Sunday, February 23, 2020

Live-blogging the Fifteenth Amendment: February 22, 1869

 - by New Deal democrat

On February 22, the Senate took up the revisions that the House of Representatives had made to their proposals from one week prior. The House had struck from the Senate’s version, as sent to the House, the section extending the protections of the Amendment to qualifications for office, as well as the companion Amendment reforming the Electoral College.

Senator Stewart (Republican from Nevada) proposed that the Senate disagree with the House and send back the following version:

The right of citizens of the United States to vote and hold office shall not be denied or abridged by any State on account of race, color, nativity, property, creed, or previous condition of servitude. 
The Congress by appropriate legislation may enforce the provisions of this article.

Stewart moved that the Senate ask for a conference committee to iron out their differences. There was dismay that the House was insisting on having its exact way as to this amendment, as had been the case for the past number of years as to all legislation, and that the attempt to reconcile their differences might be futile. 

The Senate decided to put off voting on the proposal for a day. 

Source: Congressional Globe, 40th Congress, 3rd Session, pp. 1440-42.

Saturday, February 22, 2020

Weekly Indicators for February 17 - 21 at Seeking Alpha

 - by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

Aside from the sudden improvement in new manufacturing orders I wrote about earlier this week, the significant changes have moved from the short leading forecast to the coincident nowcast.

Clicking through and reading will give you the reason I say that, and as usual reward me a little bit for my efforts.

Friday, February 21, 2020

Production, transportation, and sales show a stalled economy

 - by New Deal democrat

Below is a graph I put together in a discussion of transportation that I’ll probably post next week at Seeking Alpha.

The idea behind the graph is that (1) everything that is produced needs to be transported to market; i.e., the two metrics should move essentially in tandem (this is known as the “Dow theory” in financial markets); and (2) sales also ought to reflect - and slightly lead - what is being transported to market, since production is geared to match anticipated sales.

Anyway, here it is:

The blue and gold lines are two measures of sales. The green line is retail, the blue also adds manufacturing and wholesale sales to retail. Both are inflation-adjusted. The red and green lines are production and transportation, respectively. All are normed to 100 as of last August.

What we see is that production, transportation, and sales are all either flat or down since then. Although I didn’t include it, real personal income is only up +0.2% since then. Only jobs continue to show significant growth.

In short, since 6 months ago the economy has been in a very real slowdown, and in many respects has stalled.

Note that this is a nowcast, not a forecast, so you shouldn’t project this forward. But given how badly coronavirus is affecting China’s output, if the economy otherwise remains weak for the next several months, that might be enough to tip it into contraction.

Thursday, February 20, 2020

Housing analysis at Seeking Alpha; updated jobless claims

 - by New Deal democrat

I have a more detailed analysis of yesterday’s very positive housing permits and starts data, and what it means for the economy for the rest of this year, over at Seeking Alpha.  As usual, clicking over and reading helps reward me a little bit for my efforts.

This morning’s weekly jobless claims report continues the recent string of very positive numbers. Here’s the updated graph of the monthly average of initial claims, plus the 4 week average of continuing claims:

And here is the same information graphed YoY:

There isn’t going to be a recession so long as jobless claims stay close to their lowest levels and are lower YoY.

Wednesday, February 19, 2020

Housing continues to surge

 - by New Deal democrat

Low interest rates continue to fuel a strong upsurge in new housing construction.

I’ll put up a more detailed post later, but for now simply note that housing permits, both overall and for the less volatile single family housing component, made new expansion highs, at levels not seen since 2007. Housing starts backed off from December - but to only the second highest numbers of the entire expansion.

Here’s the graph from the Census Bureau:

This is extremely bullish for the economy at the end of this year and into next year.

Tuesday, February 18, 2020

Regional Fed Manufacturing Indexes Improving

 - by New Deal democrat

It’s been a really slow newsweek so far, with no important data until tomorrow.  Until then, here’s a note of interest.

This morning's Empire State Manufacturing Survey was the third regional report in a row (after Richmond and Dallas in the last week of January) to show a strong rebound in strength, as the new orders index jumped 15.5 to 22.1 (values over zero indicate improvement).

Here’s what the average of the five regions look like as of now (this is taken straight from my weekly update):

Regional Fed New Orders Indexes
(*indicates report this week) 
The regional average had been only +3 only 3 weeks ago. A reading of +13 shows pretty strong growth on the order of what we saw in 2018.
Between coronavirus fears and always the possibility that Tariff Man launches new trade wars, I’m not making any promises about where this goes from here. But for now, a clear rebound in manufacturing.

Saturday, February 15, 2020

Weekly Indicators for February 10 - 14 at Seeking Alpha

 - by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

Several of the coincident indicators that turned positive one week ago turned right back to negative this week. The bifurcation between the producer and consumer sides of the economy continues.

As usual, clicking over and reading should be educational for you, and ever so slightly enumerative for me.

Friday, February 14, 2020

Real retail sales continue flat in January; production sector still in recession

 - by New Deal democrat

Retail sales increased nominally by +0.3% in January, while December was revised downward by -0.1%, for a net gain of +0.2%. Since consumer inflation increased by +0.4% during those two months, real retail sales were unchanged.  On a per capita basis, they declined less than -0.1%.

This means that neither real retail sales, and real retail sales per capita have made new highs since last August. The former is off -0.4% and the latter -0.6%. Here are both measures, normed to 100 as of then:

As I’ve noted several times recently, We’ve had similar periods of flatness previously during this expansion, for example late 2018 as shown in the above graph. It would still take one more month of a reading below the August peak for me to flip this to neutral. For now it remains a very weak positive.

The bottom line is that, while there is some flatness, there are no signs of the consumer actually rolling over. 

At the same time, this may signal a cooling in employment gains in the next few months, as real retail sales (red in the graph below) tend to lead jobs (blue), and are an even better fit for aggregate payrolls (green), first over the past 25 years:

And here is a close-up view of the past five years:

Meanwhile, industrial production, the King of Coincident Indicators, declined -0.3% in January. It is back where it was last July, and still more than 1% below where it was at its December 2018 peak:

Note that the decline is not nearly so severe as the nearly -5% decline of 2015-16.

Together, industrial production and real retail sales tell us that the production sector remains in recession, while the consumer sector, while not contracting, has been treading water for nearly a half year.

Thursday, February 13, 2020

Live-blogging the Fifteenth Amendment: February 9, 1869 (2) The Senate votes to reform the Electoral College

 - by New Deal democrat

As I mentioned several days ago, the Senate endured a pair of marathon sessions on February 8 and 9, 1869, and considered a variety of subjects. Perhaps most breathtakingly, they discussed further amending the Constitution to ensure that the winner of the popular vote was elected President.
Sen. Morton [Republican, Indiana]: I desire to renew the amendment I offered in regard to electing electors directly by the people.... It is very important. It will popularize the whole thing ...: 
Article XVI
“[As to the Electoral College,] each State shall appoint, by the vote of the people thereof qualified to vote for Representatives in Congress, a number of electors equal to the whole number of Senators and Representatives to which the State may be entitled to in the  Congress; but no Senator or Representative, or person holding an office of trust or profit under the United States shall be appointed an elector; and the Congress shall have power to prescribe the manner in which such electors shall be chosen by the people.” 
Sen. Cameron [Republican, Pennsylvania]: I do not see how I can vote for that amendment. If he will allow the people to vote directly for President and Vice President, I will agree to any amendment he will offer for that purpose; but I cannot see what we shall gain by this proposed amendment. If the people are allowed to vote at once for President and Vice President and you count the votes all over the United States, that will come up to the notion which I have held for a long time on the subject, for I think the people ought to be brought directly in contact with the candidates for whom they vote.
Sen. Morton:... It is now left to the legislature. The legislature may elect the electors themselves.... This amendment requires these electors be appointed directly by the people, and leaves to Congress the mode of regulating that appointment....
Sen. Harlan [Republican, Iowa]: ... [is it] contemplated by the honorable Senator that an elector may be elected from each Congressional district, or by districts to be arranged by Congress in each State?
Sen. Morton: It gives the power to Congress to require election by districts; it leaves the manner of election to Congress just as it is now left in regard to Representatives.
Sen. Frelinghuysen [Republican, New Jersey]: [would] Congress [ ] not also have the power to provide by law for minority representation under that?
Sen. Morton: I suppose it would ....
Sen. Sherman [Republican, Ohio] : The only change, if I correctly read it, is that the Legislature shall not itself elect the electors, but it may either require them to be elected by a general ticket or by a separate district vote. 
.... Sen. Fessenden [Republican, Massachusetts]: It gives Congress the power to change it.

The amendment was passed, 37-19.

Sen. Edmunds [Republican, Vermont]:.... Now, it is asked that the state of Vermont shall surrender that right [to appoint Presidential electors] that belo ngs to her to Congress, who, according to their own predilections, may every four years district and redistrict that State and every other one where the majority in Congress can gain votes by it, in order to elect a part of her electors of a different political opinion from that of a majority of her people....

Sen. Morton: ... What interest can the [ ] States have in the continuation of the present anomalous condition of the Constitution on the subject of choosing electors it is impossible to see.... it is right everywhere to allow electors to be chosen by the people; and that is the substance of this provision. We know that the people everywhere desire this. The danger likely to result from the continuation of the present system has been shown on a prior occasion.... 

Sen. Buckalew [Republican, Pennsylvania]: ... the present condition of things in regard to choosing Presidents [is] in a deplorable light, and prove that there is danger ahead of difficulty in our country from the imperfect machinery of the electoral colleges. [He then discusses the election of 1824, in which Jackson won a plurality of the vote, but the House chose John Quincy Adams as President, and also the disproportionate number of electors won by the victor in 1828, 1852, and 1860].  ...[In] several other presidential elections  [1864 and 1868] ....  the popular majority, as reported, secured the result they desired. But this was fortunate or accidental rather than a certain result under our electoral system now constituted. The election of 1824 proves that a plurality as well as a minority candidate may suffer heavy loss of electoral votes and in fact be defeated. And the subsequent cases must convince us that there is danger of defeat in future elections even to majority candidates.  
The conclusion to be drawn from the facts in our political history is that at any time a candidate with a minority of the votes given to him by the people of the United States may have a majority in the Electoral College. ...[T]he committee examined the subject ... [and] acted wisely in recommending the proposition before us. It is in my opinion wise and timely ....

On third reading the proposition passed 39-16. The resolution for reforming the Electoral College under a Sixteenth Amendment, as well as the Fifteenth Amendment, passed by the required 2/3’s majority.

Source: Congressional Globe, 40th Congress, 3rd Session, pp. 1042-44.   

Ultimately we know that the proposal to enable the national popular vote to prevail in the Electoral College did not get included in the Fifteenth Amendment, nor was it passed on its own as the Sixteenth.

Of course the exact problem feared by Sen. Buckalew happened in 1876, as the popular vote winner, Samuel Tilden, with 50.9% of the vote, was passed over in favor of Rutherford B. Hayes, who had 47.9%. And twice in the last 20 years in our own time the situation has happened again, most disastrously in 2016.

But it is breathtaking to read the Senate, in 1869, foreseeing and grappling with the exact time bombs in the Electoral College that have detonated twice in our lifetimes, and passing a proposed amendment by a 2/3’s margin.

Note also the reiteration that Congress has the power to determine the manner of election of US Representatives,  by such method -e.g., general ticket voting or by districts -as they may choose, and the understanding that Congress could determine the boundaries of those districts, as well as the fear that a temporary majority in Congress could use gerrymandering of such districts to lock in electoral advantage in Presidential elections.

Utterly prescient.

Have we reached “full employment”? An update

 - by New Deal democrat

As an initial matter, this morning’s initial and continuing jobless claims report were positive as to all metrics by which I judge them. They are near the bottom of their recent ranges and/or are lower YoY (lower being good). I’ll add a graph once the info is available at FRED.  UPDATE: Here it is:

Here is something I haven’t updated in a couple of months: given recent gains in labor force participation and declines in unemployment, have we finally, by at least by some measures, arrived at “full employment”?

At 3.6% in January, the unemployment rate is only 0.1% above its November and December 65 year low (except for a few months in 1968-69). The underemployment rate, at 6.9%, is only 0.2% above its series low from December:

Similarly, even beyond that, when we add in those who aren’t even in the labor force, but say they want a job now, December remains the lowest level of all:

Further, among the prime age group, both participation in the labor force (blue in the graph below) and the employment/population ratio (red) jumped by a stunning +1.0% and 1.1%, respectively, just in the past six months! In the graph, the current levels for both are normed at the zero level, to show how the present level compares with earlier expansions (prior to 1987, the levels were never as high as presently):

Prime age EPOP is now above its levels at the peak of the 1980s and 2000s expansions. Only during the 1997-2001 boom was it higher. This is even more important than labor force participation, which is “(employment + unemployment)/population.” Unless you think that the 1997-2001 levels should be the norm, it certainly looks like we are at or very close to “full employment.”

Next, here is a look at the YoY percent change in the prime age EPOP ratio compared with the YoY% growth in nominal wages (-3% for easier comparison):

There are two things I want you to pull out from this graph. The first is that wage growth very much lags employment. In terms of the economy, it is a “long lagging” indicator. Secondly, note that wage growth tends to be suppressed the bigger the entry into labor market participation. The biggest increases in participation, in the 1970s and 1980s, led to outright declines in average nominal wages. Conversely, the late 1990s, when there was both a strong economy and little movement into the labor force from the sidelines, was the one time since the 1960s that real wage growth really boomed. I suspect the slowdown in wage growth in the past few months is a result of the big surge of entrants into the labor market in the past six months.

Finally, although CPI came in at only +0.1% for January, that is still higher than its 0.0% reading last January, so YoY inflation slightly accelerated. This means that real wage growth after inflation was flat. [I’ll add the graph once the data is available on FRED]. UPDATE: Here it is:

This means that real average wages for non-supervisory workers have not increased since September. Stalls like this have happened several times before during this expansion, so its not terrible, but it’s certainly not a positive either, since it tends to correlate down the line with consumer spending.

Wednesday, February 12, 2020

Where is the puzzling growth in service jobs coming from?

 - by New Deal democrat

Continuing with my week of follow-up stories based on last Friday’s jobs report, I noted last Friday that there was a completely anomalous upwards revision of nearly 100,000 jobs in the last 8 months of 2019. This after a -500,000 decrease, based on full data, in the previous 12 months!

So I took two approaches: a bottoms-up micro view, and a top-down macro view — and got contradictory answers. This post is up at Seeking Alpha.

Since that article was posted, a correspondent pointed out that some of the biggest upward revisions were to the retail trade. So here are a few supplemental graphs.

First, all retail jobs plus all leisure and entertainment jobs:

Next, the sectors of retail with the biggest gains:

Finally, the sectors of leisure and entertainment with the biggest gains:

As of now, we went from outright losses in the 12 months from July 2018 through July 2019, to roughly 50,000 gains per month in the 6 months since. I have a very strong feeling that these are going to be revised down substantially in the future. Since the only contrary explanation is the surge in retail sales during last spring and summer, which ended in August, this makes this Friday’s retail sales number look even more important.

As usual, clicking over and reading the article at Seeking Alpha should be educational for you, and puts a $ or 2 in my pocket.

Tuesday, February 11, 2020

December JOLTS report continues the trend of confusing jobs data

 - by New Deal democrat

The December JOLTS report came out this morning, and it continues the streak of confusing employment data.

To recapitulate, the JOLTS report decomposes the jobs numbers into openings, hires, quits, layoffs and discharges, and total separations. Since the series is only 20 years old,  however, it only covers one full business cycle, so is of limited forecasting use.

The order in which the JOLTS series peaked during the 2000s expansion was as follows:

  • Hires peaked first, from December 2004 through September 2005
  • Quits peaked next, in September 2005
  • Layoffs and Discharges peaked next, from October 2005 through September 2006
  • Openings peaked last, in April 2007 
I’ll treat these in that order, below.

So to start, here are YoY hires (blue, left scale) and quits (turquoise, right scale) for the entirety of the series:

For the last nine months, hires have formed what in the stock market would be called a “pennant” pattern of lower highs and higher lows, i.e., the range is compressing and could break out in either direction.

Here’s the same data measured YoY:

There’s clear deceleration, but have hires turned decisively negative? Impossible to tell.

Next, as I have often said, hiring leads firing (actually, total separations). Here’s what that looks like for the entire series:

Separations still appear to be trending up, but may also be forming a “pennant” pattern.

Next, here are layoffs and discharges (blue, left scale), which I am comparing against the monthly average of initial jobless claims (red, right scale):

Layoffs and discharges have been trending higher for the past year. But the series is very noisy compared with initial jobless claims, which measures a very similar thing.

Finally, here are job openings, measured absolutely (blue, right scale) and YoY (red, left scale):

Openings are telling a terrible story. They are down 14% YoY. More significantly, they are down 15.8% from their November 2018 peak. This is equivalent to where they were off peak in May 2001 and March and April 2008 - early in recessions. 

I am going to be consistent here: I have been downplaying job openings as a “soft” metric when they were booming, and there is no reason to treat them differently when they appear to be collapsing. But it is a very significant move for this series, so I cannot ignore it.

To sum up, in the order these series turned in the last business cycle:
  • Hires have been flat for nearly a year, with an ambiguous trend
  • Quits appear to be still rising, but may also be turning flat
  • Layoffs and discharges have been trending higher, a negative
  • Job openings have fallen off the proverbial cliff and are recessionary

In other words, the four metrics have turned neutral or negative in reverse order from their one and only previous cycle. It’s all very confusing. For now, my takeaway is a slowdown only.

Monday, February 10, 2020

Why I expect further declines in manufacturing jobs

 - by New Deal democrat

This is the week I highlight further information from last Friday’s jobs report. 

One thing that struck me is that we’ve now had two months of declines in manufacturing jobs. This is something I have been anticipating since about the middle of last year, because the manufacturing work week had been declining significantly, and it has a reliable 80+ year history of leading manufacturing jobs. Here’s the entire history measured as YoY% changes: 

The manufacturing work week is down -1.4% YoY. So in the next two graphs I’ve added +1.4% to that number so that it is exactly equal to the zero line. Here is that data split up into two 40 year intervals:

There has literally *never* been a time, in all of that 80 year history, when hours have been down this much for this long, and manufacturing jobs have not gone down YoY. Further, leaving out one month YoY declines, in all but three occasions (1953, 1966, and 1995) a recession has resulted. That’s 11 out of 14 times total, with at least two of the other three being slowdowns.

In short, I am expecting further losses in manufacturing jobs in the next few months.

Sunday, February 9, 2020

Live-blogging the Fifteenth Amendment: February 9, 1869 (1)

 - by New Deal democrat

The Senate continued its debate on the proposed amendment for a second long day after only a one hour break. Ninety percent of the debate centered on four topics: whether and how to exclude Asians in general and Chinese in particular from voting; whether of not to extend the amendment’s prohibitions to other preconditions from voting; extending the amendment to include State office-holding conditions as well; and de facto abolition of the Electoral College.

Because the debate was so important and voluminous, I am breaking it down by subject. What follow deals only with the issue of Chinese immigration.

By way of background, in the 20 years since the end of the Mexican War, tens of thousands (one Senator said 100,000) Chinese had emigrated to the West coast. Senators representing the West Coast States were fearful that the “yellow hordes” would come to outnumber the white settlers and take control of the State governments. Here is a sample of the debate, that came to the fore when an amendment was offered to remove the words “of citizens of the United States” from the amendment which as proposed read “The right of citizens of the United States to vote”. 

Mr. Morton: ... [T]he gist of th[is] amendment ... would make the Chinese eligible to vote and to hold office. As the amendment is presented by the Committee on the Judiciary it provides that the right of citizens of the United States to vote and hold office shall not be denied or abridged by the United States nor any State on account of race or color. That does not admit the Chinese, because the Chinese are not citizens of the United States and cannot be naturalized under the law as it now stands, because the naturalization laws contain the word “white.” This will not enfranchise the Chinese, because the Chinese are not citizens of the United States; but if you strike out these words, then you make the Chinese, without being citizens, eligible to office and to vote.

Mr. Doolittle: ... [T]here is no restriction upon Congress over the laws of naturalization; and they may, and judging by all the history of the past, they probably will, strike the word “white” out of the naturalization laws.... and our friends from California and Nevada and Oregon may just as well understand it now as understand it one, two, three, or five years hence. The thing is coming. 

I suppose it will not be gainsayed by any person who is acquainted with the Chinese character and population that not one in ten thousand of them has any capacity whatsoever for American citizenship.

There can be no question that the right will be granted when the demand is made. But then there may be a deluge of Chinese upon the Pacific coast. I think there must be some words of exclusion for the Chinese. The negro race in our midst, having lived here for generations, know no other civilization other than our own. The Chinese belong to another civilization, one that can never unite or assimilate with ours. They can never become Americans in heart and feeling. They can never fuse with us.... and I doubt whether their children born in this country can or will assimilate with our civilization.

... the time may come when they will find out their power, and then they will desire to become American citizens. They are now treated most brutally .... Their personal and civil rights are not regarded. ... [but] in the next ten or twenty years they may outnumber all other populations on that coast; and then they will come to understand their power, and then the cruelties and brutalities that they now suffer and have suffered ... may drive them to seize the political power into their hands.

.... The authorities in China might send over hundreds of thousands of Chinamen to the Pacific coast instructed to become citizens for the purpose of securing in every possible way the productions of that vast and rich country for the benefit of the Chinese empire.

So vehement was the opposition that the sponsor of the amendment, Sen. Sumner, finally said:

I say that this country has the absolute power to protect itself from Chinamen or any other sort of foreigners by such legislation as in its judgment is necessary for the purposes of  protection. 
... I find that I have opened an immense debate, and therefore I withdraw the amendment.

But not to leave you totally downhearted, here is Sen. Cameron:

I must express my surprise about all this talk about the poor Chinaman. I never heard of his doing any harm to anybody in America. He has enriched the Pacific slope by his toil. He  has made that great railroad which is the miracle of the world by his patient industry. Who ever heard before of a people doing so much work in so short a space of time and getting so little reward for it as they have done.... [T]heir children, who remain here, will after awhile imitate our people, adopt our institutions, and become citizens of our country, and by their toil add to the wealth of the country. 

Source: Congressional Globe, 40th Congress, 3rd Session, pp. 1028-42
Note that the “progressive” position in 1869 was that Chinese could be excluded via naturalization laws, so that the amendment would not affect their lack of ability to vote.

But perhaps most striking is how close the debate is to the current right-wing paroxysms of fear and anger as to Mexicans, Muslims and others immigrating from “sh*thole countries.”

Saturday, February 8, 2020

Live-blogging the Fifteenth Amendment: February 8 - 9, 1869

 - by New Deal democrat

Note: I fell a little behind on this project. I hope to be fully up to date by the end of this weekend.

On February 8 and 9, 1869, the Senate did something I daresay it would never consider now: it pulled an all-nighter! Despite numerous requests to adjourn, the session ran nearly 24 hours straight, only ending at about 11:30 AM on the 9th (and picked up again at 1 pm).

The text goes on for close to 100 pages, so I can only hope to hit a few highlights here. Numerous subjects were addressed.

Several members, e.g., Sen. Hendricks again posited that the Congress did not have authority even to amend the Constitution if it impinged on the ability of States to pass laws with regard to suffrage: 

There is a particular proposition in the Constitution of the United States that it may be amended. Where ... does the power of amendment stop? I say the power of amendment is limited to the correction of defects that might appear in the practical operations of the Government; but the power of amendment does not carry with it the power to destroy one form of overnment and establish another.

This was a small minority opinion, which was quite sensibly met with the Supremacy Clause. For example, here is Sen. Freylinghuysen:

All that is proposed by this amendment is to permit the people of this country to determine whether suffrage as to this numerous class [African Americans] be destroyed. It does not take away from the States the right to regulate. It leaves the States to declare in favor of or against female suffrage; to declare that a man shall vote when he is eighteen or when he is thirty-five; to declare that he shall not vote unless possessed of a freehold, or that he shall not vote unless he has an education and can read the Constitution.

A few members also declaimed on the inferiority of black people:

I think they are the only normal conditions that the negro, as a race, can ever occupy. I have known him as an ignorant savage from Africa with only the faintest lights of reason and intelligence; I have known him as a comparatively intelligent and contented slave, and I have known him as a political vagabond hovering under the shadow of the Freedman’s Bureau [i.e., Frederick Douglass].... He is inferior in physical condition, in mental and moral endowment, to the white race or to the yellow race. Every ethnologist knows it. Every man who is acquainted with the negro practically and from experience knows it.

This argument too went nowhere. The overwhelming sense was that intellect was distributed widely among all races of people, and if lack of intelligence were to be a disqualification, then millions of whites should also be disqualified:

Intelligence and virtue are not the distinctive characterizations of races; they are not peculiar to any race; they are not monopolized by nor wholly excluded from any people on the round earth. Intelligence and virtue are individual possessions, inconstant qualities  varying ad infinitum among the individuals of every people ....

Nearly hysterical rants that heathen Chinese immigrants to the West Coast States should not be allowed to vote were made:

Another amendment ... is to make this amendment inapplicable to persons of foreign birth. The reasons for this proposition, doubtless, is that those States which are on or near the Pacific Coast dread the immigration of Asiatics.... I am not in favor of giving the rights of citizenship or the right of suffrage to either pagans or heathens. I believe that the history of this country, and its laws as well as the spirit of its people, declare just as clearly that this is a Christian as well as a free country; and I am not in favor of taking steps backward into the slough of ignorance and of vice, even under the cry of progress.

These were also met with arguments of equality, and that if anything, the Chinese were far more intellectually capable of voting than uneducated slaves:

[H]ow can you contend in favor of giving this power to the African race if you deny it to the Chinese? You know that the Chinese are far in advance of the African in point of civilization. You know that, in comparison with the Chinaman, the African is inferior. You know that in point of industry the testimony of all men upon the western coast in relation to the Chinaman is that he loves industry; that he loves to labor. He is trained to labor and habits of industry and habits of frugality and economy that are most remarkable.

Relatedly, a proposed change to limit the amendment’s applications to Africans was made, by Senator Howard of Nevada. His proposed amendment read:

Citizens of the United States of African descent shall have the same right to vote and hold office in States and Territories as other citizens, electors of the most numerous branch of their respective Legislatures.

This was defeated. Among other things, how much African blood was necessary to qualify one as of African descent was seen as a stumbling block.

Reminiscent of the argument for 18 year olds’ voting 100 years later, the fact that 1000s of slaves had volunteered to fight for, and died for, the union cause was a potent argument that they had earned the right to protect their equality via the power of the vote:

During the war we were all very glad to witness the alacrity with which the negroes flocked to our standard. He was deemed good enough to stand shoulder to shoulder with us on the bloody field, but now that the time of trial is past too many are prone to forget the lesson learned in the hour of danger, and to conclude that the negro, though good enough to die for liberty, is far too inferior a being to enjoy its full blessings now that it is permanently won.

Perhaps the primary argument made was that embraced by Frederick Douglass, that the right to vote was the “completion” of the eradication of slavery, that would enable the freed slaves to prevent the rollback of their rights by the States:

No class, no race is truly free until it is clothed with political power sufficient to make it the peer of its kindred class or race and enable it to resist the contingencies of popular emotion.
It is of ...[the] great[est] importance to have our liberties and our rights secured, guarantied, chartered, and written in the Constitution, so that we can maintain them and leave them to our posterity. Therefore I desire to see that the important measure which we are now considering made a part of the fundamental law of the land.
[I]t is certain that this Government was founded on the idea that all political power was vested in the people; not a third of a half or a fraction, but all of the people.
Black men are denied the right to hold office now; the next step will be to take from him the ballot; and the next his freedom. 
...[T]his question [must] be definitely and permanently settled .... Certainly no one here can desire to see repeated the issue then presented, of the naked sword, or a repudiation of the act of emancipation, and of all the guarantees of protection which the Government had vouchsafed to its friends in the late rebellious States. 
The only sure protection of this nation against the ultimate re-establishment of that institution, is by the adoption and rigid maintenance in all the States of the doctrine of impartial suffrage.

Source: Congressional Globe, 4oth Congress, 3rd Session, pp. 978-1014

I will update this post with identifying information as to the speakers and some further comment tomorrow.

Weekly Indicators for February 3 - 7 at Seeking Alpha

 - by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

There were some changes in all of the timeframes this week. Of particular note, the coincident indicators of rail and steel, which were negative for almost all of 2019, have switched over to positive.

As usual, clicking over and reading helps reward me a little bit for my efforts, as well as bringing you up to date about the economy.

Friday, February 7, 2020

January jobs report: why I am discounting the headline strong jobs number

 - by New Deal democrat

  • +225,000 jobs added
  • U3 unemployment rate up +0.1% to 3.6%
  • U6 underemployment rate up +0.2% from 6.7% to 6.9%
Leading employment indicators of a slowdown or recession

I am highlighting these because many leading indicators overall have strongly suggested that an employment slowdown is here. The following more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mixed to slightly negative: 
  • the average manufacturing workweek was unchanged  at 40.4 hours. This is one of the 10 components of the LEI.
  • Manufacturing jobs declined by -12,000. Manufacturing gained only 26,000 jobs in the past 12 months.
  • construction jobs rose by 44,000. In the past 12 months construction jobs are up 142,000, a deceleration from 207,000 in 2018. Residential construction jobs, which are even more leading, rose by 2400.
  • temporary jobs declined by -1500. Last months initial +6400 was revised downward to +5900.. 
  • the number of people unemployed for 5 weeks or less declined by -6,000 from 2,065,000 to 2,059,000.

Wages and participation rates

Here are the headlines on wages and the broader measures of underemployment:
  • Not in Labor Force, but Want a Job Now: increased by 72,000 to 4.904 million
  • Part time for economic reasons: increased by 34,000 to 4.182 million 
  • Employment/population ratio ages 25-54: rose +0.2% from 80.4% to 80.6%
  • Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $.03 to $23.87 (while December was revised upward), up +3.3% YoY - a deceleration from recent YoY growth. (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)  

Holding Trump accountable on manufacturing and mining jobs

 Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise?  
  • Manufacturing jobs rose an average of +2200/month in the past 12 months vs. the last seven years of Obama's presidency in which an average of +10,300 manufacturing jobs were added each month. This is a sharp deceleration.
  • Coal mining jobs increased by +200, and an average of -67 jobs/month in the past year vs. the last seven years of Obama's presidency in which an average of -300 jobs were lost each month
November was revised upward by 5,000. December was also revised upward by 2,000, for a net change of +7,000.

Other important coincident indicators help  us paint a more complete picture of the present:
  • Overtime declined -0.1 hour to 3.1  hours
  • Professional and business employment (generally higher-paying jobs) rose by 21,000 and is up 390,000 YoY, a deceleration from 561,000 in 2018. 
  • the index of aggregate hours worked for non-managerial workers rose by 0.5%
  •  the index of aggregate payrolls for non-managerial workers rose by 0.6%  
Other news included:            
  • the alternate jobs number contained  in the more volatile household survey declined by -679,000  jobs.  This represents an increase of 2,087,000 jobs YoY vs. 2,052,000 in the establishment survey. [Note: I originally reported a much lower number in error]
  • Government jobs rose by 19,000.
  • the overall employment to population ratio for all ages 16 and up rose +0.2% to  61.2% and is up 0.5% YoY.    
  • The labor force participation rate rose +0.2% to 63.4% and is up 0.2% YoY.

SPECIAL NOTE ABOUT ANNUAL REVISIONS: Both the establishment and household survey had major annual revisions this month. In the establishment survey, the first four months of 2019 were revised downward by -110,000. But the last 8 months were revised higher by +98,000. The population control for the household survey subtracted over -800,000 from population growth in 2019. Thus the January household employment number of -89,000 represents a monthly gain of 418,000 overcome by a -507,000 population adjustment. Note this does not change the YoY number in the household report.


This report was very mixed. The headline jobs gain in the establishment survey masked continued declines in several leading components. Meanwhile the headline unemployment numbers in the household survey masked strong participation gains, once the annual population adjustments were made.

Because participation is a lagging part of the report, while the leading components were neutral to negative, I am taking the headline strength in the jobs number with a grain of salt. I have a strong feeling that the improved numbers for the last 8 months of last year are going to get revised downward once we have more information. 

Thursday, February 6, 2020

Live-blogging the Fifteenth Amendment: January 29, 1869 (3)

- by New Deal democrat

Later in the evening debate, Representatives Boutwell (who supported the narrow 15th Amendment language) and Shellabarger (Republican from Ohio) (who supported broader “right to vote” language similar to that espoused by Bingham) had the following exchange on the issue of State voter registration laws:
Boutwell [discussing the narrow non-discrimination based on race proposal]: I am not sure that it will not go so far as to put it out of the power of States to establish a registration law. It certainly does abolish those qualifications in some States which require the voter to pay a small capitation tax .... I think that by arraying against this proposition all the peculiarities of the different States we put the proposition itself in danger. I think it better, therefore, as a matter of practical wisdom, to address ourselves exclusively to those great evils which have existed [already].
Shellabarger: [T]he [braoder, right-to-vote] proposition which I submit is not amenable to the objection ... that by it the States would be deprived of the power of passing registration or election laws. Plainly that cannot be so. The Constitution itself in express terms provides that ‘The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively or to the people.’ 
Hence, ... if the power to regulate elections or registrations resides with the States under the Constitution in its present form, then my proposition will not take it away.... 

Boutwell: The difficulty, in one word, is that the gentleman’s amendment, if made a part of the Constitution, vests the right of suffrage absolutely in every person covered by the amendment; and if any State should provide that the voters shall be registered ten days before the election it will be in the teeth of the provisions of the gentleman’s amendment as I understand it....
Source: Congressional Globe, 40th Congress, 3rd Session, p. 727

As we know, the broad “right to vote” language was rejected by the Congress. We also know that, contrary to Boutwell’s opinion, the Supreme Court upheld “poll taxes” until they were specifically outlawed as to Federal elections only  by the 24th Amendment, passed in 1964.

I have highlighted the above exchange because the members of Congress debating the proposed amendment were not unaware of the complications that could ensue. Bingham and Shellabarger were worried that a narrow amendment focused on race would leave the States free to discriminate on other grounds; while Boutwell and others were worried that a broad mandate would throw out the proverbial baby with the bath water, and that States would recoil from ratifying the amendment.

Jobless claims continue to show a healthy economy

 - by New Deal democrat

I’ll keep this brief. This morning’s weekly report on initial jobless claims continues to show no danger of any imminent downturn.

The weekly number was 202,000, close to its 50 year lows last year. The 4 week average was 211,750, also close to its recent 50 year lows. Below are the monthly (blue) and moving 4 week averages (red):

The less leading but also less noisy 4 week average of continuing claims was 1.3% higher YoY, which shows weakness, but as the below 35 year graph indicates, is not near the 5% higher threshold which has typically been exceeded before recessions:

That this metric has refused to turn negative, and the stock market continues to make new highs, are the two biggest reasons why I have never gone on “recession warning” (vs. “watch”) in the past year.

Wednesday, February 5, 2020

Live-blogging the Fifteenth Amendment: January 29, 1869 (2)

 - by New Deal democrat

Rep. John A. Bingham, Republican of Ohio, among the most ardent reconstructionists, wanted a more broadly inclusive amendment:
I concur with my colleague ... [regarding] the objectionable features of the amendment as presented .... [T]he only limitation that the amendment imposes upon the original powers now in the several States of this Union is the limitation that they shall not restrict the elective franchise in the persons of citizens by reason of race, color, or previous condition of slavery.... [H]ence it is manifestly clear that this power remaining in the States, in no other manner fettered by the proposed amendment, may be exercised to the end that an aristocracy of property may be established, an aristocracy of intellect may be established, an aristocracy of sect may be established .... [T]he amendment presented to the people for their approval will inform them that upon its adoption these abuses by States will hereafter be impossible. To that end I have proposed an amendment [as follows:] 
‘No State shall make or enforce any law which shall abridge or deny to any male citizen of the United States of sound mind and twenty-one years of age or upward the equal exercise of the elective franchise, subject to such registration laws as the State may establish, at all elections in the State wherein he shall have actually resided for a period of one year next preceding such election, except such of said citizens as shall hereafter have engaged in  rebellion or insurrection, or who may have been or shall be duly convicted of treason or other infamous crime.’

Congressional Globe, 40th Congress, 3rd Session, p. 723.

Note that even this broad formulation included a right to vote for women; and more to the point for our current situation, would not prohibit the identification laws that are presently being used for voter suppression. States most likely would also attempt to define as many crimes as possible that might be disproportionately committed by poor blacks, as “infamous.” 

Live-blogging the Fifteenth Amendment: January 29, 1869 (1)

 - by New Deal democrat

I am trying to catch up with this endeavor. Hopefully I’ll be fully caught up by early next week. This is the third entry which is particularly important in the context of our present-day crisis due to gerrymandering and voter suppression. 

On January 29, 1869, the House of Representatives dedicated time to discussing the Civil Rights bill under the 14th Amendment, and the proposed 15th Amendment.

Rep. William R. Kelley, Republican from Pennsylvania, first discussed the powers of Congress pursuant to the Federal constitutional guarantee of a “republican form of government” to the States:
I hold that all of the power that this amendment will give is already in the Constitution. I admit that it has lain dormant .... [but] I am persuaded that it will yet be quickened and called into action. The aroused people will demand that all of the powers of the Constitution be exercised so that each State shall be guaranteed a republican government, and that the citizens of each State shall enjoy peaceably the privileges and immunities of citizenship in the respective States .... 
How was this power to be exercised? How was the guarantee to be carried into effect? .... I turned to the recorded views of James Madison, the leader of that convention, and who is known to history as its father because of the influence he exercised in its counsels and in molding its conclusions. I found that on the 18th of June, 1788, in the Virginia convention, Mr. Madison, in his response to Mr. Monroe, [said:] ... 
‘Some States might regulate the elections on the principles of equality, and others might regulate them otherwise. This diversity would be obviously unjust. Elections are regulated now unequally in some States, particularly in South Carolina, with respect to Charleston, which has a representation of thirty members. Should the people of any State be deprived of the right of suffrage, it was judged proper that it should be remedied by the General Government.’
Turning to the Congressional authority over the “time, place, and manner” of Congressional elections, he quoted the remarks of Theophilus Parsons during the ratification debates in Massachusetts:
‘But a State Legislature, ... when faction and party sprit ran high, would introduce such regulations as would render the right of the people insecure or of little value. They might make an unequal and partial division of the States into districts for the election of Representatives .... Without these powers in Congress, the people can have no remedy. But the fourth section [of Article I of the Constitution] provides a remedy.’
The power is not, I freely admit, one to be exercised by Congress in the first instance. The regulation of the suffrage is left primarily to the States. If they regulate it according to the principles of justice then their action stands; but if not, Congress is required to exercise its supervisory power.
(Emphasis mine)
Source: Congressional Globe, 40th Congress, 3rd Session, pp. 721-22.
The situation I have bolded in the remarks of Theophilus Parsons from the Massachusetts ratifying convention, quoted by Kelley, almost exactly describe our situation today. Kelley is quite clear that he interprets the Constitution to mean that Congress has the explicit power under its authority to regulated the “time, place, and manner” of Congressional elections to remedy this situation.

Further, the quotation from Madison certainly indicates his belief that Congress has the authority, under the Constitutional guarantee of a “republican form of government” to the States, to remedy unjust abridgments of the right to vote including inequality, even in State legislative elections.

The long leading forecast up to 12 months

 - by New Deal democrat

Last week I posted my short term forecast through midyear. This morning my long term forecast through the 2nd half of 2020 was also posted at Seeking Alpha.

As usual, clicking through and reading will help you see the longer term trends, and also rewards me a little bit for my efforts.

Tuesday, February 4, 2020

Live-blogging Congressional power to ensure fair federal elections: January 28, 1869

 - by New Deal democrat

As I described in my earlier post today, the power of Congress to determine the manner in which Congressional elections are to be conducted, including power over the districting process, came up in a speech by Rep. Stewart on January 28, 1869. Since this is of critical importance as to Congress’s ability to prohibit gerrymandering of at least Federal elections, below are selections from another important speech.

James B. Beck, Democrat from Kentucky, discussing the proposed Civil Rights Act, addressed the issue of Congress having the power to set the “time, place, and manner” of voting for Representatives. After declaiming at length about the States having the right to determine who formed their electorate, and to determine the times, places, and manner for elections to the State legislatures, he turned to the issue of elections for the US Congress:

If the State legislatures refuse to fix a time for holding such elections [for US Congress], or fix an improper time; if they fail to designate places or to authorize them to be designated, or if they are unsuitable or inadequate, or if they fail to appoint or cause to be appointed suitable persons to conduct and determine the result of such election, or in any regard fail to conduct them in a proper manner, I take it to be not only the right but the duty of Congress by proper laws to provide the proper times, places, and manner of conducting such elections, which, when complied with by the electors in the States, will entitle the Representatives chosen by them in conformity thereto to take their seats in Congress .... That seems to me to be the whole scope, intent, and meaning of the constitutional provision [i.e., Article I, Section 4]. 

This is a much more cramped reading than that given by Congressman Stewart earlier that same day. To the point, it is unclear to say the least whether the reforms of 1842 which outlawed Statewide general ticket elections for Congress and replaced them with individual districts, would fit within the confines of Beck’s reasoning.

But even Beck agreed that if the states “fail to designate places ... or if they are unsuitable or inadequate” for Congressional elections, Congress could and indeed ought to intervene.

Since one form of modern voter suppression is to provide inadequate numbers of polling places, or put them in places difficult to reach, or to provide inadequate equipment at those places where “undesired” voters will cast votes, Congressional action to remove these impediments under Congress’s Article I, Section 4 power is squarely within even Beck’s interpretation.

Source: Congressional Globe, 4oth Congress, 3rd Session, p. 689

Live-blogging the Fifteenth Amendment: January 28, 1869

 - by New Deal democrat

Note: I have fallen a little behind, due to traveling. My apologies! I am making a concerted effort to catch up. Today’s installment is particularly important on the issue of gerrymandering.

On January 28, Rep. Charles Stewart, a Republican from New York, spoke with reference to the proposed Amendment that had been voted out of the Judiciary Committee, which had been amended from:
No State shall deny or abridge the right of its citizens to vote, and hold office, on account of race, color, or previous condition of servitude.
to read:
The right of citizens of the United States to vote, and hold office, shall not be denied or abridged by the United States or any State on account of race, color, or previous condition of servitude.
Here is a brief excerpt from his speech:

[T]his great question ... is the culmination of a contest which has lasted for thirty years. It is the logical result of the rebellion, and the abolition of slavery.... and now we are to place the grand result, I hope, in the Constitution of the United States.... This question can never rest until it is finally disposed of. This amendment is a declaration to make all men, without regard to race or color, equal before the law. The arguments in favor of it are so numerous, so convincing, that they carry conviction to every mind.... 
It must be done. It is the only measure that will really abolish slavery. It is the only guarantee against peon laws and against oppression.... You may put this in the form of legislative enactment; you may empower Congress to legislate; you may empower the States to legislate, and they will agitate the question. Let it be made the immutable law of the land; let it be fixed; and then we shall have peace.

Probably much more significantly, he addressed an issue *directly* relevant to the present crisis caused by extreme gerrymandering, in connection with a proposed second section of the amendment which would extended Congressional power to mandate the manner that Electors in Presidential elections also be determined.

He proceeded form Article I, Section 4 of the US Constitution, which provides: 
The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Place of Chusing Senators.

Relying on that power, he noted:
Many years ago the Congress of the United States abolished the general ticket system in the States for choosing Representatives in the lower house of Congress, because it was seen to be attended with great evils, inconveniences, and mischiefs which required the hand of reform. Fortunately the power existed in Congress to apply reform, and Congress did. It required that each State electing more than one Member of the House of Representatives should divide itself into single districts, and that one Member should be elected from each. It was only because that power existed in Congress that that reform was possible at the time it was secured. Some of the States in fact resisted it.  I believe two or three States continued to elect by general ticket in spite of the act of Congress; but they were finally compelled to conform themselves to the new and improved system which was established by Federal law; and we now have, therefore, in the election of Representatives in the other branch of Congress, a single district system established and enforced by congressional power.
Source: Congressional Globe, 40th Congress, 3rd Session, p. 668.

As we know from 150 years of history, even a straightforward Constitutional amendment cannot survive a Supreme Court majority that is determined to eviscerate it.

More compelling is Stewart’s point that it is within Congress’s power to determine the manner in which States can elect Representatives to Congress.  The “general ticket” system allocated *all* Representatives to the party which won the most votes. Thus if, e.g., Jacksonian Democrats got 51% of the vote, they got 100% of the elected Representatives. The individual district system was designed to be much closer to the actual will of the electorate. 

In our day, there is much wailing and gnashing of teeth about the US Supreme Court’s unwillingness to deal with extreme gerrymandering. Stewart crucially points out that, at least as to federal Representatives, it is within Congress’s power itself to determine the manner of elections. Congress could, e.g., mandate that the percentage of winners from each party be proportionate to that party’s statewide vote. Or it could mandate the methods (such as compactness and avoidance of “wasted” votes) by which districts are shaped. This is a crucial and absolutely vital lesson.