February 12, 2016

SEASONAL ADJUSTMENT BS ALERT: Seasonally Adjusted Jan. 2016 Retail Sales Up 0.2 Pct.; December Revised Up to +0.2 Pct.; January’s Raw Sales Should Have Led to a Big SA Decline

Filed under: Economy,Taxes & Government — Tom @ 8:22 am

SEE BELOW: January’s raw sales were awful, and should have led to a HUGE seasonally adjusted loss. Instead, the bad news was seasonally adjusted away.


Okay, the weather wasn’t all tha bad in January … right? Or was it too good, which was the go-to excuse during the Christmas shopping season?

Anyway, the predictions today for the Census Bureau’s retail sales report vary a bit. Briefing.com expects a flat reading, while the “market expect” +0.2 percent.

I suspect the reading will be in the middle of those two predictions. The other thing to watch for is whether December, which initially came in at -0.1 percent, gets revised. I’m thinking that if that happens, it will be downward, but with the seasonal adjusters doing their quirky thing, who knows?

The report will be accessible here at 8:30 a.m.

HERE IT IS (link):

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $449.9 billion, an increase of 0.2 percent (±0.5%)* from the previous month, and 3.4 percent (±0.7%) above January 2015. Total sales for the November 2015 through January 2016 period were up 2.5 percent (±0.5%) from the same period a year ago. The November 2015 to December 2015 percent change was revised from down 0.1 percent (±0.5%)* to up 0.2 percent (±0.3%)*.

Retail trade sales were up 0.3 percent (±0.5%)* from December 2015, and up 3.1 percent (±0.5%) from last year. Sporting goods, hobby, book and music stores were up 9.1 percent (±2.1%) from January 2015 and nonstore retailers were up 8.7 percent (±1.2%) from last year.

Looking into the seasoning, which appears suspect …


UPDATE: Based on reviewing previous Census Bureau data combined with today’s report, January’s raw result was so bad, one would have expected it to lead to a negative seasonally adjusted result of almost -2 percent!


Don’t believe a word of what you read in the press today about “strong” retail sales. Especially considering the relatively decent weather, January was a disaster.

UPDATE 2: The following, from Census Bureau data combined with today’s report, illustrates things more simply. It’s quite obvious which seasonal conversion is unlike the others:


UPDATE 3: Zero Hedge“The Curious Case Of The “Strong” January Retail Sales: It Was All In The Seasonal Adjustment”

February 11, 2016

The Nation’s Walsh ‘Wonders’ If ‘White Working Class’ Isn’t Supporting Hillary Because of Obama (Hint: His Race)

Joan Walsh, who after a long tenure at Salon.com is now National Affairs Correspondent at far-left publication The Nation, is responding as leftists usually do when their favored candidates and causes are in trouble: immaturely, and by smearing recalcitrant people who, in their fevered minds, should be supporting them.

Walsh is a big fan of Hillary Clinton, whose legal and electoral situations seem to get more dire with each passing week. In Walsh-World, Mrs. Clinton is having problems garnering “white working class” Democrats because of racism. But of course, she won’t directly say that. Instead, she issued the following passive-aggressive tweet, followed by the oh-so-predictable “Who, me?” response (HT Breitbart via Instapundit):


Yellen, Associated Press Continue to Blame ‘The World’ As U.S. Economy Weakens

The Federal Reserve, Fed Chair Janet Yellen, and the ever-cooperative Associated Press have a message for America: “If there’s an economic downturn, even one that turns into a recession, it’s going to be the rest of the world’s fault. The U.S. economy is fine, and it will stay fine if everybody else doesn’t ruin it.”

As the AP’s Martin Crutsinger reported today (“YELLEN: TOO EARLY TO DETERMINE IMPACT OF GLOBAL DEVELOPMENTS”), Yellen told members of the Senate Banking Committee that, in Crutsinger’s words, “that global economic pressures pose risks to the U.S. economy,” and that the Fed will wait until its next meeting to see “how much economic weakness and falling markets around the world have hamstrung U.S. growth.” Folks, to “hamstring” growth, you’ve got to have growth, and the best estimates at the moment are telling us that at the end of last year there either wasn’t any, or that it barely existed.


Initial Unemployment Claims (021116): 269K SA; Raw Claims (291K) 10 Percent Below Same Week Last Year

Filed under: Economy,Taxes & Government — Tom @ 8:29 am

Predictions, per Yahoo’s Economic Calendar: Briefing.com, 283,000 seasonally adjusted claims; “Markets Expect” 280,000.

Last week came in at 285,000, with raw claims running ahead of the same week last year.



In the week ending February 6, the advance figure for seasonally adjusted initial claims was 269,000, a decrease of 16,000 from the previous week’s unrevised level of 285,000. The 4-week moving average was 281,250, a decrease of 3,500 from the previous week’s unrevised average of 284,750.


The advance number of actual initial claims under state programs, unadjusted, totaled 290,804 in the week ending February 6, a decrease of 21,136 (or -6.8 percent) from the previous week. The seasonal factors had expected a decrease of 3,988 (or -1.3 percent) from the previous week. There were 324,158 initial claims in the comparable week in 2015.

This year’s seasonal adjustment factor 108.1 is virtually the same as last year’s 107.5.

This is a welcome change from the past two weeks, when it started to look like raw claims were going to take off relative to last year. We’ll see if that trend continues next week.

February 10, 2016

AP Pair Deceptively Covers Supremes’ Stay of EPA ‘Clean Power Plan’ Reg

If you’re a couple of reporters at the Associated Press, aka the Administration’s Press, it’s one thing to be personally disappointed and even upset at yesterday’s move by the Supreme Court to grant a stay to states challenging the “Clean Power Plan” regulation issued by the Obama administration’s Environmental Protection Agency last October.

It’s quite another thing to falsely portray what occurred and the related impacts, which is what AP reporters Michael Biesecker and Sam Hananel most certainly did early Wednesday morning. The nature of their dispatch, which emphasized the administration’s defiant reaction, likely contributed to TV networks’ decisions to ignore or downplay what the Court did, choices which Julia Seymour at NewsBusters noted earlier today.


Baltic Dry Update: More All-Time Lows

Filed under: Economy,Taxes & Government — Tom @ 12:32 pm

All is not well:


A reminder:

Most directly, the index measures the demand for shipping capacity versus the supply of dry bulk carriers.

There is very little demand, because there is relatively little economic activity.

UPDATE, 7 p.m.: Make that 290.

February 9, 2016

Not News: January’s Actual Payroll Job Losses, Seasonally Adjusted to Look OK, Were the Third-Worst on Record

On Friday, in its January Employment Situation Summary, the government’s Bureau of Labor Statistics served up a stack of lemons disguised as lemonade. President Barack Obama declared in a tweet that “We’ve recovered from the worst economic crisis since the 1930s,” and the press dutifully fell in line.

The BLS reported that the economy added seasonally adjusted 151,000 payroll jobs and that the unemployment rate fell to 4.9 percent. As has been their habit for years, business reporters failed to label either key data point as “seasonally adjusted,” even though they routinely apply that label to most other government data in their dispatches on the economy. The business press almost never looks at the raw (i.e., not seasonally adjusted) figures in any area. If they had looked at last Friday’s raw jobs data, they would have wondered how the BLS could possibly have reported such a large number of additional seasonally adjusted jobs.


February 5, 2016

January Employment Situation Summary (020516); +151K SA Payroll Jobs, 4.9 Pct. Unemployment Rate; TRULY A DISASTER — Worst January Raw Job Losses Since ’09, Worse Than All Years on Record Except ’08 and ’09

Filed under: Economy,Taxes & Government — Tom @ 7:17 am

TOPSIDE NOTE: As seen below, this month’s Establishment Survey seasonal conversions wildly overstate the underlying data by about 75,00 – 100,000 jobs.

January’s raw total nonfarm and private-sector job losses are the worst in January since 2009, and represent the worst January on record except for 2008 and 2009.


Predictions, per Yahoo’s Economic Calendar: Briefing.com — 195,000 jobs added, 5% unemployment rate; “Markets expect” 188,000 and 5%.

The AP has been touting 200K job additions.

What I hope ends up being a gag post at Zero Hedge (turns out, not so much — Ed.), which has another post with a range of predictions from 175K-225K, speculates that a goose egg is a possibility.

The report will be here at 8:30.

Benchmarking: January is a month for huge actula (i.e., not seasonally adjusted) job losses every year as seasonal employees are let go. I’ll post tables later, but the benchmarks for this report to be a good one for payroll jobs, regardless of how the results seasonally convert, are as follows:

  • Total nonfarm — 2.7 million or fewer jobs lost.
  • Private sector — 2.15 or fewer jobs lost.

HERE IT IS (permanent link): It’s far from perfect, that’s for sure. More will be known after digging in —

Total nonfarm payroll employment rose by 151,000 in January, and the unemployment rate was little changed at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in several industries, led by retail trade, food services and drinking places, health care, and manufacturing. Employment declined in private educational services, transportation and warehousing, and mining.

Household Survey Data

Both the number of unemployed persons, at 7.8 million, and the unemployment rate, at 4.9 percent, changed little in January. Over the past 12 months, the number of unemployed persons and the unemployment rate were down by 1.1 million and 0.8 percentage point, respectively.

Among the major worker groups, the unemployment rates for adult men (4.5 percent) and Whites (4.3 percent) declined in January. The jobless rates for adult women (4.5 percent), teenagers (16.0 percent), Blacks (8.8 percent), Asians (3.7 percent), and Hispanics (5.9 percent) showed little change over the month.

The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged in January, at 2.1 million, and has shown little movement since June. These individuals accounted for 26.9 percent of the unemployed.

After accounting for the annual adjustments to the population controls, the civilian labor force and total employment, as measured by the household survey, were little changed in January. The labor force participation rate, at 62.7 percent, was little changed. The employment-population ratio (59.6 percent) changed little over the month but was up by 0.3 percentage point since October.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 6.0 million in January but was down by 796,000 over the year. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs.

Establishment Survey Data

Total nonfarm payroll employment increased by 151,000 in January. Employment rose in several industries, led by retail trade, food services and drinking places, health care, and manufacturing. Private educational services and transportation and warehousing lost jobs. Mining employment continued to decline.

Retail trade added 58,000 jobs in January, following essentially no change in December. Employment rose in general merchandise stores (+15,000), electronics and appliance stores (+9,000), motor vehicle and parts dealers (+8,000), and furniture and home furnishing stores (+7,000). Employment in retail trade has increased by 301,000 over the past 12 months, with motor vehicle and parts dealers and general merchandise stores accounting for nearly half of the gain.

Employment in food services and drinking places rose in January (+47,000). Over the year, the industry has added 384,000 jobs.

Health care continued to add jobs in January (+37,000), with most of the increase occurring in hospitals (+24,000). Health care has added 470,000 jobs over the past 12 months, with about two-fifths of the growth occurring in hospitals.

Manufacturing added 29,000 jobs in January, following little employment change in 2015. Over the month, job gains occurred in food manufacturing (+11,000), fabricated metal products (+7,000), and furniture and related products (+3,000).

Employment in financial activities rose in January (+18,000). Job gains occurred in credit intermediation and related activities (+7,000).

Private educational services lost 39,000 jobs in January due to larger than normal seasonal layoffs.

Employment in transportation and warehousing decreased by 20,000 in January. Most of the loss occurred among couriers and messengers (-14,000), reflecting larger than usual layoffs following strong seasonal hiring in the prior 2 months.

Employment in mining continued to decline in January (-7,000). Since reaching a peak in September 2014, employment in the industry has fallen by 146,000, or 17 percent.

Employment in professional and business services changed little in January (+9,000), after increasing by 60,000 in December. Within the industry, professional and technical services added 25,000 jobs over the month, in line with average monthly gains over the prior 12 months. Employment in temporary help services edged down in January (-25,000), after edging up by the same amount in December.

The average workweek for all employees on private nonfarm payrolls rose by 0.1 hour to 34.6 hours in January. The manufacturing workweek edged up by 0.1 hour to 40.7 hours, and factory overtime was unchanged at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.8 hours.

In January, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents to $25.39. Over the year, average hourly earnings have risen by 2.5 percent. In January, average hourly earnings of private-sector production and nonsupervisory employees rose by 6 cents to $21.33.

The change in total nonfarm payroll employment for November was revised from +252,000 to +280,000, and the change for December was revised from +292,000 to +262,000. With these revisions, employment gains in November and December combined were 2,000 lower than previously reported. Over the past 3 months, job gains have averaged 231,000 per month. …

Benchmarking results:

  • Total nonfarm — 2.989 million jobs lost vs. -2.7 million or fewer jobs lost benchmark
  • Private sector — 2.475 jobs lost vs. -2.15 million or fewer jobs lost benchmark

These are HUGE misses. Each figure represents the highest January job loss since 2009. Each figure is also the highest job January loss on record except for 2008 and 2009.

The seasonal conversions don’t reflect this horrid underlying reality — at all.

I’ll insert the adjusted tables later, but for now just know that this year’s total nonfarm loss is 173,000 greater than last January, while the seasonally adjusted figure of 151,000 is only 70,000 below last January.  Comparisons to previous Januarys are mostly similar or even worse. One would have expected a seasonal conversion to only about 50,000 based on these comparisons.

In the private sector, this year’s job loss is 143K greater than last year’s, but the seasonally adjusted result of +158K is only 56K below last year’s  214K. Again, comparisons to previous Januarys are mostly similar or even worse. One would have expected a seasonal conversion to only about 75,000 based on these comparisons.

Here is the BLS data as of after the release:


(Noted at 10:15 a.m. — Ed.) I should also note that raw data not as bad as today’s in 2010 and 2011 led to seasonally adjusted results of 50,000 or below in both total nonfarm and the private sector. Even though they are technically outside of the five-year seasonal adjustment calculation window, they would support an argument that today’s seasonally adjusted results should have come in at zero or below.

More after a review.


UPDATE (references are to seasonally adjusted data unlessotherwise indicated):

  • The Household Survey data shows an additional 1.1 million Americans employed in the past two months, compared to 413,000 in the Establishment Survey. I didn’t realize that self-employment had all of sudden become so appealing. (That’s sarcasm.)
  • The participation rates are edging up, but I suspect that phenomenon will come to a halt or go the other way in future months.
  • Full-time employment went up by over 500K, while part-time employment increased by only 5K.
  • “Not in labor force” is still over 94 million.
  • The raw data says that a net of 258,000 employees at temp agencies were let go in January. I suspect that this is far more than a Christmas season effect, and has a lot to do with companies getting rid of anything resembling excess cost in advance of a potential slowdown.

UPDATE 2: Zero Hedge notes that retail jobs added of 58K plus food service and drinking places (+47K) account for 70 percent of the seasonally adjusted jobs added in January.

February 4, 2016

But There Is No Serious Slowdown …

Filed under: Economy — Tom @ 1:56 pm

… it’s actually looking more like a shutdown.

The Baltic Dry Index is at an all-time low (HT longtime reader/commenter dscott):


Longer context, i.e., almost 31 years:


Zero Hedge’s concern almost a year ago to the day was that the index had hit 559. The 1986 record low was 554.

The latest value of 303 is 46 percent and 45 percent lower than those two values.

We have never been in such negative territory for this index, which “measures the demand for shipping capacity versus the supply of dry bulk carriers.” Excuse the semi-pun, but it’s totally in the tank.


UPDATE, 1105 p.m.: The Index has dropped below 300 for the first time ever.

O … M … G: Productivity Goes Sharply in Reverse

Filed under: Economy,Taxes & Government — Tom @ 10:19 am

From the Bureau of Labor Statistics, wishing it was The Onion:

Nonfarm business sector labor productivity decreased at a 3.0-percent annual rate during the fourth quarter of 2015, the U.S. Bureau of Labor Statistics reported today, as output increased 0.1 percent and hours worked increased 3.3 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2014 to the fourth quarter of 2015, productivity increased 0.3 percent. … Annual average productivity increased 0.6 percent from 2014 to 2015.

For those who wonder how this is even possible, such serious dips have happened somewhat frequently during the Obama era, especially in the past couple of years:


This news couldn’t have come at a worse time, given that fourth-quarter GDP is already on track to be knocked down to about zero from its currently already weak annualized 0.7 percent.

Initial Unemployment Claims (020416): 285K SA; Raw Claims (312K) Higher Than Same Week Last Year for Second Straight Week

Filed under: Economy,Taxes & Government — Tom @ 10:05 am

I’m late with this because I felt the previous post had to get done first — but here we go.

From the Department of Labor:


In the week ending January 30, the advance figure for seasonally adjusted initial claims was 285,000, an increase of 8,000 from the previous week’s revised level. The previous week’s level was revised down by 1,000 from 278,000 to 277,000. The 4-week moving average was 284,750, an increase of 2,000 from the previous week’s revised average. The previous week’s average was revised down by 250 from 283,000 to 282,750.


The advance number of actual initial claims under state programs, unadjusted, totaled 311,956 in the week ending January 30, an increase of 16,296 (or 5.5 percent) from the previous week. The seasonal factors had expected an increase of 7,191 (or 2.4 percent) from the previous week. There were 306,643 initial claims in the comparable week in 2015.

The seasonal adjustment factor this was 109.5; for the same week last year, it was 108.0. That’s not a big difference, but if last year’s adjustment factor had been used on this year’s raw claims, the seasonally adjusted result would have been 290,000 (311,956 divided by 1.08, rounded).

I don’t see how rising year-over-year claims is a sign that things are still okay.

AP’s Rugaber Ignores Mark Zandi’s Prediction of Near-Zero Fourth-Quarter Growth on ADP Conference Call (See Additional Comments)

On Wednesday, Christopher Rugaber at the Associated Press was tasked with covering ADP’s morning report on January private-sector payrolls. At 8:15 a.m., the payroll and benefits giant estimated that the economy added 205,000 seasonally adjusted private-sector jobs last month.

Rugaber also attended the 8:30 a.m. conference call which followed the report’s release. It’s clear that he was on it because his coverage, time-stamped at 9:18 a.m., contains quotes from economist Mark Zandi dealing with a key topic the sunnyside-up Moody’s economist addresssed in that call. So why did the AP economics writer fail to report Zandi’s acknowledgment that fourth-quarter economic growth, which the government estimated was an annualized 0.7 percent on Friday, could close in on zero in its February or March revision?


February 3, 2016

Barely News: Big-Rig Orders Are in a Steep, Year-Long Decline

One of the economy’s more important bellwethers has been on a steep year-long decline which shows no signs of abating this year. It’s barely news, and much of the sparse reporting seen has been incomplete and sloppy.

Truckinginfo.com reported today that “January was a tough month for truck manufacturers as Class 8 truck orders were down 35% compared to the previous month, according to a preliminary report from ACT Research.” This follows a 2015 calendar year during which total orders came in 25 percent lower than 2014. A Google News search indicates that only Reuters and the Wall Street Journal found this information important enough to cover. Reuters might as well not have bothered, given the sloppiness of its report as carried at CNBC:


Snitchbook: Facebook Enforcing Gun-Sale Ban by Relying on ‘Network of Users’

A great deal was made of Facebook’s announcement last week that it would ban private gun sales on both its flagship website and Instagram.

Readers who only followed establishment press accounts can be forgiven if they came away from most reports thinking that the firm has some kind of algorithm or recognition system for enforcing the ban. That’s not so.


January 2016 ISM Non-Manufacturing: 53.5 Percent, Down from a Revised 55.8 Pct. in December

Filed under: Economy — Tom @ 10:16 am

Predictions, per Yahoo’s Economic Calendar — Briefing.com, 55.2 percent; “Markets Expect” 55.0 percent

Last month was: 55.3 percent (any reading above 50 percent indicates expansion; NOTE — revised up to 55.8 percent in January’s report)

The report will be a bit of a test of whether the three-month contraction in manufacturing has had any impact on the rest of the economy. I would guess that if there’s potential for “surprise,” it would be on the downside, given the already-weak predictions for the first quarter and the just-admitted likely downward revisions to fourth-quarter GDP.

Here’s the report, and the answer to the test question appears to be “Yes” from the Institute for Supply Management (bolds are mine; most paragraph breaks added by me; note that December was revised upward):

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in January for the 72nd consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 53.5 percent in January, 2.3 percentage points lower than the seasonally adjusted December reading of 55.8 percent. This represents continued growth in the non-manufacturing sector at a slower rate.

The Non-Manufacturing Business Activity Index decreased to 53.9 percent, which is 5.6 percentage points lower than the seasonally adjusted December reading of 59.5 percent, reflecting growth for the 78th consecutive month at a slower rate. The New Orders Index registered 56.5 percent, 2.4 percentage points lower than the seasonally adjusted reading of 58.9 percent in December.

The Employment Index decreased 4.2 percentage points to 52.1 percent from the seasonally adjusted December reading of 56.3 percent and indicates growth for the 23rd consecutive month.

The Prices Index decreased 4.6 percentage points from the seasonally adjusted December reading of 51 percent to 46.4 percent, indicating prices decreased in January for the third time in the last five months.

According to the NMI®, 10 non-manufacturing industries reported growth in January. The majority of the respondents’ comments are positive about business conditions; however, there is a concern that exists relative to global conditions, stock market volatility, and the effect on commercial and consumer confidence.


The 10 non-manufacturing industries reporting growth in January — listed in order — are: Finance & Insurance; Real Estate, Rental & Leasing; Utilities; Retail Trade; Information; Construction; Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; Management of Companies & Support Services; and Public Administration. The eight industries reporting contraction in January — listed in order — are: Mining; Educational Services; Wholesale Trade; Other Services; Arts, Entertainment & Recreation; Accommodation & Food Services; Transportation & Warehousing; and Professional, Scientific & Technical Services.

In terms of driving GDP, the steep Business Activity Drop is quite troubling. The New Orders drop is not as much of a problem, especially since the Backlog figure (not noted in narrative) went from a neutral 50.0 to 52.0.

The industry rundown for the past four months is as follows:

That trend is not our friend. Uless stopped, seems to presage a move into contraction in about three months.

The move into not seasonally adjusted contraction in New Orders will occur next month if another drop like January’s occurs.