Yet, Fourth-Quarter 2020 New-Home Sales Contracted, as Did Real Retail Sales, Suggestive of Consumers Facing Intensifying Pandemic and Liquidity Issues 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). In parallel, the year-to-year pace of March 2023 ShadowStats Alternate CPI inflation eased to 12.9% in March 2023, from 14.1%, from in February 2023. View Download Excel CSV File Last Updated: April 13th, 2023. April 2023 Annual Benchmark Revisions lowered historical levels and growth estimates for inflation-adjusted Real Retail Sales back to January 2021, likely foreshadowing some downside revisions to headline GDP in its later 2023 benchmarking. Reporting problems have included methodological changes to economic reporting that have pushed headline economic and inflation results out of the realm of real-world or common experience. "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. (February 3rd 2023/April 5th 2022) U.S. GOVERNMENT DETERIORATING FISCAL CONDITIONS/ INTENSIFYING FISCAL CRISIS [In context of the United States once again at the brink of breaking its Debt Ceiling and risking default ] Grievously malfeasant U.S. Government fiscal policies continue to contribute meaningfully to the rapidly accelerating pace of U.S. Inflation. 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. 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. 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. EXPANDED SHADOWSTATS ALERT: - Intensifying Risks of a Highly Inflationary, Major U.S. Economic Downturn. Signals of renewed, faltering activity increasingly have taken on the mantle of a new Recession. (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. Further definition is provided in our CPI Glossary. 1461 soon. The Committee will closely monitor incoming information and assess the implications for monetary policy. Fed Chair Powell Noted That Surging Money Supply No Longer Boosts the Economy Under current policy and based on this reports assumptions, it is projected to reach 701 percent by 2096. 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. Separately, though, the Fed also purportedly has been reducing its balance sheet assets, which should slow or cut the Money Supply growth and inflation. Accordingly, the April 2021 to January 2023 growth rates here generally are shown against that February 2020 PPT, instead of year-to-year. 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. Data downloads and the Inflation Calculator are Subscriber only. Shadowstats debunked. Separately, the Russia-Ukraine War continues to supply near-term uncertainty for and volatility to the domestic and global financial and commodity markets, amidst intensifying global political instabilities, all exacerbating systemic risks for related economic and financial market disruptions and crises. Data source: Quarterly Informal Economy Survey (QIES) by World Economics, London. Please click on a chart or link to view details. Including Commercial Aircraft, aggregate New Orders recovered pre-Pandemic levels in Third-Quarter 2020. Again, full detail follows in the DAILY UPDATE e-mails and in pending No. Understate inflation and you end up overstating the Real or inflation-adjusted level of growth in GDP. 1460b and will be detailed in pending No. Commentary No. Where Pandemic Forced the Shutdown of the U.S. Economy in March 2020, FOMC Rate Hikes Already Had Strangled Business Activity The headline March 2023 Monetary Base, jumped by 4.7% month-to-month to a seven-month high, as the FOMC fed emergency funding into Reserve Balances with Federal Reserve Banks, at a time of systemic liquidity concerns. Surging Monetary Base, Reserves and Currency Indicate Intensifying Systemic Problems -- 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. March 2023 Real New Orders for Durable Goods -- For fourteen consecutive quarters, through First-Quarter 2023, Real New Orders for Durable Goods (deflated by the Durable Goods PPI, and net of the volatile Commercial Aircraft orders), never has recovered its Third-Quarter 2019 Pre-Pandemic Peak activity. Accordingly, the FOMCs near-term financial-market policy conundrum of creating Money Supply to support the financial system, while trying to kill inflation at the same time, has no happy resolution. Against its Pre-Pandemic Trough (PPT), ShadowStats March 2023 Basic M1 (Currency plus Demand Deposits [83% of the old pre-May 2020 M1]) moved higher to 120.5%, from a revised 119.8% (previously 119.3%) in February, still shy of its historic peak of 123.2% in August 2022. the Plunge Protection Team), or as otherwise being gamed by the Federal Reserve. That Is Because the Current Collapse Is Pandemic, Not Business-Cycle Driven; Surging Money Growth in a Non-Business-Cycle Collapse Can Trigger Hyperinflation In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living. Chances Are Reduced for Moderating Extreme Monetary and Fiscal Policies That also was in context of a deepening shortfall against its Pre-Pandemic Peak by 1.46% (-1.46%) in 1q2023, versus a 1.22% (-1.22%) shortfall in 4q2022. Per the NAR Press Release, Existing-home sales retreated 2.4% in March to a seasonally adjusted annual rate of 4.44 million. This is because he states that these numbers have been manipulated over the past 25 years for nefarious political reasons. Chairman Powell backed off talk of mandatory, continuing FOMC Rate Hikes to kill Inflation, by killing the economy with high Interest Rates, noting that perhaps the Banking Crisis might slow the economy, and help to contain inflation. Single-family auths flat in Sep/Oct. 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]. Negative Implications Here for the July 29th GDP Benchmarking 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 SHADOWSTATS DAILY UPDATE - May 1st to May 3rd A major Subscriber-Only e-mail update is pending for later today. Watch part 2 on hyperinflation: https://youtu.be/jzwU_UOwVMIUsing the same data collection and calculation methodologies as the Bureau of Labor Statistics us. In contrast, the usually less meaningfully sampled Housing Starts, tend to be more volatile in revision. (7) April 20th (National Association of Realtors NAR). Year-to-year Core PPI Inflation (net of Food and Energy) eased from 5.1% to 4.3%. October Industrial Production Continued in L-Shaped Recovery, With Annual Change Flattening Out in Negative Territory The projected continuous rise of the debt-to-GDP ratio indicates that current policy is unsustainable. Allowing for the 2021 Unfunded Liabilities, reflected here, that Debt-to-GDP ratio already was 552% at the end of Fiscal Year 2021. Separately, extended full coverage and graphs of both the Money Supply and Monetary Base and their components follows in the pending Subscriber-only Daily Update E-mail. Despite Happy Headline Gains in January 2021 Real Retail Sales, Production and Construction, the Underlying Payroll Employment Numbers Tell the Opposite Story Unemployment. March 2023 Housing Starts dropped year-to-year by a meaningful 17.2% (-17.2%) +/- 9.1%, with a 90% confidence interval, versus a revised 19.4% (-19.4%) [previously 18.4% (-18.4%)] in February. (7) April 20th (National Association of Realtors NAR). Contact us to discuss your needs. For a number of years I conducted surveys among business economists as to the quality of government statistics (the vast majority thought it was pretty bad), and my results led to front page stories in 1989 in the New York Times and Investors Daily (now Investors Business Daily), considerable coverage in the broadcast media and a joint meeting with representatives of all the government's statistical agencies. Trailblazer builds: Strengthen your main character up. 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%. 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 ET). Separately, all as measured against Pre-Pandemic Troughs, traditional M2, which has not been redefined, was up by 34.7% in March 2023, versus readings 36.4% in February 2023 and 37.3% in January, while the broadest ShadowStats Ongoing-M3 Estimate notched lower in March to 30.2%, from 31.9% in both February and January 2023. 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]. 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. Business-Cycle Conditions Are Collapsing Rapidly, Amidst an Extreme Acceleration in Inflation Nonetheless, the quality of government reporting has deteriorated sharply in the last couple of decades. First-Quarter 2021 GDP Remains at Risk of Relapsing into Quarterly Contraction That said, the initial estimate of the theoretical GDP-equivalent 4q2022 Gross Domestic Income (GDI) showed an annualized quarterly contraction of 1.14% (-1.14%), versus an annualized gain of 3.76% in 3q2022, with the more traditional Gross National Product (GNP) gaining at an initial annualized 2.38% in 4q2022 GDP, versus 2.44% in 3q2022. Informal Economy Sizes. Read more about the World Economics Informal Economy database. INFORMAL ECONOMY SIZE AS A PERCENTAGE OF GDP. (2) April 27th (Bureau of Economic Analysis), also see Note 17. At present, full economic recovery is not likely until well into 2024 or after. Here is how the March 2023 Money Supply numbers shaped up. B U S I N E S S .. C Y C L E -- RECESSION-DEPRESSION TIMING Updated September 21, 2021 [Full review and update pending in No. We thank Cass Information Systems for sharing their survey information. That revised February inflation of 16.1% was much higher than the year-to-year nominal growth of 5.3% in parallel February Construction Spending, resulting in an unrevised, inflation adjusted, real year-to-year decline of 9.5% (-9.5%) in February 2023 [See extended comments in later Note (16)]. Federal Reserve Chairman Powell: "We Are a Long Way from Full Recovery" As previously reviewed, the March Federal Open Market Committee (FOMC) raised its targeted Fed-Funds Rate by a minimal 0.25%, to 5.00%, citing hopes that the Banking-System Crisis would dampen the Economy and the FOMC-driven Inflation. We thank Cass Information Systems for sharing their survey information. Theoretically Equivalent Third-Quarter 2020 GDP (Product) and GDI (Income) Rebounded by Varying Annualized Quarterly Gains of 33.1% and 25.5%, Still Holding Far Shy of Economic Recovery
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