May 30, 2018

Missed It by Quite a Lot: NY Times Corrects Reported Trump Rally Crowd Size — Quintupling It

Tuesday evening (for Wednesday’s print edition), New York Times reporter Julie Hirschfeld Davis, covering President Donald Trump’s rally in Nashville, Tennessee, reported that it attracted “about 1,000″ attendees. The Times issued a correction on Wednesday, stating that “the fire marshal’s office estimated that approximately 5,500 people attended the rally.” So the crowd was 5-1/2 times larger than originally reported. How can that happen?


Starbucks CEO: ‘I Am Not Aware’ That Company Funds Planned Parenthood

On Maria Bartiromo’s Wednesday morning Fox Business show, the host asked Starbucks CEO Kevin Johnson to respond a Tuesday Washington Examiner op-ed by Alveda King, a longtime pro-life activist and niece of Martin Luther King Jr. King contended that if Starbucks is “really serious about eliminating racism,” it will “stop funding” Planned Parenthood. When asked if his company would do that, Johnson said that he’s “not aware that … we do fund Planned Parenthood,” and didn’t answer Bartiromo’s question.


1Q18 Gross Domestic Product, Second Estimate (053018): An Annualized 2.2 Percent; Nonresidential Fixed Investment Best Since 3Q14

Filed under: Economy,Taxes & Government — Tom @ 7:55 am


Given how weak reported spending on goods was in the first quarter (a negative contribution to GDP of 0.24 points) and the relatively modest bounceback in inventories (only +0.43 points after -0.53 the previous quarter), I think there’s some potential for an upside surprise. But we’ll see.

The report will be here at 8:30. I begin evaluating it until 9 a.m. after the ADP conference call ends.

HERE IT IS (analysis begins a 9 a.m.: Good grief, it dropped a bit to 2.2 percent —

Real gross domestic product (GDP) increased at an annual rate of 2.2 percent in the first quarter of 2018 (table 1), according to the “second” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2017, real GDP increased 2.9 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.3 percent. With this second estimate for the first quarter, the general picture of economic growth remains the same; downward revisions to private inventory investment, residential fixed investment, and exports were partly offset by an upward revision to nonresidential fixed investment.

Real gross domestic income (GDI) increased 2.8 percent in the first quarter, compared with an increase of 1.0 percent (revised) in the fourth quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.5 percent in the first quarter, compared with an increase of 2.0 percent in the fourth quarter (table 1).

The increase in real GDP in the first quarter reflected positive contributions from nonresidential fixed investment, personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and state and local government spending that were partly offset by a negative contribution from residential fixed investment. Imports, which are a subtraction in the calculation of
GDP, increased (table 2).

The deceleration in real GDP growth in the first quarter reflected decelerations in PCE, exports, state and local government spending, and federal government spending and a downturn in residential fixed investment. These movements were partly offset by an upturn in private inventory investment and a larger increase in nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, decelerated.

Current-dollar GDP increased 4.2 percent, or $202.7 billion, in the first quarter to a level of $19.96 trillion. In the fourth quarter, current-dollar GDP increased 5.3 percent, or $253.5 billion (table 1 and table 3).

The price index for gross domestic purchases increased 2.7 percent in the first quarter, compared with an increase of 2.5 percent in the fourth quarter (table 4). The PCE price index increased 2.6 percent, compared with an increase of 2.7 percent. Excluding food and energy prices, the PCE price index increased 2.3 percent, compared with an increase of 1.9 percent (appendix table A).

UPDATE: Here’s the detail —


The decrement from consumption expenditures on goods dipped as I expected, but the inventory change went the other way by 0.30 points, from +0.43 to +0.13. If today’s contribution holds, it’s reasonable to believe that inventory change will be a more positive second-quarter contributor.

Though overall fixed investment barely changed, the key nonresidential component, which is an important driver of future GDP growth, was revised up from 0.76 points to 1.13 points:

  • That 1.13-point contribution is the biggest single-quarter contribution since 3Q14.
  • During the next 9 quarters (3Q14 through 4Q16), nonresidential fixed investment GDP contributions totaled only 0.23 points — an average barely exceeding zero per quarter. Collectively, companies for all practical purposes stopped investing in the U.S.
  • During the most recent five quarters (1Q17 through 1Q18), nonresidential fixed investment GDP contributions have totaled 4.23 points, averaging 0.85 points per quarter. At long last, companies have been investing in the U.S. again.

Though it still needs to get stronger, this a critical good-news turnaround which offsets the not-cheery news of today’s slight overall drop.

May 2018 ADP Employment Report (053018): 178,000 Private-Sector Jobs Added; Previous Months Written Down by 108K (Also Conference Call Notes)

Filed under: Economy,Taxes & Government — Tom @ 7:46 am


As was the case in 2017, this report has been showing more private-sector job additions than the government’s Bureau of Labor Statistics. But the differences aren’t as great as those we seen last year. Through this year’s first four months, ADP shows 914,000 private-sector jobs added; BLS shows 812,000.

The report will be here at 8:15. I’ll attend the 8:30 conference call.

HERE IT IS: A bit lower than expected, for the first time in a while —

Private-sector employment increased by 178,000 from April to May, on a seasonally adjusted basis.

From the press release:

“The hot job market has cooled slightly as the labor market continues to tighten,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Healthcare and professional services remain a model of consistency and continue to serve as the main drivers of growth in the services sector and the broader labor market as well.”

Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth is strong, but slowing, as businesses are unable to fill a record number of open positions. Wage growth is accelerating in response, most notably for young, new entrants and those changing jobs. Finding workers is increasingly becoming businesses number one problem.”

Previous months were revised down considerably:

  • April went from 228K to 163K (65K drop).
  • March went from 241K to 198K (43K drop; March was also originally 241K).

That’s a huge, 108K drop in prior-month figures.


MARK ZANDI; Very solid, but we’ve seen some slowing in job growth due to increasing difficulty businesses are having filling open positions. Record job openings per BLS. Only sector that is soft is brick-and-mortar retailers. Higher minimum-wage increases may be having an impact too in that area.

Wage growth is picking up (again). Employment Cost Index is pushing 3 percent. ADP wage data indicating acceleration of wage growth. Job-changers are seeing stronger wage growth.

Growth is being constrained for the first time in over a decade by a shortage of workers, which will intensify given the fiscal stimulus hitting the economy (tax cuts, govt. spending).

Projecting employment growth at current rate of growth will cause the unemployment rate to hit 3.0 percent by the end of the decade.

Job growth is broad-based. Contstruction, manufacturing, health care, education. Also across company sizes, unlike 7-8 years ago, when adds were more in larger-company sector. Everyone’s firing on all cylinders.

Slowing job growth due to tight labor supply.


ME (average work week with every new job since December 2016 being full-time and previous-month writedowns in today’s ADP report) — Really no good answer. Says he’ll look at ADP data for work-week evidence. There has been a long-term trend towards reduced work weeks which might be offsetting otherwise expected upward moves.

Rugaber from AP on effects of tariffs; Not seeing it in jobs data yet. If it appears it would be in manufacturing and transportation and agriculture, but no evident in data so far. Too early to tell. Not affecting hiring, but may be affecting business investment. Currently, businesses may be hiring in advance of the need.

OVERALL: I’m not chastened by Zandi’s optimism. Guarded optimism is justified, but that’s it. All of a sudden, a report which turned in results over 240K per month in December, January, and February show an average of only 180K per month in the past three months. Stabilizing at that level in future months would be okay; further declines would not be okay.

Wednesday Off-Topic (Moderated) Open Thread (053018)

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: A Catholic mom made a big difference in her community – by speaking up

Filed under: Positivity — Tom @ 5:55 am

From Denver:

May 24, 2018 / 12:29 am

Abriana Chilelli is a Catholic mother of four children who lives in Denver, Colo.

Every day on their daily route to school, she and her kids would drive by a strip club downtown that featured a parked van with pornographic images of two women.

While disturbed by the images, especially on behalf of her children, Chilelli initially believed she would not be able to do anything to change it.