, with about 1 in every 500 residents having died of the disease this year. About one in 600-700 of the entire populations of Massachusetts, North and South Dakota, Connecticut, Rhode Island, Louisiana, and Mississippi  have also died of the disease. 

Maine, Vermont, Alaska, and Hawaii have the best record, with only 2 deaths per 10,000 population. 

Looking at the 7 day average rate of infections shows that the wave that began in early November utterly dwarfs the two prior waves, with North Dakota having the worst result of any State:

Note that North Dakotans were apparently sufficiently terrified that their infection rate is now one of the 10 lowest in the entire country!

The 7 day average of deaths shows that the initial outbreak in the NYC metro area remains the most lethal:

Although Iowa and South Dakota’s recent spikes are in the same ballpark.

I expect the recent horrific rates of infections and deaths to continue throughout the winter, although there will be alternating waves of panic and complacency, depending on the recent experience of each State. Between vaccinations, warmer weather, and a competent new Administration in Washington I expect a real subsidence to finally begin by about late March or early April.

The Four big coincident indicators as of the end of 2020

 

 - by New Deal democrat

All of the important economic data for 2020 has already been released. In this final week only November house prices and one last week of jobless claims remain.

So this is a good time to take a look at the current state of the economy as it has unfolded in this pandemic year.

The 4 most important components in the NBER’s toolkit for calling recessions and expansions are real sales, real income, production, and employment. With the exception of manufacturers’ and wholesalers’ sales, all of the above components, including retail sales, have already been released through November. Let’s take a look:

The onset of the pandemic in March is really obvious, and the outsized distortions, first to the downside, and then to the upside, continued through July. In the last 3 months, the gains have slowed dramatically, and in November two of the four components went negative.

Norming each of the four components to 100 as of February shows that sales have actually made new highs since then, and income (thanks to the emergency stimulus) is only slightly below February’s level. But production and employment are still at quite depressed levels:

As of this morning, Trump finally signed the supplemental stimulus passed by Congress, but only after the unemployed lost one week of benefits.

While it is a mistake to project coincident trends forward, my expectation is that with the pandemic at its worst, more deterioration of the 4 coincident components of the economy is likely before the effect of vaccination and coherent Federal policy under the incoming Biden Administration make their mark.

Weekly Indicators for December 21 - 25 at Seeking Alpha

 

 - by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

While there have been some signs of softening in a few of the high profile metrics, overall the economy continues to remain surprisingly resilient.

As usual, clicking over and reading should bring you up to the moment, and put a little coin jingle in my pocket.

Jobless claims continue to show sideways to upward trend

 

 - by New Deal democrat

New jobless claims declined this week, but are still significantly above their recent pandemic lows, while continuing claims, seasonally adjusted, made a new pandemic low. The downward trend in claims has clearly ended for now, although whether the current trend is sideways or upward remains unclear. In particular, there is a sizable but by no means certain likelihood that December’s jobs number will be negative.

On a unadjusted basis, new jobless claims declined by 71,512 to 869,398. Seasonally adjusted claims also declined by 89,000 to 803,000. The 4 week moving average rose by 4,000 to 818,250. All of these are above their recent lows. 

Here is the close up since the end of July (for comparison, remember that these numbers were in the range of 5 to 7 million at their worst in early April): 

Because of the huge distortions caused by the pandemic in seasonally adjusted numbers, and because we are at a time of year when seasonality causes the most distortions in any event, let’s also take a look at the YoY changes in all of the above metrics:

There is now a 6 week trend in the seasonally adjusted data of YoY% increases, while the trend looks sideways for the unadjusted data. It remains likely that the renewed explosion of the pandemic has indeed caused new jobless claims to break into an upward trend due to the rampaging pandemic. Nevertheless, as I have written for the past 2 weeks, I won’t feel certain unless and until seasonally adjusted new claims rise over 900,000 and the 4 week average over 850,000, which would take both out of the range they have been in over the past 4 months. We’re not quite there yet.

Seasonally adjusted continuing claims, which historically lag initial claims typically by a few weeks to several months, declined by 170,000 to a new pandemic low of 5,337,000. On an unadjusted basis, they declined by 5,552 to 5,444,281, about 200,000 above their recent pandemic low:

Because these lag initial claims, I continue to suspect we will see an upward reversal in the next few weeks.

Additionally, although I won’t bother with a graph, both initial and continued claims remain at or above their worst levels from the Great Recession.

Finally, in the past month the 4 week moving average of new jobless claims has been  about 75,000 higher than it was in the 4 prior weeks. In “normal” times in the past, that has typically meant an actual job loss being reported in the next month’s payrolls report. As I wrote last week, because we are in uncharted territory all I really feel comfortable saying is that I suspect that the December jobs report is going to be the weakest since May.  A negative number is very possible, and if there is a positive number, it looks likely to be well under 200,000.  

The next 8 weeks are likely to be the very worst of the entire pandemic, because it is raging completely out of control, because it is winter, and because the current Administration has absolutely zero interest in doing anything about it. It will probably take at least a month for the Biden Administration’s efforts to begin to make a difference, and there won’t be enough people vaccinated until the end of the winter for that to make a significant difference.

Decline in personal income and spending adds to evidence of reversal of economic rebound

 

 - by New Deal democrat

This morning’s release of personal income and spending for November adds to the evidence that the economic recovery from the onset of the pandemic has stalled, and potentially reversed.

Real personal income declined -1.3% in November, the first decline since April. Real personal spending also declined -0.4%. Real personal spending is now down -2.7% from its February peak, while income remains higher by 2.0% (an important reason why the economy has not suffered more):

When we factor in “government transfer receipts,” i.e., things like unemployment and supplemental pandemic benefits, income also declined for the first time since April, and is down -1.5% compared with its February peak:

Between the cold weather curtailing outdoor activities, renewed lockdown-type restrictions, and increased caution by many due to the most recent surge in the pandemic, income becomes the latest metric, after restaurant reservations and jobless claims, to show a reversal. I expect more to come until winter ends and/or the pandemic begins to abate.

Coronavirus dashboard for December 22: the pain threshold

 

 - by New Deal democrat

Total US infections: 18,035,209*

Past 7 days average daily infections: 215,429

Total US deaths: 319,364

Past 7 days average daily deaths: 2,655

Source” COVID Tracking Project

*Because many asymptomatic cases in particular have probably not been diagnosed, I suspect the truer number is on the order of 25 million, or 1 in every 13 Americans.

Here is the latest overall look at new infections and deaths countrywide (note separate scales):

Each wave of new infections has been bigger than the one preceding, but deaths only in the past month have risen on a per capita basis to and exceeding the early peak from March and April. In the past 2 weeks, the rate of new infections has stabilized. We can expect deaths to stabilize in the next week or two at the level of one 9/11 each and every day.

Unfortunately, there is a behavioral feedback loop bordered by complacency and panic. The former means that voluntary measures alone will never defeat the pandemic. The latter has meant that patent and visible danger leads to a period of serious scaling back of risky activities by the majority of individuals.

Given the recent huge surge in cases, is there still a “pain threshold?” I think so, and it probably has been triggered most cogently by news reports of hospital ICU’s that are already at full capacity and most turn away patients, accompanied by a continuing rise in deaths.

In the below graphs, I break out new infections, hospitalizations, and deaths by those States which at various times have been the “poster children” for out of control outbreaks: NY and NJ in March and April, AZ and FL during the summer, ND and SD about a month ago, and TN, AL, and MT now.

New infections:

Hospitalizations:

Deaths:

Obviously there is no set threshold for when infections start to change behavior. No doubt part of this is the differing demographics of the successive waves of infection, as well as improvements to medical treatment.

There does seem to be a “pain threshold” for deaths at roughly the level of 2.5 deaths per 100,000 population daily, but note that in summer public behavior changed in AZ and FL well below that level.

The rate of hospitalizations seems to correlate most closely with a “pain threshold.” At the level of 4 to 8 hospitalizations per 100,000 population, there is a palpable change in the public’s behavior.

Because the large majority of infections do not lead to hospitalizations, it is likely that the level of infections itself does not sufficiently alarm the public so as to change their behavior. But once serious, life-threatening cases become noticeable enough, as indicated by the level of hospitalizations, and additionally by a big rise in reported deaths, people’s behavior begins to change. That even North and South Dakotans changed their behavior once the situation became dire enough seems like the best proof for the existence of such a “pain threshold.” 

The newest “poster children” are Tennessee and, alas, California (shown with North Dakota for comparison): 

Based on the above, they are probably a week or two away from hitting their “pain thresholds.”

The 2004-2020 political red/blue shift: the intersection of geography, the economy, and ethnic migration

 

 - by New Deal democrat

It’s a very slow, holiday-shortened economic week. We’ll get new home sales, plus personal income and spending Wednesday, and jobless claims as usual Thursday.

In the meantime, here is something I found revealing. It’s a map, created by Nathan Jordan,  a college student from Alabama (I think), showing the county-level change in Presidential voting countrywide (except Alaska) from 2004 through 2020:

What was fascinating to me (because I am a nerd) is how closely the changes track some geographical features. The spine of the Appalachians stands out clearly, plus the Ozark mountains, and the red-shaft also appears to closely follow the Mississippi-Missouri-Ohio River valley system.

On the first pass, this certainly looks like an “It’s the economy, stupid!” story. But it’s more complicated than that.

First of all, here is a county-level map of Black population density:

It closely matches the “black belt” - named for the soil color that supported the plantation economy not the skin color - in the Southeast over to Texas. In addition to the Northeast megalopolis, the blue shift matches up pretty well with this map as well.

But what about Hispanics? Well, here are two maps. The first, again, shows Hispanic population density by county:

With the exception of east Texas and Wyoming, again the map appears to closely match up with the blue shift, especially in the West and Southwest, but also in the Northeast megalopolis.

This second map show the *change* in the Hispanic population by county between 1990 and 2018:

This shows that there was a big increase in the Hispanic in-migration to the upper Mississippi and Missouri valleys, but also to the Southeast and the Appalachians and Ozarks. 

In other words, the areas of the country that have shown the biggest red-shift in the past 16 years shared two characteristics:

1. They were relative economic backwaters, with relative outmigration to the coasts, BUT

2. They experienced significant IN-migration of Hispanics (even if in relatively small *absolute* numbers - see the 1st map of Hispanic population density).

In short, these have been areas of significant economic malaise, where there is increased competition for jobs by a new “other” ethnic group. This is a potent recipe for a racial backlash.

I believe a substantial number of White voters can put racial animus aside if the economic pie is visibly growing for them. But when their economic condition is stagnating or worse, that racial animus is going to be a potent motivator for voting. I think this gets to the heart of why the Democratic Party has so badly lost in the whole Mississippi watershed area.

Weekly Indicators for December 15 - 19 at Seeking Alpha

 - by New Deal democrat 

My Weekly Indicators post is up at Seeking Alpha.

Even with deterioration in a few noteworthy items like new jobless claims, the overall tenor of both the forecast and the nowcast remains positive.

As usual, clicking over and reading should be educational for you and remunerative for me to the tune of a penny or two in my pocket.

Housing permits and starts for November: yet more evidence of an economy primed for takeoff in 2021

 

 - by New Deal democrat

If there was bad news yesterday in the further increase of initial jobless claims, there was also good news in the 10+ year highs in new housing permits.

Here’s the graph of permits (blue), single family permits (red, right scale), and housing starts (green):

Not only total permits, but also the much less noisy single family permits, made 13 year highs. While the much noisier starts didn’t, the only months in the past 13 years that were better were last December through this February.

Because housing construction involves spending on all sorts of trades in the following year, and spending on landscaping, appliances, and other furnishings thereafter, new home building is an excellent long leading indicator.

Bottom line: yet more evidence that once the pandemic is brought under control, the economy is primed for a very vigorous takeoff.