Liquidity-Strapped Consumers Move to Cash, Spiking Traditional Money Supply M1 SHADOWSTATS DAILY UPDATE - May 1st to May 3rd A major Subscriber-Only e-mail update is pending for later today. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. Per the NAR Press Release, Existing-home sales retreated 2.4% in March to a seasonally adjusted annual rate of 4.44 million. On Top of a Downside Revision, October Building Permits Monthly Change Flattened Out at a Statistically Significant 0.0%, Analysis Behind and Beyond Government Economic Reporting, Some Biographical & Additional Background Information. That said, in Business Cycle definitions, an economic downturn traditionally has been known as a Depression, which has two components the Recession and the Recovery. After the economic terror of the Great Depression, economic downturns took on the less-frightening Recession nomenclature. Reporting For the month of February 2023, the real Deficit deepened to -l04.6 billion. As Tim notes, this is a gobsmacking error. Moving higher to a 120.5% of its Pre-Pandemic Level, from 119.8% in February and 119.7% in January, March 2023 Basic M1 still is shy of its August 2022 unrevised record level of 123.2%. Near-Term Financial-Market Turmoil Likely Is Far from Over, Given Renewed Deterioration in Economic Conditions, Fourth-Quarter 2020 Annualized Real GDP Growth of 4.0% Was as Expected, Slowing from the Record 33.4% Third-Quarter Pandemic Rebound Data downloads and the Inflation Calculator are Subscriber only. Your Shadow subscription. Internationally, these activities are more broadly referred to as the shadow economy. (2) April 27th (Bureau of Economic Analysis), also see Note 17. (18) March 21st to 22nd (FOMC). ARCHIVES - VIEWING EARLIER COMMENTARIES. Given mounting U.S. Banking System instabilities, the Federal Reserve continues to spike systemic liquidity with inflation-driving Money Supply creation, which exacerbates the inflation problem. The level of revenue passenger miles was their primary sales forecasting tool, and the model was heavily dependent on the GNP (now GDP) as reported by the Department of Commerce. While the headline number usually is the seasonally-adjusted month-to-month change, the formal CPI is reported on a not-seasonally-adjusted basis, with annual inflation measured in terms . In contrast, the usually less meaningfully sampled Housing Starts, tend to be more volatile in revision. Increases have continued across-the-board into early April 2023. The aggregate Monetary Base often moves broadly on a parallel basis with the Money Supply, but it also can vary widely with the Money Supply, tied to the dominance of its movements triggered by Bank Reserves held by Federal Reserve Banks. ShadowStats Defined "Basic M1" -- Combined Currency and Demand Deposits -- Still Reflects the Extraordinary Liquidity Flight to, and Surge in the Narrower Money Supply (15) April 5th (Census Bureau, Bureau of Economic Analysis - BEA) - Following a record 2022 Real Annual Merchandise Trade Deficit, the January and February 2023 Deficits deepened successively to their worst readings since October 2022, but narrower than in First-Half 2022. Where monthly jobs growth in the key Manufacturing, Retail Sales and Construction Sectors has turned flat-to-minus, the Leisure and Hospitality Sector showed continued strong, albeit slowing monthly growth, still holding shy by more than 2% (-2%) of ever recovering its pre-Pandemic level of activity. View Download Excel CSV File Last Updated: April 13th, 2023. [Posted May 1st, 1:00 a.m. The 2021 Financial Report is available here: https://www.fiscal.treasury.gov/reports-statements/financial-report/current-report.html -- ShadowStats will provide extended analysis in an updated Hyperinflation Commentary, which will post subsequent to the pending Commentary No. That Is Because the Current Collapse Is Pandemic, Not Business-Cycle Driven; Surging Money Growth in a Non-Business-Cycle Collapse Can Trigger Hyperinflation Those numbers are adjusted for inflation, using the Construction Producer Price Index. (13) April 12th (Bureau of Labor Statistics). A similar pattern is likely with the Census Bureaus May 1st release of March 2023 nominal Construction Spending, given the activity patterns and related needed inflation-adjustments already in play. (4) April 25th (Federal Reserve Board, ShadowStats) -- Headline U.S. March 2023 Money Supply and Monetary Base details showed a continuing creation of, or a shift or flight to liquidity, all of which tends to fuel inflation. [April 9th]. Contact us to discuss your needs. Consumer Liquidity, Depression, Money Supply. March 7th builds: Power up the pink archer. 1461 soon. Accordingly, ongoing massive Fiscal and Monetary Stimuli will be needed, and likely will expand into 2024/2025, irrespective of the FOMCs pronounced tightening. As demonstrated in recent decades, FOMC stimulus likely will remain in play, as targeted by the FOMC, primarily, in order to prevent a collapse in the Banking System, or to magnify liquidity in the Banking System, which owns and controls the Federal Reserve, not to stimulate the Broad Economy, per se. March 2023 Money Supply activity reflected a continuing and intensifying 55-year record-high flight to liquidity in Basic M1 (Currency plus Demand Deposits), with Basic M1 notching higher to 35.0% of the aggregate headline Money Supply M2, its highest proportion since the same level in April 1970, a 53-year high. Effectively fully surveyed, Permits were down by a deepening, seasonally adjusted year-to-year drop of 24.8% (-24.8%) in March 2023, against a revised, narrowed 16.5% (-16.5%) [previously a 17.9% (-17.9%) February decline]. Inflation is already in the double digits, according to ShadowStats' John Williams, and will still grow. The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990. Stock Indices Are At or Near All-Time Highs, Coming into the First Anniversary of the Pre-Pandemic Stock-Market Peaks and Subsequent Crashes Economic Recovery Is Not as Close as Hyped by the Consensus Outlook The original Money Supply measure, Basic M-1 is defined as Currency plus Demand Deposits (checking accounts). Yet, as discussed here frequently, the problem inflation largely is being driven by the FOMCs still explosive Money Supply and System Liquidity growth, not by an overheating economy. At the same time, the FOMC keeps hiking interest rates, in order to kill economic activity that is neither overheating nor driving the inflation, despite the publicly expressed claims of the FOMC and its Fed Chairman. The annual drop of 22.0% (-22.0%) in March was against a 23.1% (-23.1%) annual decline in February, and was the eighth straight month of annual contraction deeper than minus 20% (go to https://www.nar.realtor/existing-home-sales for details). Summary John Williams from Shadowstats joins me to discuss the new economy post-COVID-19 emergence in the US. Redefined November Money Supply M1 Just Jumped from 31.7% to 92.7% of Total M2; November 2020 Year-to-Year Growth in the Traditional Money Supply M1 Soared to a Record 53.2%, the Redefined New Series Reflects a Record 348.4% Jump (2) April 27th (Bureau of Economic Analysis), also see Note 17. Where current inflationary pressures appear to be tied to excessive Monetary stimulus out of the Fed, not due to an overheating economy, still higher interest rates, now, would do little to contain inflation, while at the same time higher interest rates would continue to impair economic activity. That circumstance is reviewed in pending ShadowStats Benchmark Commentary No. First-Quarter 2021 GDP Remains at Risk of Relapsing into Quarterly Contraction EXPANDED SHADOWSTATS ALERT: - Intensifying Risks of a Highly Inflationary, Major U.S. Economic Downturn. -- Noted regularly here, New Home Sales (likely the least-reliable, least-meaningful, least-significant and most heavily revised headline series published by the Census Bureau) continued to sink year-to-year. Reserves jumped by a dominant 7.1% in the month, which would speak to new money creation, while the Currency in Circulation component gained by 0.6% month-to-month, to a new historic high. Those details are posted and graphed on the Alternate Data Tab. Despite political hype to the contrary, such is helping to accelerate the pace of domestic Inflation. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. Any solid developments in the ever-deepening U.S. Government Fiscal Crisis will be covered here in the SYSTEMIC RISK Section. March 2023 Industrial Production, Manufacturing and Capacity Utilization showed meaningful downside benchmark revisions to previously reported activity, but continued in a third month of upturn in context of Federal Reserve regular overestimation of headline Industrial Production. Please note with the ALTERNATE DATA Tab, that the Money Supply annual growth rates after February 2021 instead are against the February 2020 Pre-Pandemic Level not year-to-year (although both measures are plotted in the subscriber-only graphs). That said, the aggregate series quarterly sales, have been in annual decline for each of the last seven quarters, up through the current 1q2023, in an otherwise deepening housing recession. The SGS-Alternate GDP reflects the inflation-adjusted, or real, year-to-year GDP change, adjusted for distortions in government inflation usage and methodological changes that have resulted in a built-in upside bias to official reporting. Yet, with the new Fed Funds Rate at a 15-plus-year high (since July 2007), the earlier FOMC rate hikes already are pummeling the economy, but again, not relieving inflation. (7) April 20th (National Association of Realtors NAR). Collapsed Oil Prices Still Suppressed November CPI and PPI Annual Inflation; Yet, Oil Prices Suddenly Are Surging Anew Real year-to-year growth patterns were kinder to the fourth-quarter GDP, with year-to-year growth increasing from 0.88% to 1.57%, and with the gain against Pre-Pandemic Peak Activity increasing from 5.03% in 4q2022 to 5.31% in 1q2023. U.S. Dollar. Unemployment. Noted frequently here and discussed subsequent to earlier FOMC Meetings (March 22nd was the last), little has changed: The Federal Reserves Federal Open Market Committee (FOMC) hiked the targeted Federal Funds Rate March 22nd by the expected 0.25%, to a 15-year high level of 5.00%, hoping still to induce an imminent Economic Recession, which otherwise already had been in play and deepening for some time, due to earlier rate hikes. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Christopher J. Waller.. 1461] -- The 2020 Economic Collapse Remains Far from full Recovery. From a revised -101.7 (previously -101.7) billion, from a revised -98.2 billion in December, its worst monthly showing since -112.4 billion in October 2022. Please contact johnwilliams@shadowstats.com for further details or any questions. Such Was the First Annual Gain in Freight Activity Since November 2018, When Excessive Fed Tightening Was Being Used to Constrain Consumer Liquidity and Domestic Economic Growth Annual-Change Gyrations Are Just Beginning for Economic, Inflation, Money Supply and Financial Return Numbers, as the Pandemic-Driven Collapse Passes It First Anniversary The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. Despite Talk of Tightening in 2022 or 2023, FOMC Is Easing Anew in Its Latest Actions, Benchmarked Industrial Production Revised Sharply Lower; Both Manufacturing and Mining Were Hit Hard Underlying headlines of better-quality U.S. economic numbers, reviewed here in Part II [see Points (1) to (18)], suggest that the United States has been in Recession since First-Quarter 2022, allowing for the political games played with the Strategic Petroleum Reserve depletion, which otherwise also accounted for the headline boost in Second-Half 2022 (Third- and Fourth-Quarter 2022) GDP growth. Primers & Reports. Separately, though, the Fed also purportedly has been reducing its balance sheet assets, which should slow or cut the Money Supply growth and inflation. Full-Year 2020 Annual GDP Decline of 3.5% (-3.5%) Was the Deepest Since the 1946 Post-World War II Economic Reset "John" Williams was born in 1949. 1460b and will be detailed in pending No. Dan Heng builds: Sharpen that spear. (I) - BOTTOM LINE COVERAGE: A ninth, consecutive FOMC Meeting Interest Rate hike is expected Wednesday, yet the U.S. Economy already is in intensifying Recession. Including Long-Term Discouraged Workers, the broader, March 2023 ShadowStats Alternate Unemployment Rate of 24.6% held at a seven-month high. One of my early clients was a large manufacturer of commercial airplanes, who had developed an econometric model for predicting revenue passenger miles. Search Text. (10) April 14th (Census Bureau, Bureau of Labor Statistics, St. Louis Fed, ShadowStats) [See the Opening Comments on the April 24th annual benchmark revisions to Retail Sales, which continue to show flat to negative annual contractions and quarterly contractions, net of inflation.] [Again, the E-Mail Updates are available to you as part of both new and existing regular subscription; just request it by e-mail from johnwilliams@shadowstats.com .] Continuing Massive Expansions of Federal Government Deficit Spending and Federal Reserve Monetary Stimulus Promise Massive Inflation It remains ShadowStats contention that the surging headline inflation is due to FOMC-triggered massive growth in the Money Supply and Monetary Liquidity, as reflected in the highly liquid Basic M1 (Currency plus Time Deposits / Checking Accounts), not due to an Overheating Economy. Tourism Research Australia (TRA) provides statistics, research and analysis to support industry development and marketing activities for the Australian tourism industry. In the charts to the right we show two SGS-Alternate CPI estimates: One based on the pre-1990 official methodology for computing the CPI-U, and the other based on the methodology which was employed prior to 1980. That said, in practice, such should be a major economic consideration for the FOMC and the Administration, going forward, as they hike Interest Rates, reduce their Balance Sheet and look to break the Budget Deficit Federal Debt Ceiling. Despite numerous, separate indications of the economy stalling or turning down anew (see the earlier GDP, Consumer Sentiment, New Orders for Durable Goods, Industrial Production, and Construction Spending), such broadly is ignored at present. The initial headline annualized quarterly estimate of inflation-adjusted First-Quarter 2023 Real Gross Domestic Product (GDP) showed doubly negative patterns of activity. Those details are posted and graphed on the Alternate Data Tab. Headline March 2023 CPI-U annual inflation eased to 5.0%, from 6.0% in February, again, due to the relative easing of March 2023 energy prices against the oil and gasoline price spikes triggered by the year-ago by Russian invasion of the Ukraine. Shadow TUAS air vehicle The air vehicle system can be transported by two military wheeled vehicles and can be operated round-the-clock from unprepared sites by the 22-soldier crew. (6) April 24th (Census Bureau). Current employment/ economic conditions will be assessed and reviewed shortly in the pending No. Surging Monetary Base, Reserves and Currency Indicate Intensifying Systemic Problems The Federal Reserve Overhauled Its Money Supply Reporting, Redefining Traditional M1 from 34.8% to 93.4% of a Not-Redefined Total M2 FOMC Has Trouble Forecasting Inflation One Quarter Ahead, Let Alone Two Years Ahead Accordingly, the April 2021 to January 2023 growth rates here generally are shown against that February 2020 PPT, instead of year-to-year. March 2023 New Residential Construction continued in statistically significant annual year-to-year collapse for both Building Permits and Housing Starts. IMPORTANT: Commentary postings are advised directly to Subscribers by coincident e-mail, along with a direct link to the posted Commentary and any needed login detail. Shadow Government Statistics or Shadowstats is a blog run by John Williams in which he re-analyzes government economic /unemployment published statistics in order to restate them. Current liquidity and political risks and issues are intensified by potential Hyperinflation, long viewed by ShadowStats as the ultimate fate of the U.S. Dollar. Although I am known formally as Walter J. Williams, my friends call me John.For 30 years, I have been a private consulting economist and, out of necessity, had to become a specialist in government economic reporting. Minimizing Reporting of Such, the Fed Just Redefined Money Supply M1; Given Newly Defined M1-Like Liquidity Characteristics for M2 Savings Deposits, Savings Have Been Shifted Retroactively from M2 to into M1, Effective as of May 2020 That began a lengthy process of exploring the history and nature of economic reporting and in interviewing key people involved in the process from the early days of government reporting through the present. Revised year-to-year growth slowed to 0.88%, from 0.91% and an initial estimate of 0.96%, versus 1.94% in 3q2022. Unprecedented in 40-Plus Years of Weekly Monetary Reporting: Money Supply M1 Jumped by 14.1% in the Last Two Weeks, in a Post-Election / COVID-19 Flight to Cash, From M2 to M1 The FOMC announced in its March 22nd Press Release: Recent indicators point to modest growth in spending and production. -- In line with FOMC rate hikes, annual Payroll Growth has been slowing for the last fourteen months, from 5.3% in February 2022 to 2.7% in March 2023, suggestive of softening economic activity. For those looking to subscribe, please go to the SUBSCRIPTION LINK at the upper left-hand corner of this Web page). Treasury Secretary Janet L. Yellen did not describe in her Opening Message for 2021, as she had in 2020, and as her recent predecessors had done, that the current Fiscal Path was Unsustainable. Yet that concept still appeared early in the Opening Summary: The debt-to-GDP ratio was about 100 percent at the end of FY 2021 [around 122% in November 2022 WJW]. -- Noted regularly here, New Home Sales (likely the least-reliable, least-meaningful, least-significant and most heavily revised headline series published by the Census Bureau) continued to sink year-to-year. 1461. FOMC action looms this week, amidst signs of a tanking Economy and a serious Inflation problem. Aside from some short-term reporting gimmicks, Payroll Employment probably still is the highest-quality economic statistic published by the U.S. Government, at present, given current data and the reporting-compromised conditions of a still-evolving Pandemic/ post-Pandemic environment. The 2020 Pandemic-Driven Recession was timed by the defining National Bureau of Economic Research (NBER), from Peak-to-Trough, as from February 2020 to April 2020 [2 months, the shortest on record] and from Fourth-Quarter 2019 to Second-Quarter 2020 [2 quarters]. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4-3/4 to 5 percent. Ongoing rate hikes at each of the last several FOMC Meetings to reduce inflation, remain counterproductive in the context of an already deepening Economic Recession and resurgent gasoline prices. Over the decades, well in excess of 1,000 presentations have been given on the economic outlook, or on approaches to analyzing economic data, to, clientslarge and smallincluding talks with members of the business, banking, government, press, academic, brokerage and investment communities. A Review-Preview of 2020 into 2024, it will incorporate all the latest economic details. P E N D I N G .. P O S T I N G S Monday, May 1st, the Census Bureau releases March 2023 Construction Spending (10:00 a.m. Chances Are Reduced for Moderating Extreme Monetary and Fiscal Policies In the end, the Fed has little choice but to support the banks and to let inflation run its course. Gross Domestic Product. FOR SUBSCRIBERS Beyond the pending monthly Commentary, graphs covering the latest numbers and most other economic, inflation and monetary detail, are available to you by e-mail, as part of your existing, regular subscription. Where January 2021 Year-to-Year Manufacturing Contracted by 1.0% (-1.0%), It Also Contracted by 1.8% (-1.8%) from January 2019, Two Years Ago Ukraine Latest: War Casts Shadow Over Votes in Bulgaria, Finland. Near Record Growth of Currency in Circulation Foreshadows Inflation Risk Commentary No. A prospering shadow economy makes official statistics (on unemployment, official labor force, income, consumption) unreliable. Mind the Aftershocks: Post-Tantrum Market Calm Unnerves Traders . Year-to-Year Gain in Monthly November M1 Jumped to a Record 53.2% from the Prior Record of 42.3% in October, Surged to 65.6% in Week-Ended November 30th January 2021 Producer Price Index Monthly Inflation Hit a Record, 10-Year High [Posted May 1st, 1:00 a.m. The ShadowStats-Alternate Consumer Inflation Measures were created by reverse-engineering the CPI-U-RS series, and adding in estimates of the inflation effects of factors not otherwise estimated by the BLS, such as more-frequent (two-years versus ten-years) reweighting of the CPI series. John Williams, Fundamentals Could Not Be Stronger for Gold and Silver, nor Weaker for the U.S. Dollar and Stocks, Despite Fed or Market Nonsense to the Contrary (14) April 7th (Bureau of Labor Statistics BLS, and ShadowStats.com). ShadowStats will re-address these numbers at that time. Adjusted for seasonal factors, the monthly decline was 3.8% (-3.8%), with the year-to-year drop at 3.6% (-3.6%). "John" Williams was born in 1949. "John Williams Shadow Government Statistics" is an electronic newsletter service that exposes and analyzes flaws in current U.S. government economic data and reporting, as well as in certain private-sector numbers, and provides an assessment of underlying economic and financial conditions, net of financial-market and political hype. The response to those writings (the Primer Series available at the top-center of this page) was so strong that we started ShadowStats.com (Shadow Government Statistics) in 2004. -- In line with FOMC rate hikes, annual Payroll Growth has been slowing for the last fourteen months, from 5.3% in February 2022 to 2.7% in March 2023, suggestive of softening economic activity. Adjusted for seasonal factors, the monthly decline was 3.8% (-3.8%), with the year-to-year drop at 3.6% (-3.6%). Given a moribund, underlying U.S. Economy, raising rates further [as had been heavily jawboned and promised by the Fed Chairman, among other FOMC members, until the most-recent March 2023 FOMC] likely will only exacerbate deteriorating economic conditions, without providing any meaningful inflation relief. Note also that the period of time in which the blue line departs from the CPI transformation is 2007-2009, a time in which inflation mania was at its peak. (11) April 14th (CassInfo.com) The March 2023 Cass Freight Index release noted that The shipments component of the Cass Freight Index fell 1.0% m/m in March as freight markets continue to work through an extended soft patch. That monthly decline of 1.0% (-1.0%) was not seasonally adjusted, with a related unadjusted year-to-year drop of 4.0% (-4.0%). ShadowStats will re-address these numbers at that time. The CPI-U (consumer price index) is the broadest measure of consumer price inflation for goods and services published by the Bureau of Labor Statistics (BLS).. Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation. Nonetheless, the quality of government reporting has deteriorated sharply in the last couple of decades. For the most-liquid Basic M1 Money Supply measure in March 2023, dollar levels and growth levels moved higher against the Pre-Pandemic Trough, still suggestive of massive mounting, not easing inflation pressures. Where Commercial Aircraft account for about 32% of total orders, the remaining 68% includes everything else, ranging from automobiles to computers. The best Honkai: Star Rail Trailblazer build is all about . In Australia, unions are already demanding 3 per cent annual pay rises in wage negotiations, while Labor's shadow treasurer Jim Chalmers used Tuesday's data to highlight that inflation was. March 2023 Industrial Production, Manufacturing and Capacity Utilization showed meaningful downside benchmark revisions to previously reported activity, but continued in a third month of upturn in context of Federal Reserve regular overestimation of headline Industrial Production. Federal Reserve Sees Continuing Need for Inflation-Boosting Monetary Stimulus, With No Economic Recovery Expected Before 2023
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