Movie review: “Disclosure Day”

 

 - by New Deal democrat

Today is a travel day for me, and there’s no big economic news today, so enjoy this movie review instead. Regular economic nerd-dom will resume tomorrow.

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“Disclosure Day” is Steven Spielberg at his stupidest.

A big budget, bloated, logically incoherent, sprawling mess of a movie that is what happens when there is nobody left in the Big Name’s orbit who has the authority to say “no.” It’s as if he was possessed by M. Night Shyamalan and forced to make yet another attempt at B-grade sci fi.

For example: the good guy escapes one of many attempts by the bad guys to kidnap him by - I kid you not - crawling around in plain sight and driving a car into the thick of them amid a hail of bullets. Later, as if to cover all his sci-fi bases, (and there are lots of callbacks to both “Close Encounters of the Third Kind” and “E.T.”, both better movies by far, among other sci-fi films) the good guy is standing in a field of grain that spontaneously develops crop circles, for no apparent reason and no significance to the plotline, 

Or how about the bad guys? They start out the movie having already kidnaped one character and threatening to kill her, kidnap another character later, plot the murder of a hero, later seriously attempt a double murder, and then at the end, when shooting one of the heroes would entirely defeat them, simply shrug as if to say “Oh well. We lost. Let’s go home.”

And then there’s the final scene, which can only be described as the return of a geriatric E.T., which entirely logically undercuts the entire drama up until that point. If you have a live alien, why bother with a worldwide “Disclosure” of video which nowadays everyone would dismiss as AI slop? 

And the very very end, which makes you think, I sat through 2 1/2 hours for this?

The high point of the movie was when I had to leave the theater for 5 minutes during the climactic scene in order to take a pee.

If you’re upset that this review contains spoilers (and really, it doesn’t), be grateful. I gave you back 2 1/2 hours of your life to do something better.

Weekly Indicators for July 6 - 10 at Seeking Alpha

 

 - by New Deal democrat

My “Weekly Indicators” post is up at Seeking Alpha.

The high frequency data continues to confirm my Big Picture outlook that after a near-miss or possible “mini-recession” late last year, the economy is rebounding. In particular, the YoY improvements, already Booming, in consumer spending are accelerating even more. Some of this is probably the wealth effect from stock portfolios, and some may be big tax refunds to upper income households due to last year’s Billionaire Bust-out Bill.

As usual, clicking over and reading will bring you up to the virtual moment as to the state of the economy, and reward me for putting it all together for you with a little gas money for summer excursions.

This is what entrenched economic power looks like

 

 - by New Deal democrat

As we come to the end of the week after the payrolls report, when typically almost nothing is reported, I wanted to follow up on several posts I wrote last week: one, revisiting the configuration of long leading indicators, and second, that Republics are very durable unless and until they are overmatched by entrenched interests that cannot be dislodged by a majority.

Let me go back to a point I made that recessions don’t happen unless there is a real setback to producers and consumers, as reflected in real corporate profits (blue) and real retail sales per capita (red):

As indicated above, to some extent, America has been economically blessed in that aside from the Giant Flaming Meteor of Death, i.e., COVID, there has been no recession in the past 17 years. That’s quite a good record!

But when one looks at the distribution of corporate profits and worker income, a more disturbing story is told. Here is what (nominal) corporate profits (blue) and aggregate nonsupervisory payrolls look like, both normed to 100 in 1987:

They began to diverge in the 1990s, then much more in the 2000s, further after the Great Recession, and then racheted further out of equilibrium after COVID. As of the first Quarter of 2026, nominally aggregate nonsupervisory payrolls have quadrupled, but corporate profits have increased 20x! Put another way, economic power has become increasingly entrenched among corporate ownership. This is reflected in another graph you may recall seeing here and/or elsewhere in the past few years, of the labor share of the economy, normed to 100 as of its generational peak at the beginning of 2000:

Labor now only takes 87% of what it did then, a new low for this series that goes all the way back to the 1940s. Although I won’t show the graph, labor share peaked in 1960. The 2000 high was 3% below that, and the current share is only 81% of the 1960 share.

This, quite simply, shows economic power becoming increasingly entrenched over time among the wealthy. 

Interestingly, aside from what may be happening at present, only one of the times when the corporate share increased sharply via profits coincided with a tax cut: in the aftermath of George W. Bush’s 2001 tax cut. Perhaps surprisingly, after both recent recessions, that featured extensive stimulus programs, corporate profits surged and the labor share declined sharply. As shown below, despite both stimulus programs real median household declined through 2012 and 2022, respectively:

Which suggests that even though stimulus may be aimed at average American households, the mechanics by which it works is that those households *spend* the payments in order to get them through difficult times. Once spent, those funds wind up in the hands of producers, i.e., they become concentrated in the largest corporations - which don’t spend them, but engage in stock buybacks and soaring executive compensation. So even though they accomplish their short term goal, over the long term they wind up helping to entrench wealth, suggesting that all economic stimulus programs should come with a back end corporate tax surcharge acting to “sop up” those extra gains once the crisis has passed.

This leads to a deeper discussion of the *dynamics* of economics and politics over time; in other words, how this came to be. That discussion involves the economics of bargaining power, the psychology of attraction to gains and avoidance of losses, and how human behavior learning strategies for the same apply, which is something I have read about and studied for decades. But this post is long enough, and rather than turn it into a veritable book, that will be the subject for a follow-up later.

The housing market’s new suboptimal equilibrium: flat, flat, and flat

 

 - by New Deal democrat

It has been four years since the Fed started aggressively raising interest rates, causing mortgage rates to rise similarly. It has been over four years since home sales peaked, and also about four years since the median price of a new home peaked. Finally, it has also been four years since the YoY% increase in median house prices peaked.

In other words, the effects of those interest rate increases have been baked in the cake. It no longer makes sense to forecast based on those price and interest rate hikes of four years ago. To the contrary, as I wrote last month in my summary of that existing home sales report:

“[S]ince the pandemic the dynamics that have been more important have been prices and inventory. Because during the pandemic prices skyrocketed, and inventory cratered. It has been a long, slow arduous process of rebalancing since then…. This year the housing market has appeared to reach a sub-optimal post-COVID equilibrium, with sideways sales and prices, and at best slowly increasing inventory.”

This morning’s report on existing home sales for June confirmed that message: there is a new equilibrium, with sales, prices, and inventory all but flat.

First, to the numbers: existing home sales in June declined -2.4% for the month to 4.09 million, and well within its range of between 3.85 - 4.30 annualized for the past three+ years:

On a YoY basis, sales were up 2.8%.

This is similar to total housing permits, which have varied between 1.4 million to 1.6 million annualized for the past three+ years, and even the more volatile new home sales, which have varied between 575,000-750,000 during that same period:

On a YoY basis, they are down -0.4% and -6.8% YoY.

The sideways story is the same for median prices. The median existing home price is up only 1.8% YoY (the NAR does not seasonally adjust this metric, so YoY is the only valid way to measure:

Since February of last year, there has been no YoY comparison higher than 3.0%. Again, this is similar to both Case Shiller (blue) and FHFA (red) repeat home sales indexes and the median price of new homes (gold), which are up only 0.8%, 2.0%, and 0.7% YoY:

This year the most lagging metric, inventory, has also fallen in line. In June, the YoY% change in existing home inventories was only 1.3%. By contrast, as recently as last December it was up 7.9% YoY, and in March was up 4.5% YoY:

Again, we see the exact same flatness in YoY new home inventories (blue), down -1.4%, the active listing count of homes for sale nationwide (red), up 1.9%, and the new listing count (gold), up 2.4%:

Finally, I would be reimiss if I did not show how this is all downstream of mortgage rates, which have trended sideways between 6% and 7% for almost the entirety of the last 3.5+ years:

The housing market has reached a new, suboptimal equilibrium in sales, construction, prices, and inventory. Until some new positive or negative shock occurs (like a surprise new Fed hiking regimen), expect little change in this important leading sector of the economy, which is needless to say neutral for forecasting purposes. 

Jobles claims: the “low-hire, *no*-fire” regime continues, as the “Quick and Dirty” forecast model remains positive

 

 - by New Deal democrat

Let’s take our regular weekly look at jobless claims. In addition to being 1/2 of my “quick and dirty” forecasting system (the other 1/2 being stock prices), they have a 60 year history of being a good short leading indicator. [Later this morning we’ll get existing home sales, and I’ll update an overview of the housing market then.]

This week’s update is more confirmation for the “low-hire, *no*-fire” economy that has manifested this year, as well as evidence of some return to post-pandemic residual seasonality (claims rising to midyear, then declining to year end).

For the week, initial claims declined -2,000 to 215,000, and the four week moving average declined -3,750 to 218,750. Continuing claims, with the typical one week lag, rosse 8,000 to 1.814 million:

On the YoY% basis more important for forecasting purposes, initial claims were down -5.7%, the four week average down -6.7%, and continuing claims down -7.1%:

This indicates continued expansion for the next few months.

We’re not far enough along in July to warrant updating vis-a-vis the unemployment rate, but apropos of my comment above, here is what the “quick and dirty” forecasting model looks like through this week:

Both measures are above 0. Only when both are below 0 does the system trigger a recession watch, and only when they are sustained for a significant period of time (at least a month) does it trigger a warning.

Regional Fed surveys confirm manufacturing rebound: services, not so much

 

 - by New Deal democrat

Yesterday I looked at the economically weighted ISM manufacturing and services indexes, pointing out that they have shown a rebound this year. Today let’s take a brief look at the regional Fed manufacturing and services indexes.

Below are the manufacturing and services indexes, averaged over the four Fed districts whose reports are picked up on FRED: namely, New York, Philadelphia, Texas, and Chicago [Note: for unknown reasons, FRED does not publish the Richmond and Kansas City Fed regional numbers].

Here is the average of the four regional manufacturing indexes:

Just like the ISM manufacturing survey, shown below, they showed a change from contraction to expansion late last year that has intensified this year:

Most likely this is due to the AI data center building boom (or bubble).

Now here is the average of the four regional services indexes:

Very much *unlike* the ISM services index, shown below, they have shown consistent contraction throughout the entire last 18 months:

I am inclined to go along with ISM in this case, mainly because employment in services has shown consistent growth in the monthly payrolls reports, as well as consistent increases in personal spending on services even after adjusted for inflation, and also the very strong weekly Redbook consumer spending reports, the most recent of which, for this week, continued the trend:

Weekly spending YoY was up 11.5% YoY per Redbook, another new four year high.

I am not sure why the regional Fed services indexes are not picking up on the growth that appears to be shown everywhere else.