Underlying Fundamentals Remain Extremely Strong for Gold and Silver, and Weak for the U.S. Dollar and Stocks, Despite Central Bank or Other Systemic Machinations to the Contrary, January 2021 Manufacturing Declined Year-to-Year for the 19th Consecutive Month, Still in the Downturn Induced by the FOMC 15 Months Before the Pandemic Collapse ShadowStats is Williams' attempt to provide an alternative to the official consumer price index (CPI), which he views as a flawed measure of what members of the general public have in mind when. Republishing our charts: Permission, Restrictions and Instructions (includes important requirements for successful hot-linking) 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. 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. 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. Evolving Circumstances Remain Extremely Strong for Gold and Silver, and Weak for the U.S. Dollar and Stocks, Despite Central Bank or Other Systemic Machinations to the Contrary, Intractable and Deteriorating Conditions Still Signal No Imminent Economic Recovery, Irrespective of Some Bounces in March Activity Against Weather-Driven February Collapses Shadowstats.com is a website that claims that the government does a piss poor job of keeping track of certain statistics. That said, again, Fiscal Years 2021 and 2022 (FY 2021, FY 2022, FY 2023) circumstances and prospects have continued to deteriorate meaningfully, at an accelerating pace, from conditions at the end of FY 2020 (see the next paragraph), exploding anew into the still unfolding, disastrous FY 2023. Where Pandemic Forced the Shutdown of the U.S. Economy in March 2020, FOMC Rate Hikes Already Had Strangled Business Activity 1461 will review the underlying GDP, GDI and GNP numbers. Momentum of Fourth-Quarter Data Suggests a First-Quarter 2021 GDP Contraction, As the Pandemic and Political Tumult Take on Negative New Dimensions 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. -- Extended Fed coverage will follows in the later SYSTEMIC RISK SECTION -- FEDERAL RESERVE, with an updated story following the pending May 3rd FOMC coverage, as well as a comprehensive review of Federal Reserve Monetary Policies and Federal Government Fiscal Policies in pending Commentary No. ET, May 23, 2023. INFORMAL ECONOMY SIZE AS A PERCENTAGE OF GDP. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. Including Commercial Aircraft, aggregate New Orders recovered pre-Pandemic levels in Third-Quarter 2020. 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 Adjusted for seasonal factors, the monthly decline was 3.8% (-3.8%), with the year-to-year drop at 3.6% (-3.6%). Consumer Inflation: Official vs ShadowStats | Chart of the Week. ET) and Press Conference (2:30 p.m. For those looking to subscribe, please go to the SUBSCRIPTION LINK at the upper left-hand corner of this Web page). Ukraine Latest: War Casts Shadow Over Votes in Bulgaria, Finland. The revisions did not change quarterly patterns meaningfully, but did show that broader headline activity generally had been some somewhat slower than previously estimated in the last two years [graphs were plotted in the Subscriber-only e-mail of April 14th]. 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. Year-to-year Core PPI Inflation (net of Food and Energy) eased from 5.1% to 4.3%. Accordingly, comparative year-to-year change in the various March 2021 to March 2022 Money Supply measures against the heavily spiked year-ago activity tended to be depressed, against what otherwise would be the change versus the February 2020 Pre-Recession or Pre-Pandemic Trough (PPT), effectively the Base Circumstance, before the Pandemic emergency liquidity surge. For the month of February 2023, the real Deficit deepened to -l04.6 billion. FOMC Has Trouble Forecasting Inflation One Quarter Ahead, Let Alone Two Years Ahead (II) - REGULAR ALERTS Again, as noted after the February 2023 rate hike, despite Fed Chairman Jerome Powells continued downplaying risks for the FOMCs hoped-for imminent Recession, which otherwise ostensibly is why he was raising rates, that downturn already was and is in play. 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 In terms of quarter-to-quarter change, despite a sharp monthly decline in March 2023, those January and February auto sales pulled relative real 1q2023 activity up at an annualized quarterly pace of 3.10%, following respective consecutive annualized quarter-to-quarter declines of 3.29% (-3.29%) and 2.35% (-2.36%) in 4q2022 and 3q2022. 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. As Tim notes, this is a gobsmacking error. Pandemic-Disrupted U.3 Unemployment Effectively Was 9.0% in November 2020, Not the Headlined 6.7% Nonetheless, January 2021 CPI-U Annual Inflation Hit a Soft, Ten-Month High of 1.4%, Boosted by Gasoline Prices, but Constrained by Mixed Food and Core Inflation Others: Consumer Liquidity, Depression, Money Supply. Bureau of Labor Statistics Reveals It Cannot Measure the CPI Properly, At Present Summary John Williams from Shadowstats joins me to discuss the new economy post-COVID-19 emergence in the US. Search Text. If you are not a Subscriber, and wish to be, see the next paragraph. CPI Data Series (Subscription required.) 2021 Social Security Cost of Living Adjustment (COLA) Could Spike to a 40-Year High, Based on Potential Third-Quarter 2021 CPI-W Fed Chair Powell Noted That Surging Money Supply No Longer Boosts the Economy 1461. 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. 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]. 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 The pattern of current activity remains consistent with a deepening, albeit not formally recognized Economic Recession. March 2023 New Residential Construction continued in statistically significant annual year-to-year collapse for both Building Permits and Housing Starts. He believes the economy has collapsed, based upon his calculations on economic. Commentary No. Severe, U.S. Dollar-Debasing Inflationary Pressures from Existing, Extreme Monetary and Fiscal Policies Are About to Get Much Worse PLEASE NOTE: In 10 days (March 24th), this Retail Sales Series will undergo an annual benchmark revision. 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. Money Supply and Monetary Base detail follows in the later FEDERAL RESERVE Section and its SYSTEMIC RISK -- MONEY SUPPLY AND MONETARY BASE coverage (just keep scrolling down), along with expanded material in conjunction with the updated Money Supply numbers and graph posted on the ALTERNATE DATA Tab of www.shadowstats.com (see the link above). 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.. December 2020 Cass Freight Index Jumped Year-to-Year by 6.7%, but Its Two-Year Change Was Down 1.8% (-1.8%) from December 2018, Due to FOMC Tightening Contracting Intervening 2019 Activity The aggregate Real Annual Merchandise Trade Deficit for 2022 was unrevised at -1,320.2 Billion Chained (2012) Dollars, again, its worst showing in history. -- Severe Systemic structural damage and distortions from the Pandemic-driven Shutdown continues to forestall meaningful Economic Rebound into 2023 and beyond, despite a reopened economy, in context of flummoxed Fiscal and Monetary Policies, and ever-evolving COVID-19 and related circumstances, and the continuing Russia-Ukraine conflict. Nonetheless, the quality of government reporting has deteriorated sharply in the last couple of decades. With a further quarter-point rate hike expected out of this weeks May 2nd to 3rd FOMC Meeting, following nine consecutive FOMC Meeting rate hikes (0.25% at the last three meetings, 0.50% and 0.75% earlier), the U.S. Central Bank appears intent on using surging interest rates to drive the U.S. economy into the ground. 1454, No. If you are a Subscriber and are not receiving, but would like to receive those e-mails, please send a note to [email protected] along with the desired e-mail address. 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. 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. That Is Because the Current Collapse Is Pandemic, Not Business-Cycle Driven; Surging Money Growth in a Non-Business-Cycle Collapse Can Trigger Hyperinflation Commentary No. Headline March 2023 Producer Price Index (PPI) annual inflation dropped sharply from 4.9% in February 2023 to 2.8% in March 2023, due to the relative easing against the extreme oil and gasoline price spikes triggered by the year-ago Russian invasion of Ukraine. Congress keeps delaying U.S. Government Shutdowns, with continual increases in and extensions to the Debt Ceiling, amidst ongoing political games. November Unemployment and Payrolls Confirmed Stalled, L-Shaped, Non-Recovering Economic Activity The newsletter is published as part of my economic consulting services. -- Headline March 2023 U.3 and U.6 Unemployment of 3.50% and 6.68% notched lower from respective three- and six-month highs of 3.57% and 6.80% in February, but held above January 2023 levels. 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 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). Informal Economy Sizes. 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. John Williams, founder of ShadowStats, calculates inflation using the same methodology that the government used to have for calculating the consumer price index (CPI). 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. Those details are posted and graphed on the Alternate Data Tab. Go to https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/march-2023 for full detail. Job gains have picked up in recent months and are running at a robust pace; the unemployment rate has remained low. Your Shadow subscription. PLEASE NOTE: In 10 days (March 24th), this Retail Sales Series will undergo an annual benchmark revision. -- A little closer to real-world numbers, initial year-to-year headline March 2023 PPI Construction Inflation eased to 15.6%, from a minimally revised 16.1% (previously 16.2%) in February 2023. Severely Negative Annual Revisions to Industrial Production Mean the Economy Was in Recession Well Before the Pandemic Hit The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. (16) April 3rd (Census Bureau) February 2023 Real Construction Spending) - Despite the usual upside revisions to the prior two months of reporting, February 2023 Real Construction Spending showed its 17th straight month of year-to-year decline (down by 9.5% (-9.5%) from February 2022) [see Note (4)], with First-Quarter 2023 activity track for its fourth consecutive quarter-to-quarter decline, and its sixth consecutive quarterly year-to-year decline. -- Headline Fourth-Quarter 2022 GDP inflation (Implicit Price Deflator [IPD}) came in at a revised third estimate of an annualized pace of 3.92% (previously 3.93% and 3.51%), against an unrevised 4.36% in 3q2022, and up by an unrevised year-to-year 6.41% (initially 6.30%), versus an unrevised 7.15% in Third-Quarter 2022, which remained at a 42-year high, outside of the recent inflation spike. While the January 2021 Cass Freight Index Gained Year-to-Year for the Fourth Straight Month, It Also Contracted by 1.6% (-1.6%) from Two Years Ago -- In contrast, the ShadowStats Corrected Alternate-GDP estimate, adjusted for the continual understatement of headline GDP Inflation, and the corresponding continual overstatement of growth in the Real GDP, showed a corrected 1q2023 real annualized quarterly contraction of 0.98% (-0.98%), against a 0.50% 4q2022 gain, with an annual contraction of 0.49% (-0.49%) in 1q2023, against an annual drop of 1.16% (-1.16%) in 4q2022.