January 5, 2018

Uh-Oh: Intel’s Chips’ Security Vulnerabilities Could Cool the Economy Down Very Quickly

Filed under: Business Moves,Economy — Tom @ 12:56 pm

From the Wall Street Journal:

Businesses and institutions raced to patch computer systems and braced for slowdowns in system performance, as they—and much of Silicon Valley—reacted to the disclosure this week of two long-hidden vulnerabilities in chips running most of the world’s computers.

The two flaws, dubbed Meltdown and Spectre by researchers that discovered them, provide opportunities for hackers to exploit tricks many modern chips use to speed performance, and steal information in the chips’ memory, like passwords.

Experts say software patches to plug the holes could slow computers. With one of the flaws, these experts say, full protection against it may require swapping out most of today’s chips for a new generation of hardware, an undertaking that could take years to complete.

And patches and other software fixes may not be the definitive answer. Patches can protect against Meltdown, but it isn’t clear if they can foil Spectre. CERT, a federally funded cybersecurity research organization at Carnegie Mellon University, initially said on Wednesday that new hardware was the only guarantee against the flaws. But on Friday, the organization updated its assessment, saying updates to operating systems or apps could “mitigate these attacks.”

Still, experts say full protection might require design changes, which could take a year to roll out. Luckily, they say, Spectre is difficult to exploit as it requires tailoring to the target systems, and that might take hackers a while.

The scope of this problem is breathtaking. Any computer with an Intel chip from as far back as 1995, which basically means almost every functioning Intel-based computer on earth, appears to be vulnerable.

If people decide not to buy new machines until hardwired hardware fixes get done (that’s my plan, based on what is known now), tech spending could slow down dramatically, as it would appear that this “new generation of hardware” doesn’t yet exist, and won’t for some time.

On the other hand, once a credible fix arrives, there may be a rush to buy the new technology, which would be a form of “broken windows” juice for the economy. But that does not appear to be in any way imminent.

November 2017 Manufacturing Goods Orders and Shipments: Orders Up 1.3 Percent, Shipments Up 1.2 Percent, Both October Figures Revised Up

Filed under: Lucid Links — Tom @ 12:40 pm

From the Census Bureau:

New orders for manufactured goods in November, up five of the last six months, increased $6.5 billion or 1.3 percent to $488.1 billion, the U.S. Census Bureau reported today. This followed a 0.4 percent October increase. Shipments, up eleven of the last twelve months, increased $5.7 billion or 1.2 percent to $491.2 billion. This followed a 0.8 percent October increase. Unfilled orders, up three consecutive months, increased $1.2 billion or 0.1 percent to $1,137.1 billion. This followed a 0.1 percent October increase. The unfilled orders-to-shipments ratio was 6.60, down from 6.68 in October. Inventories, up twelve of the last thirteen months, increased $2.5 billion or 0.4 percent to $665.1 billion. This followed a 0.3 percent October increase. The inventories-to-shipments ratio was 1.35, down from 1.36 in October.

October orders went from down 0.1 percent to up 0.4 percent, while shipments went from +0.6 percent to +0.8 percent.

September, October, and November shipments have increased by 3.1 percent. September, October, and November orders have increased by 3.4 percent.

These are strong numbers. Shipments and orders have both finally recovered from a three-year 2014-2016 slump.

December 2017 ISM Non-Manufacturing: 55.9 Percent, Down From November’s 57.4 Percent

Filed under: Economy — Tom @ 9:45 am

Predictions: Yahoo’s Economic Calendar sees a tiny rise from last month’s 57.4 percent to 57.6 percent.

On Thursday, the separate MarkIt Services Index fell from 54.5 percent to 54.1 percent (HT Zero Hedge), which it believes is consistent with 2.0 percent to 2.5 percent fourth-quarter growth. If they’re right, that would obviously be a disappointment. MarkIt tends to bring in more conservative readings than the Institute for Supply Management, whose survey I believe is affected a bit by the same positive selection bias seen in its manufacturing survey (not as big a deal when the economy is doing well, however).

As of late Thursday afternoon, the three GDP predictions I closely follow were showing the following for the fourth quarter: Atlanta Fed, +3.2 percent; Moody’s, +2.7 percent; Federal Reserve of New York, 3.87 percent (which hadn’t been updated since December 29, and thus didn’t consider the effect of any data from the current week).

Moody’s description in it “Latest Analysis” of its “thinking” at the moment is pretty odd:

New data on U.S. construction spending and vehicle sales didn’t alter our high-frequency GDP model’s estimate of fourth quarter GDP growth, but they removed the downside risk. Our high-frequency GDP model puts fourth quarter GDP growth tracking 2.7% at an annualized rate, which would be less than the 3.2% gain in the third quarter but comfortably above the economy’s potential growth rate.

So the economy’s “potential growth rate” is apparently lower than the economy has been and predicted to achieve. Doesn’t that mean that someone should reconsider the reasonableness of the assumed “potential growth rate”?

The ISM’s non-manufacturing report will be here at 10:00 a.m.

HERE IT IS (bolds and paragraph breaks added by me):

Economic activity in the non-manufacturing sector grew in December for the 96th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

… The NMI® registered 55.9 percent, which is 1.5 percentage points lower than the November reading of 57.4 percent. This represents continued growth in the non-manufacturing sector at a slower rate.

The Non-Manufacturing Business Activity Index decreased to 57.3 percent, 4.1 percentage points lower than the November reading of 61.4 percent, reflecting growth for the 101st consecutive month, at a slower rate in December. The New Orders Index registered 54.3 percent, 4.4 percentage points lower than the reading of 58.7 percent in November.

The Employment Index increased 1 percentage point in December to 56.3 percent from the November reading of 55.3 percent. The Prices Index increased by 0.1 percentage point from the November reading of 60.7 percent to 60.8 percent, indicating that prices increased in December for the seventh consecutive month.

According to the NMI®, 14 non-manufacturing industries reported growth. There has been a second consecutive month of pullback in the rate of growth. Overall, the majority of respondents’ comments indicate that they finished the year on a positive note. They also indicate optimism for business conditions and the economic outlook going forward.


The 14 non-manufacturing industries reporting growth in December — listed in order — are: Retail Trade; Utilities; Arts, Entertainment & Recreation; Other Services; Health Care & Social Assistance; Accommodation & Food Services; Finance & Insurance; Real Estate, Rental & Leasing; Transportation & Warehousing; Mining; Construction; Wholesale Trade; Public Administration; and Professional, Scientific & Technical Services. The three industries reporting contraction in December are: Information; Educational Services; and Management of Companies & Support Services.

The pullback in New Orders and Business Activity is more than what was needed to cool off overheating and inflation concerns. Backlog of Orders, the third major GDP driver, fell back to 50.0 percent, which is neither expanding nor contracting.

The index is still comfortably in expansion, but I wouldn’t want to see it give much more ground in future months.

December 2017 Employment Situation Summary: 148K SA Payroll Jobs Added, Raw Data Slightly Worse; Unemployment Rate Stays at 4.1 Percent; Black Unemployment Hits All-Time Low of 6.8 Percent

Filed under: Economy,Taxes & Government — Tom @ 7:05 am

Predictions: As of late Thursday afternoon:

Other recent developments:

  • Outplacement firm Challenger, Gray & Christmas reported on Thursday that “U.S. employers announced plans to cut 32,423 jobs in December, bringing the year’s total to a low not seen since 1990.” Specifically, “Cuts in 2017 totaled 418,770, 20 percent below 2016′s number. In 1990, companies announced plans to cut 316,047 jobs.”
  • Vehicle sales announced late Wednesday fell 5 percent in December compared to December 2016, and almost 2 percent for comparable calendar years. The bet here is that full-year industry revenues held steady or increased slightly, because the mix of cars and light trucks went from 36.9 percent and 63.1 percent in 2016 to 32.3 percent and 67.7 percent in 2017. That’s a huge one-year shift to SUVs and bigger trucks. Remember when the Obama administration was crusading to get people to buy cars and avoid SUVs?
  • Specific vehicle manufacturers’ December fortunes varied widely. GM and Ford both were down about 1 percent for the year, but GM was down 3.4 percent year-over-year for December, while Ford was up 1.3 percent. Chrysler had an awful year. A couple of years ago, it looked it was closing in on Toyota, but forget about that. It was down 8.6 percent year-over-year, and was about the only company which saw a drop (5.7 percent) in light truck sales. Toyota was down less than 1 percent for the year, but had an absolutely awful December, as did Honda (up 0.2 percent for the year) and Nissan (up 1.9 percent). It’s hard to see why December was so bad for these three companies, but one explanation might be that Japanese companies have a financial reporting year-end of March 31. while Detroit’s traditional Big Three report on a calendar year. So the pressure was on at the Big Three, while that pressure won’t be seen at the Japanese companies for a few months.
  • Initial unemployment claims remain in the completely non-troubling 240K-250K range. They may only be at the higher end of that range because of weather conditions in much of the country.

Not seasonally adjusted benchmarks: Here’s the situation going in —


Regardless of how the seasonally adjusted calculations come out, the economy needs to have lost no more than 50,000 jobs  overall and to have added 125,000 jobs in the private sector to be really cooking on all burners. Theoretically, those raw values would lead to seasonally adjusted results of about 300,000. I’ll haul out the model I used for the first time last month after the numbers are released to see how well the seasonally adjusted results reflect the raw data.

The report will be here at 8:30. The permanent link containing all tables will be here.

HERE IT IS: Looks disappointing, but the devil is in the details —

Total nonfarm payroll employment increased by 148,000 in December, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment gains occurred in health care, construction, and manufacturing.

Household Survey Data

In December, the unemployment rate was 4.1 percent for the third consecutive month. The number of unemployed persons, at 6.6 million, was essentially unchanged over the month. Over the year, the unemployment rate and the number of unemployed persons were down by 0.6 percentage point and 926,000, respectively.

Among the major worker groups, the unemployment rate for teenagers declined to 13.6 percent in December, offsetting an increase in November. In December, the unemployment rates for adult men (3.8 percent), adult women (3.7 percent), Whites (3.7 percent), Blacks (6.8 percent), Asians (2.5 percent), and Hispanics (4.9 percent) showed little or no change.

Among the unemployed, the number of new entrants decreased by 116,000 in December. New entrants are unemployed persons who never previously worked.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.5 million in December and accounted for 22.9 percent of the unemployed. Over the year, the number of long-term unemployed declined by 354,000.

The labor force participation rate, at 62.7 percent, was unchanged over the month and over the year. The employment-population ratio was unchanged at 60.1 percent in December but was up by 0.3 percentage point over the year.

… Establishment Survey Data

Total nonfarm payroll employment rose by 148,000 in December. Job gains occurred in health care, construction, and manufacturing. In 2017, payroll employment growth totaled 2.1 million, compared with a gain of 2.2 million in 2016.

Employment in health care increased by 31,000 in December. Employment continued to trend up in ambulatory health care services (+15,000) and hospitals (+12,000). Health care added 300,000 jobs in 2017, compared with a gain of 379,000 jobs in 2016.

Construction added 30,000 jobs in December, with most of the increase among specialty trade contractors (+24,000). In 2017, construction employment increased by 210,000, compared with a gain of 155,000 in 2016.

In December, manufacturing employment rose by 25,000, largely reflecting a gain in durable goods industries (+21,000). Manufacturing added 196,000 jobs in 2017, following little net change in 2016 (-16,000).

Employment in food services and drinking places changed little in December (+25,000). Over the year, the industry added 249,000 jobs, about in line with an increase of 276,000 in 2016.

In December, employment changed little in professional and business services (+19,000). In 2017, the industry added an average of 44,000 jobs per month, in line with its average monthly gain in 2016.

Employment in retail trade was about unchanged in December (-20,000). Within the industry, employment in general merchandise stores declined by 27,000 over the month. Retail trade employment edged down in 2017 (-67,000), after increasing by 203,000 in 2016.

Employment in other major industries, including mining, wholesale trade, transportation and warehousing, information, financial activities, and government, changed little over the month.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in December. In manufacturing, the workweek edged down by 0.1 hour to 40.8 hours, while overtime remained at 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.8 hours.

In December, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $26.63. Over the year, average hourly earnings have risen by 65 cents, or 2.5 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $22.30 in December.

The change in total nonfarm payroll employment for October was revised down from +244,000 to +211,000, and the change for November was revised up from +228,000 to +252,000. With these revisions, employment gains in October and November combined were 9,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 204,000 over the last 3 months.

Not seasonally adjusted results: Very disappointing, as seen below, and the already pretty weak seasonally adjusted calculations came in a bit stronger than the raw data would seem to indicate:



UPDATE (data is seasonally adjusted unless otherwise indicated):

  • The labor force only grew by 64K, and Household Survey employment only increased by 104K. Not in Labor Force is still over 95 million. Participation indicators didn’t improve.
  • The black/AA unemployment rate fell to 6.8 percent. That is the lowest rate in the 45 years this stat has been tracked, going back to 1972. This rate has NEVER been below 7 percent. The not seasonally adjusted rate was 6.3 percent, which as would be expected, was the lowest December on record. The previous December low was 6.9 percent in 2000.
  • Full-time employment fell by 35K, and part-time employment increased by 119K. Seasonally adjusted calendar year full-time employment increased by 2.422 million; the raw change was 2.415 million. Part-time employment fell by 633K (612K before seasonal adjustments). The FT numbers appear to have come down from last month’s 2.6 million  (and PT numbers increased) because BLS did comprehensive revisions to its Household Survey data.
  • Manufacturing has added 56K jobs in the past two months, and construction has added 57K.
  • The hourly pay increase of 9 cents was welcome, but needs to be repeated a few more times before it’s impressive.

UPDATE 2: The BLS vs. ADP difference in private-sector job growth actually widened again. Now the scoreboard for calendar 2017 has ADP at 2.530 million and BLS at 2.013 million. That’s a 517,000 difference, up from 422,000 through November. After a full year of widening differences, it seems well past time to ask if BLS is sandbagging the data and waiting until much further down the road (at least a year from now) to post a huge and barely noticed upward comprehensive revision.

OVERALL: This was a disappointing report on most fronts.

Friday Off-Topic (Moderated) Open Thread (010518)

Filed under: Lucid Links — Tom @ 6:00 am

This open thread is meant for commenters to post on items either briefly noted below (if any) or otherwise not covered at this blog. Rules are here.

Positivity: This Baby Was Saved From Abortion After It Had Already Started

Filed under: Life-Based News,Positivity — Tom @ 5:55 am

From Massachusetts, via Jay Hobbs at Life News:

DEC 29, 2017, 5:14PM

By the time Giselle entered the world in early December, she arrived fully equipped with her own protective detail of three older brothers. They’re old enough to know their sister is a precious addition to their family, but they’re years away from understanding just how priceless she is.

What Giselle’s brothers will learn in time was that their mother, Samantha, was left high and dry by Giselle’s father and turned to a chemical abortion pill as what she felt was her only way forward.

Then, almost as soon as Samantha had taken the first of two chemical abortion pills—which ends a baby’s life in utero ahead of the second and final pill, inducing labor—she changed her mind and reached out to the Abortion Pill Reversal hotline (1-877-558-0333) for help.

Through the hotline, Samantha was connected to one of 350 providers in the nationwide Abortion Pill Reversal network trained in a life-saving protocol that starts with an emergency injection of progesterone used since the 1950s to prevent miscarriages.

Samantha’s daughter, Giselle, was born Dec. 1, 2017—an event celebrated all month by Abundant Hope Pregnancy Resource Center in Attleboro, Mass., where Samantha had learned about the life-saving option before going in for her abortion appointment.

“For those who have been following along with the story of Sam, and the miracle of Abortion Pill Reversal, we are so excited to introduce her little girl, Giselle,” the pregnancy center posted in early December. “Born Friday, December 1st at 2:00 p.m. 6lb 3oz, 18 3/4 in. …

Go here for the rest of the story.