That said, in practice, such should be a major economic consideration for the FOMC and the Administration, going forward, as they hike Interest Rates, reduce their Balance Sheet and look to break the Budget Deficit Federal Debt Ceiling. Adjusted for seasonal factors, the monthly decline was 3.8% (-3.8%), with the year-to-year drop at 3.6% (-3.6%). 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). Australia's Government Strengthens Grip With By-Election Win. ShadowStats will re-address these numbers at that time. (10) April 14th (Census Bureau, Bureau of Labor Statistics, St. Louis Fed, ShadowStats) [See the Opening Comments on the April 24th annual benchmark revisions to Retail Sales, which continue to show flat to negative annual contractions and quarterly contractions, net of inflation.] Shadow Government Statistics or Shadowstats is a blog run by John Williams in which he re-analyzes government economic /unemployment published statistics in order to restate them. ShadowStats Defined "Basic M1" -- Combined Currency and Demand Deposits -- Still Reflects the Extraordinary Liquidity Flight to, and Surge in the Narrower Money Supply What are Shadow's specs? That said, the aggregate series quarterly sales, have been in annual decline for each of the last seven quarters, up through the current 1q2023, in an otherwise deepening housing recession. 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. For the month of February 2023, the real Deficit deepened to -l04.6 billion. ET); Thursday, May 4th, the Census Bureau and Bureau of Economic Analysis release the March 2023 Trade Deficit (8:30 a.m. Signals of renewed, faltering activity increasingly have taken on the mantle of a new Recession. He believes the economy has collapsed, based upon his calculations on economic. 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. 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. That said, in Business Cycle definitions, an economic downturn traditionally has been known as a Depression, which has two components the Recession and the Recovery. After the economic terror of the Great Depression, economic downturns took on the less-frightening Recession nomenclature. 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. FOMC Has Trouble Forecasting Inflation One Quarter Ahead, Let Alone Two Years Ahead Against Pre-Pandemic levels, Currency moved from a gain of 27.9% in February to 38.7% in March 2023, with parallel increases from 83.4% to 96.6% for Reserves, and from 54.11% to 61.3% in aggregate Monetary Base. The latest Economic and Inflation releases were covered earlier in the Opening Section of this DAILY UPDATE. "John" Williams was born in 1949. 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. 1461 will review the underlying GDP, GDI and GNP numbers. -- The Feds Balance Sheet Reduction formally began in June 2022 and should have begun to relieve some Money Supply pressures on Inflation at that time, in theory. For the Second Straight Month, Payrolls Declined Year-to-Year by 6.0% (-6.0%) Collapsed Oil Prices Still Suppressed November CPI and PPI Annual Inflation; Yet, Oil Prices Suddenly Are Surging Anew Shadowstats debunked. 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]. (11) April 14th (CassInfo.com) The March 2023 Cass Freight Index release noted that The shipments component of the Cass Freight Index fell 1.0% m/m in March as freight markets continue to work through an extended soft patch. That monthly decline of 1.0% (-1.0%) was not seasonally adjusted, with a related unadjusted year-to-year drop of 4.0% (-4.0%). Annual-Change Gyrations Are Just Beginning for Economic, Inflation, Money Supply and Financial Return Numbers, as the Pandemic-Driven Collapse Passes It First Anniversary PLEASE NOTE: In 10 days (March 24th), this Retail Sales Series will undergo an annual benchmark revision. Inflation. Full-Year 2020 Existing- and New-Home Sales Were Highest Since 2006 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. First-Quarter 2021 GDP Increasingly Is Set for a Relapsing Quarterly Contraction CPI-adjusted, Real Retail Sales declined by 1.04% (-1.04%) month-to-month in March 2023, down by 1.95% (-1.95%) year-to-year, with First-Quarter 2023 Real Retail Sales declining 0.30% (-0.30%) year-to-year, down for the fourth time in the last five quarters, otherwise gyrating with extreme volatility in recent monthly automobile sales. While the now-broadest aggregate Money Supply M2 declined year-to-year by 4.1% (-4.1%) in March 2023, the highly liquid and inflation driving Basic M1 was up by 4.8% year-to-year. Gasoline prices having been in an upswing since January 2023, gaining 11.7% since December 2022, as of the just-released April 2023 monthly average [EIA]. Momentum of Fourth-Quarter Data Suggests a First-Quarter 2021 GDP Contraction, As the Pandemic and Political Tumult Take on Negative New Dimensions (17) March 30th (Bureau of Economic Analysis BEA, See Note 2) -- Third and Final Estimate of Fourth Quarter 2022 (4q2022) Gross Domestic Product (GDP) [The GDP Alternate Data Tab has been updated] - In continuing downside revision, the third-estimate of inflation-adjusted real 4q2022 GDP revised lower to an annualized quarter-to-quarter gain of 2.57%, in its third and final estimate, from its second estimate of 2.68%, and its initial estimate of 2.89%, versus 3.24% in 3q2022. The NBER called an end to the 2020 Recession on July 19th, again, just the first leg of the Depression. Old Numbers Showed Production Peaked in December 2018 and Flattened Out, February 2020 Pre-Pandemic Peak Was 3.75% Higher Than the Pre-Great Recession Peak While the headline number usually is the seasonally-adjusted month-to-month change, the formal CPI is reported on a not-seasonally-adjusted basis, with annual inflation measured in terms . Where monthly jobs growth in the key Manufacturing, Retail Sales and Construction Sectors has turned flat-to-minus, the Leisure and Hospitality Sector showed continued strong, albeit slowing monthly growth, still holding shy by more than 2% (-2%) of ever recovering its pre-Pandemic level of activity. Further definition is provided in our CPI Glossary. Economic Recovery Is Not as Close as Hyped by the Consensus Outlook (14) April 7th (Bureau of Labor Statistics BLS, and ShadowStats.com). I've yet to find someone who has been able to reproduce the claims made by Shadow Government Statistics about the extent to which government agencies are grossly misreporting the U.S. inflation rate. Part II --REGULAR ALERTS - Weekly Review: ECONOMY, MONEY SUPPLY AND INFLATION ALERTS: Broad Economy continues in downturn, amidst spiking Inflation. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4-3/4 to 5 percent. (5) April 25th (Census Bureau). -- Noted regularly here, New Home Sales (likely the least-reliable, least-meaningful, least-significant and most heavily revised headline series published by the Census Bureau) continued to sink year-to-year. In the Latest Four Months, Pandemic-Driven Unemployment Has Leveled Off Around 12%, Worst Since Before World War II, Other than for the Pandemic in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. A prospering shadow economy makes official statistics (on unemployment, official labor force, income, consumption) unreliable. March 2023 New Residential Construction continued in statistically significant annual year-to-year collapse for both Building Permits and Housing Starts. 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. Please note that the ShadowStats Alternate Unemployment Data and Graphs have been updated for March 2023 on the ALTERNATE DATA TAB (see the above links ribbon). Headline 1q2023 GDP annualized Real GDP growth of 1.06% slowed from an unrevised 2.57% in 4q2022, while annualized quarterly inflation picked from 3.92% to 4.01%. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies. Liquidity-Strapped Consumers Move to Cash, Spiking Traditional Money Supply M1 Business-Cycle Conditions Are Collapsing Rapidly, Amidst an Extreme Acceleration in Inflation If you are not a Subscriber, and wish to be, see the next paragraph. Inflation is already in the double digits, according to ShadowStats' John Williams, and will still grow. Broadly, the aggregate Monetary Base had been in decline since hitting a peak in January 2021, but it has turned higher in the last several months. Federal Reserve Sees Continuing Need for Inflation-Boosting Monetary Stimulus, With No Economic Recovery Expected Before 2023 1461] -- The 2020 Economic Collapse Remains Far from full Recovery. Part II --REGULAR ALERTS - Weekly Review: ECONOMY, MONEY SUPPLY AND INFLATION ALERTS: Broad Economy continues in downturn, amidst spiking Inflation. Tourism Research Australia (TRA) provides statistics, research and analysis to support industry development and marketing activities for the Australian tourism industry. Where January 2021 Year-to-Year Manufacturing Contracted by 1.0% (-1.0%), It Also Contracted by 1.8% (-1.8%) from January 2019, Two Years Ago The Real Housewives of Atlanta The Bachelor Sister Wives 90 Day Fiance Wife Swap The Amazing Race Australia Married at First Sight The Real Housewives of Dallas My 600-lb Life Last Week Tonight with . 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. 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. -- Noted regularly here, New Home Sales (likely the least-reliable, least-meaningful, least-significant and most heavily revised headline series published by the Census Bureau) continued to sink year-to-year. 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. New Numbers Indicate the Economy Was in a Deepening Recession, Well Before the Pandemic Shutdown and Collapse Using the same data collection and calculation methodologies as the Bureau of Labor Statistics used in the 1980s, John Williams, the founder of ShadowStats, determined that headline inflation should be much higher than 5.4%, the latest June release. Alternate Gross Domestic Product Chart. Shadow TUAS air vehicle The air vehicle system can be transported by two military wheeled vehicles and can be operated round-the-clock from unprepared sites by the 22-soldier crew. Trailblazer builds: Strengthen your main character up. The original Money Supply measure, Basic M-1 is defined as Currency plus Demand Deposits (checking accounts). Understate inflation and you end up overstating the Real or inflation-adjusted level of growth in GDP. Despite a small monthly narrowing in the headline March 2023 Unemployment Rate, details remained consistent with an unfolding recession. Treasury Secretary Janet L. Yellen did not describe in her Opening Message for 2021, as she had in 2020, and as her recent predecessors had done, that the current Fiscal Path was Unsustainable. Yet that concept still appeared early in the Opening Summary: The debt-to-GDP ratio was about 100 percent at the end of FY 2021 [around 122% in November 2022 WJW]. India's Jobless Rate Hits a Three-Month High of 7.8%, CMIE Says. 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)]. 1438, subsequent missives including particularly No. 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. L A T E S T .. N U M B E R S -- See the later SYSTEMIC RISK SECTION -- FEDERAL RESERVE for the current FOMC coverage and detail of February and early March 2023 Monetary Conditions. An informal economy (informal sector or shadow economy) is the part of any economy that is neither officially taxed nor monitored. Consider that March 2023 Basic M1 (Currency plus Demand Deposits [Checking Accounts]) gained anew, month-to-month, still holding at 120.5% above, albeit somewhat shy of the peak 122.5% above its February 2020 Pre-Pandemic level. Reporting INFORMAL ECONOMY SIZE AS A PERCENTAGE OF GDP. Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation. Despite Talk of Tightening in 2022 or 2023, FOMC Is Easing Anew in Its Latest Actions, Benchmarked Industrial Production Revised Sharply Lower; Both Manufacturing and Mining Were Hit Hard (11) April 14th (CassInfo.com) The March 2023 Cass Freight Index release noted that The shipments component of the Cass Freight Index fell 1.0% m/m in March as freight markets continue to work through an extended soft patch. That monthly decline of 1.0% (-1.0%) was not seasonally adjusted, with a related unadjusted year-to-year drop of 4.0% (-4.0%). The SGS-Alternate GDP reflects the inflation-adjusted, or real, year-to-year GDP change, adjusted for distortions in government inflation usage and methodological changes that have resulted in a built-in upside bias to official reporting. A new analysis will follow with preliminary April 2023 numbers late this coming week. Payroll-Employment Benchmark Revisions Showed a Deepening, Accelerating Decline into an April 2020 Trough, With Renewed Deterioration at Present; Recovery from the Pandemic Shutdown Has Stalled and/or Is Regressing 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. (14) April 7th (Bureau of Labor Statistics BLS, and ShadowStats.com). Best Wishes -- John Williams. 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. That circumstance is reviewed in pending ShadowStats Benchmark Commentary No. Aside from some short-term reporting gimmicks, Payroll Employment probably still is the highest-quality economic statistic published by the U.S. Government, at present, given current data and the reporting-compromised conditions of a still-evolving Pandemic/ post-Pandemic environment. Surging Monetary Base, Reserves and Currency Indicate Intensifying Systemic Problems Deepening Deficits in Fourth-Quarter and Annual 2020 Real Net-Exports (GDP) and the Related Real Merchandise Trade Deficit Were the Worst Ever in Modern U.S. Permits up strongly but it's all apts inSouth. The recent string of extreme FOMC rate hikes certainly has not. THIS WEEKS PENDING DAILY UPDATE COVERAGE OF FOMC AND ECONOMIC ACTIVITY (Monday, May 1st to Friday, May 5th): (Monday) March 2023 Construction Spending will be covered Tuesday, (Late Wednesday and Thursday) May 2023 FOMC Meeting, (Thursday) March 2023 Real Merchandise Trade Deficit, (Friday) April 2023 Employment and Unemployment. Search Text. John Williams, founder of Shadow Government Statistics, . 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 Bureau of Labor Statistics Reveals It Cannot Measure the CPI Properly, At Present Your Shadow subscription. Walter J. On Top of Downside Revisions, Declining November Real Retail Sales Showed Renewed Economic Deterioration Yet, Fourth-Quarter 2020 New-Home Sales Contracted, as Did Real Retail Sales, Suggestive of Consumers Facing Intensifying Pandemic and Liquidity Issues PLEASE NOTE: In 10 days (March 24th), this Retail Sales Series will undergo an annual benchmark revision. Underlying headlines of better-quality U.S. economic numbers, reviewed here in Part II [see Points (1) to (18)], suggest that the United States has been in Recession since First-Quarter 2022, allowing for the political games played with the Strategic Petroleum Reserve depletion, which otherwise also accounted for the headline boost in Second-Half 2022 (Third- and Fourth-Quarter 2022) GDP growth. Revised year-to-year growth slowed to 0.88%, from 0.91% and an initial estimate of 0.96%, versus 1.94% in 3q2022. April 2020 Pandemic/Economic Trough Revised Lower by 5.1% (-5.1%) Shy of a near-term happy resolution to the Russia-Ukraine War, the circumstance only has exacerbated the ShadowStats Hyperinflation pre-Russia-Ukraine War outlook of the last year or so, where: Despite recent relative weakness in gold prices and related Central Bank or other market machinations, the ShadowStats broad outlook in the weeks and months ahead has remained for: (1) A continuing and renewed deepening (potentially hyperinflationary) U.S. economic collapse, reflected in (2) Continued flight to safety in precious metals, with accelerating upside pressures on gold and silver prices, (3) Mounting renewed selling pressure on the U.S. dollar, against the Swiss Franc and other traditionally stronger currencies, and (4) Despite recent extreme Stock Market volatility and current near-record high levels in the popular U.S. stock-market indices, high risk of major instabilities and heavy stock-market selling continues, complicated by ongoing direct, supportive market interventions arranged by U.S. Treasury Secretary Yellen, as head of the President's Working Group on Financial Markets (a.k.a. (8) April 18th, (Census Bureau). From a revised -101.7 (previously -101.7) billion, from a revised -98.2 billion in December, its worst monthly showing since -112.4 billion in October 2022. November Industrial Production and Its Dominant Manufacturing Sector Showed Deepening Year-to-Year Declines, While the Mining Sector Showed a Narrowed Annual Plunge, Thanks to Rising Oil Prices 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. In summary, Shadow Stats constructed their alternative measure by taking a 5.1% difference between CPIU and CPIURS (the BLS's retroactive adjustment) and misinterpreted it as an ANNUAL difference when it was in fact a CUMULATIVE difference. Republishing our charts: Permission, Restrictions and Instructions (includes important requirements for successful hot-linking) That said, more commonly, sharp annual declines in recent months have tended to be statistically significant, but not the month-to-month changes. 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. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies. Underlying Economic and Labor Numbers through November Indicate Contracting or Flattening Fourth-Quarter 2020 GDP, Well Shy of Economic Recovery Many segments and regions of the U.S. economy, and individual, personal circumstances have suffered, and continue to suffer severe structural damage from the shutdown, areas that likely will take years to recover fully. In the past, there have been various estimates of the economic impact and the size of shadow economy in Australia by organisations such as the Black Economy Taskforce External Link and the Australian Bureau of Statistics (ABS). Separately, the inflation issue is complicated by independently rising gasoline prices, not by any overheating economy! Annual Boom of 5.7% in October Real Retail Sales Was Not Credible; Related Retail Employment and Consumer Goods Production Continued in Annual Decline, Despite the Gain in Freight Activity SHADOWSTATS SUBSCRIPTIONS Economic and financial issues raised here are reviewed more extensively, along with exclusive graphs, and expanded economic, financial market and monetary assessment in subscriber-only Commentaries [monthly going forward], and more frequently on a timely basis in the subscriber-only e-mails of daily changes in the DAILY UPDATE (as the news breaks, see the prior paragraph). ShadowStats postings of the June 2021 Commentary and before - back to 2004 - are open to all, accessible by clicking on Archives, at the bottom of the left-hand column of this ShadowStats homepage. (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. 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. MARCH 2023 FOMC (May 2023 FOMC coverage is pending May 3rd) - The Federal Reserves March 2023 Federal Open Market Committee (FOMC) raised the targeted Federal Funds Rate by 25 basis points [0.25%] for second period, largely as expected, slowed from the 0.50 basis point upside rate hike in December 2022, and the previous 0.75 basis point increments, to a new range of 4.75% to 5.00%. For all readers, in general, if you have any questions or otherwise would like to communicate, please e-mail johnwilliams@shadowstats.com or call (707) 763-5786. The 2021 Financial Report is available here: https://www.fiscal.treasury.gov/reports-statements/financial-report/current-report.html -- ShadowStats will provide extended analysis in an updated Hyperinflation Commentary, which will post subsequent to the pending Commentary No. Reserves jumped by a dominant 7.1% in the month, which would speak to new money creation, while the Currency in Circulation component gained by 0.6% month-to-month, to a new historic high.
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