Shadow Government Statistics
Analysis Behind and Beyond Government Economic Reporting
DAILY UPDATE (June 18th to 19th – Flash Commentary No. 1460b, Addressing the FOMC Actions and Related Financial Market Reactions, Will Post on Saturday, June 19th - SEE UPDATED POSTING SCHEDULE) Fed Chairman Powell Acknowledged Some “Temporary” Near-Term Inflation Issues, as Headline Inflation Surges Amidst Faltering Economic Activity • Both CPI and PPI Annual Inflation Continued to Set New Multi-Decade or Record Highs in May 2021 • Evolving Numbers Confirm an FOMC-Induced “Unrecognized” Recession Hit in August 2018 and Still Was Deepening at the Time of the March 2020 Pandemic Shutdown • Specifically, Annual Benchmarkings Revised 2020 Industrial Production Activity Lower by 4.8% (-4.8%) and Deepened the 2020 Real Trade Deficit by 1.4% (-1.4%), on Top of Earlier, Negative Revisions to Payrolls and Retail Sales • These Foreshadow Downside GDP Revisions and Confirm a Slowdown Was in Place, Leading Into the Pandemic Shutdown • May 2021 Employment Numbers Confirm the U.S. Economy Remains Far From Recovery
• May 2021 Housing Starts and Building Permits Suggested a Pending Second-Quarter 2021 Quarter-to-Quarter Contraction • May 2021 Industrial Production Gained 0.8% in the Month, but Held Shy Respectively by 1.4% (-1.4%) and 4.1% (-4.1%) of Recovering Its Pre-Pandemic and Pre-Recession Peak Levels • May 2021 Real Retail Sales Declined 2.0% (-2.0%) Month-to-Month but Held at 13.7% Above Its Pre-Pandemic Peak • May 2021 Cass Freight Index® Jumped 5.9% in the Month, With Unusual Twists • May 2021 Annual PPI Inflation Jumped to 6.56% from 6.17% in April 2021, with CPI-U Inflation Surging to 4.99%, from 4.16% in the Same Timeframe • April 2021 Trade Deficit Narrowed in the Month, on Top of Sharply Negative Revisions to First-Quarter 2021 and Annual 2020 Deficits • Down 5.0% (-5.0%) from the February 2020 Pre-Pandemic Peak, May 2021 Payroll Jobs Growth Was Weakest of the Post-World War II Era (Outside of the Pandemic), With Headline Unemployment Easing to 5.9% from 6.1% -- But That Was Worse Than Headlined, Against a Disappearing Labor Force • Real Construction Spending on Early Track for 2q2021 Contraction • Second Estimate of First-Quarter GDP Was Unrevised, but Initial GNP and GDI Estimates Had Some Twists • April 2021 Durable Goods Orders Dropped 1.3% (-1.3%) in the Month, Following Its Recent Major Downside Benchmarking • April 2021 Housing Starts Dropped by a Statistically Meaningful 9.5% (-9.5%) in the Month, on Top of a First-Quarter Contraction • April and May Inflation and Business Activity Numbers Confirm a Still-Faltering, Pandemic-Collapsed Economy, Amidst Surging Broad Inflation [See the Headlined Paragraphs in the LATEST NUMBERS section]
• Fed Chairman Powell (June 16th): “Inflation Could Be Higher Than We Predicted and More Than Expected” • Money Supply and Monetary Base Growth Continue to Explode • U.S. Government’s Financial Condition Deteriorated Sharply in 2020 [See the Headlined Paragraphs and Monetary Base in the SYSTEMIC RISK Section]
• G E N E R A L .. H E A D L I N E S .. -- Pandemic-Driven U.S. Economic Collapse Continues to Harden in a Protracted “L”-Shaped Non-Recovery
-- Revisions and Pending Revisions to Key Economic Numbers Show Not Only That the Collapse Was Worse Than Headlined, But Also That the Unfolding Recovery Has Been Much Weaker Than Indicated
-- Severe Systemic Structural Damage from the Shutdown Is Forestalling Meaningful Economic Rebound into 2022 or Beyond, Irrespective of the Advances in Coronavirus Vaccines
-- Panicked, Unlimited Federal Reserve Money Creation and Federal Government Deficit Spending Continue and Likely Will Expand, Triggering Major Domestic Inflation
-- With Fundamental Dollar Debasement Intensifying, Holding Physical Gold and Silver Protects the Purchasing Power of One’s Assets, Irrespective of Any Near-Term Central Bank or Other Machinations to the Contrary.
Scroll down for the latest ShadowStats outlook, headline economic news and background information on the U.S. Economy, Financial System (FOMC), Financial Markets and Alternate Data, also for Publicly Available Special Reports and Contact Information.
• L A T E S T .. N U M B E R S .. May 2021 Housing Starts and Building Permits are on track for sharp quarterly contractions in Second-Quarter 2021 (June 16th, Census Bureau). In the context of regular nonsense-reporting volatility in the New Residential Construction series, downside revisions to April 2021 Housing Starts and Building Permits, and impaired activity in May, left both series on track for annualized quarterly contractions deeper than 10% (-10%) in Second-Quarter 2021. As usual, the monthly gain in Housing Starts of 3.6% was not close to being statistically meaningful, and it was almost entirely accounted for by a downside revision to April activity. Net of prior revisions, the May 2021 monthly gain of 3.6% dwindled to 0.2%. Year-to-year, the 50.3% gain in May 2021 Housing Starts was statistically significant, due solely to its being measured against the Pandemic-driven collapse of one-year ago. In terms of a consistent benchmark, headline May 2021 Housing Starts were down by 1.1% (-1.1%) from their pre-Pandemic peak. Building Permits are a non-indicator, at present, given data issues that surfaced in last month’s benchmarking, where a large number of Building Permits have ended up lapsed or expired due to COVID-19 disruptions. Graphs and extended detail follow in No. 1460b.
(June 15) Headline May 2021 Industrial Production Gained 0.85% in the Month, up from 0.09% in April, still well shy of economic recovery, despite the Pandemic distorted and disrupted year-to-year surge easing to 16.3% in May 2021 from 17.6% in April 2021 (Federal Reserve Board - FRB). The headline gain reflected a pickup in motor vehicle assemblies. That said, in context of last month’s extraordinary, multi-year major downside benchmark revisions to the Industrial Production series (see the following May 31 paragraph, the detail in No. 1460a and expanded coverage in pending No. 1460b), a hitherto unrecognized Recession is in play, timed from an August 2018 pre-Recession peak. That recession still was deepening, going into the February 2020 pre-Pandemic peak and the ensuing Pandemic-driven collapse.
Accordingly, where May 2021 Industrial Production was up by 16.3% year-to-year, it still was shy by 1.4% (-1.4%) of recovering its pre-Pandemic peak level and 4.1% (-4.1%) shy of recovering its pre-Recession peak level. Similar May 2021 growth patterns for the major Production Index components are seen year-to-year (YY) and against the pre-Pandemic peak (PPP) and pre-Recession peak (PRP) levels, as indicated for: Manufacturing (+11.3% YY, -0.5% PPP, -3.7% PRP), Mining (+16.5% YY, -10.2% PPP, -8.9% PRP) and Utilities (+3.6% YY, -0.4% PPP, -3.8% PRP). Expanded discussion and graphs follow in pending No. 1460b.
(June 15) Boosted by surging Inflation, and against an upside revision to April activity, May 2021 Nominal Retail Sales declined by 1.3% (-1.3%) in the month, down by 2.0% (-2.0%) net of Inflation (Census Bureau). ShadowStats standardly removes growth due to inflation from the headline Retail Sales series, reporting it in Real or Inflation-Adjusted terms, deflated by the seasonally-adjusted CPI-U as otherwise calculated by the St. Louis Fed. Net of the upside revision to April activity, May 2021 Real Retail Sales were unchanged against April, month-to-month. Year-to-year Real Retail Sales gained 22.1% in May 2021, down from 47.3% in April, heavily distorted by the year-ago Pandemic collapse. There is no pre-Recession peak here, but there is a pre-Pandemic peak of February 2020. Against that, May 2021 Real Retail Sales had gained 13.7%, down from an April 2021 gain of 16.0%. Graphs and extended detail follow in No. 1460b.
(June 15) The May 2021 Producer Price Index continued to explode across the board, setting new record levels of year-to-year Inflation at 6.56% [previously 6.17%] for the Total PPI-FD (Final Demand), 11.05% [previously 10.70%] for the PPI-FD Goods Sector and 4.52% [previously 4.02%] for the PPI-FD Services Sector (Bureau of Labor Statistics - BLS). Those record annual inflation levels were in context of the current PPI historical series that began in November 2009. Headline inflation rates for both the PPI and CPI continue to exceed financial-market expectations. Despite continued surging energy (gasoline) prices, “Core” Inflation, net of Food and Energy, hit a new historic peak for the PPI and a surging, multiple-decade peak for the CPI. Expanded discussion follows in No. 1460b.
(June 12 [released June 11th]) The seasonally adjusted May 2021 Cass Freight Index® jumped 5.9% month-to-month, having declined 3.1% (-3.1%) in April; year-to-year growth ballooned to an unadjusted 35.5% against last years’ Pandemic Collapse, up 10.6% against the February 2020 Pre-Pandemic Peak, but still down by 2.9% (-2.9%) from its Pre-Recession Peak in 2018 (CassInfo.com - See detail at https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/may-2021 and scroll down). Not familiar with the 2018 Recession? Federal Reserve tightening triggered it. Unfolding details are reviewed in No. 1460a, while pending No. 1460b will provide extended analysis of the May 2021 Cass Freight Index®, along with implications for that 2018 economic downturn in conjunction with related Industrial Production. -- ShadowStats regularly tracks and analyzes the Cass Freight Index® as a highest-quality coincident and leading indicator of underlying economic reality. We thank Cass for their permission to graph and to use their numbers in our Commentaries.
(June 10) Surging May 2021 Annual Consumer Inflation continued to top expectations, at a 13-Year high, with “Core” Inflation (net of Food and Energy) at a new 29—year peak (BLS). Year-to-year May 2021 Consumer Price Inflation (CPI-U) surged by an unadjusted 4.99% year-to-year, its strongest reading since August 2008, up from 4.16% in April 2021 and 2.62% in March 2021. Headline CPI-U month-to-month inflation gained an adjusted 0.64% in May, following 0.77% in April, against respective consensus expectations of about 0.2% and 0.5%, having gained 0.62% in March. The continuing inflation pickup reflected more than just a relative surge against year-ago collapsed Gasoline prices, where unadjusted “Core” inflation jumped to 3.80% in May 2021, from 2.96% in April, its highest level since June 1992.
Of some note to those on Social Security, and to those estimating Federal Government outlays going forward, the latest annual Cost of Living Adjustment (COLA) for Social Security, based on year-to-year Third-Quarter 2020 CPI-W (all Urban Wage Earners) was 1.3%. The annual CPI-W for May 2021 was 5.65% and is rising. Separately, the BLS indicated they remain well shy of regular inflation surveying, with implications that the full scope of rising prices is being missed in the headline numbers (see pending No. 1460b).
Year-to-Year May 2021 ShadowStats Alternate CPI (1980 Base) Inflation also jumped to a thirteen-year high, at 13.0% in May 2021, up from 12.1% in April 2021, 10.4% in March 2021, 9.4% in February 2021 and against 9.1% in January 2021. The ShadowStats Alternate CPI-U estimate restates current headline inflation so as to reverse the government’s inflation-reducing gimmicks of the last four decades, which were designed specifically to reduce/ understate annual Cost of Living Adjustments. Related graphs and methodology are available to all on the updated ALTERNATE DATA tab above. Subscriber-only data downloads and an Inflation Calculator also are available there, with extended details in No. 1460b.
(June 8) Benchmark revisions deepened the Real Merchandise Trade Deficits for both First-Quarter 2021 and Annual 2020, with parallel negative impact on pending July 20th GDP revisions (Census, Bureau of Economic Analysis - BEA). Where ever-deepening U.S. Real Merchandise Trade Deficits (the dominant component of GDP Net Exports) is a regular drain on GDP growth, that drain just intensified with the regular 2020 annual Trade benchmark revisions. Although headline initial reporting of April 2021 Trade Deficit improved for the month, such was against revised deterioration in the 1q2021 and Annual 2000 Annual Real Trade Deficits, deepening respectively by 2.3% (-2.3%) and 1.4% (-1.4%) versus prior reporting. Expanded detail and graphs follow in No. 1460b.
(June 4) Near-consensus headline May 2021 Unemployment and Payrolls reconfirmed that the U.S. Economy still is not close to recovering from its Pandemic-driven collapse (BLS). May Payroll Employment gained an adjusted 559,000 jobs (586,000 net of revisions) with headline U.3 Unemployment dropping from 6.09% to 5.79%. Both headline measures of Labor conditions were within reasonable bounds of Consensus Expectations, yet, the headline story does not foreshadow imminent economic recovery.
The decline in seasonally-adjusted May 2021 Payroll Employment against its February 2020 Pre-Pandemic Peak was 5.0% (-5.0%), narrowed from 5.4% (-5.4%) in April 2021, otherwise still the weakest showing of the Post-World War II Era, outside of the Pandemic. Payroll Employment is a fundamental measure of broad economic activity, and the current measures of Payroll decline suggest that the broad U.S. economy is far from recovering pre-Pandemic conditions.
After fifteen months of Pandemic surveying the BLS still cannot count the number of Unemployed. The BLS acknowledges continuing misclassification of some “unemployed” persons as “employed,” in the Household Survey. The count of the understated unemployed had an “upside limit” of 478,000 persons in May 2021, against 558,000 in April 2021 and 636,000 persons in March 2021. The difference would be a potential headline U.3 of 6.1% in May instead of today’s headline 5.8%. Fully adjusted for COVID-19 disruptions, based on BLS side-surveys of Pandemic impact, and with roughly six million people missing from the headline U.S. labor force, actual headline U.3 unemployment still should be well around 10%, the highest unemployment rate since before World War II. Broader May 2021 headline U.6 unemployment [including some increase in those counted as employed part-time for economic reasons as well as an increase headline discouraged workers] eased to 10.16% in May, from to 10.38% in April 2021, a roughly 0.10% (-0.10%) narrower decline than seen in the headline U.3.
Including long-term discouraged/displaced workers, the May 2021 ShadowStats Alternate Unemployment Rate increased to 26.0%, from 25.5% in April 2021. Moving on top of the decline in U.6, while reflecting a continuing and intensifying shift from short-term discouraged (in U.6) to long-term discouraged workers (in the ShadowStats Alternate). With the Pandemic at its 15-month anniversary, the May 2021 ShadowStats Alternate Unemployment Rate rose to 26.0%, elevated by the underlying, Pandemic-driven surge in U.3 unemployment that began in March 2020. The latest Unemployment Rates have been posted on the ALTERNATE DATA tab (above), with extended discussion and graphs in No. 1460b.
(June 1) Net of surging construction inflation, Real Construction Spending in April 2021 contracted month-to-month, on possible early track for a Second-Quarter 2021 quarterly contraction, on top of upwardly revised First-Quarter 2021 activity (Census). The extreme weather disruptions in February still are gyrating headline 1q2021 Construction Spending numbers. Against a nominal monthly gain of 0.6% in January 2021, February’s subsequent stormy decline of 0.6% (-0.6%), revised lower, now down by 0.8% (-0.8%), while March’s recovery revised to a 1.0% [previously 0.2%] monthly gain. Expanded detail, graphs and an assessment as to likely GDP impact follow in No. 1460b.
(May 31) In context of sharply negative Annual Benchmark Revisions to Industrial Production and other series, major downside Annual Benchmark Revisions most likely also loom for Gross Domestic Product (GDP) activity on July 29th (ShadowStats, Federal Reserve, Department of Commerce). Activity leading into the Pandemic Shutdown of the U.S. Economy was more damaging in aggregate impact than previously reported. The May 28th Industrial Production Benchmark Revisions showed an economy that already was contracting in 2019, before being hit by the Pandemic, with the level of full annual 2020 activity lower by 4.8% (-4.8%) than previously reported, reflected in downside revisions of 4.3% (-4.3%) to the dominant Manufacturing sector, 7.7% (-7.7%) to the Mining sector (including Oil and Gas production) and 0.2% (-0.2%) to the randomly volatile Utilities sector. Where much of the downside revisions were pre-Pandemic, they deepened the Pandemic-driven economic trough in April 2020 by 5.1% (-5.1%).
In parallel with an evaporating path to economic recovery, the Census Bureau previously (May 14th) published major downside benchmark revisions to Manufacturers’ Shipments, Inventories and Orders (2013-2020), including nominal New Orders for Durable Goods (NODG), which were revised lower by 5.5% (-5.5%) for 2020 (see the May 27 NODG paragraph). Sum and substance of these headline revisions is that the Pandemic-Driven Collapse of the U.S. Economy was much worse than headlined, largely because it happened on top of an otherwise then-unrecognized fundamental economic downturn. Accordingly, the Recovery from same is far shy of where it has been hyped with current GDP reporting. Underlying economic reality remains much closer to the ongoing Depression level of activity reflected in headline Payroll Employment. Downside GDP revisions likely loom on July 29th.
(May 27) Unrevised at 6.4% annualized growth, Real First-Quarter 2021 Gross Domestic Product (GDP) still held shy of recovering its Fourth-Quarter 2019 Pre-Pandemic Peak by 3.5% (-3.5%), yet, boosted sharply by First-Quarter 2021 Stimulus Checks, the theoretically GDP-equivalent Gross Domestic Income (GDI) did recover (BEA). The second estimate of 1q2021 annualized Real GDP growth was 6.40% [previously 6.39%], still holding shy of recovering its 4q2019 Pre-Pandemic Peak by 0.86% (-0.86%). In like manner, the initial reporting of 1q2021-annualized Real Gross National Product (GNP - GDP net of the trade balance in factor income) was 5.91%, shy of recovering its 4q2019 Pre-Pandemic Peak by 1.29% (-1.29%). That said, on top of a large upside revision to 4q2020 wages and salaries, and reflecting surging 1q2021 Pandemic stimulus payments, 1q2021 annualized quarterly Real GDI grew by 6.81%, recovering its 4q2019 Pre-Pandemic Peak by 0.98%. First-Quarter 2021 GDP Implicit Price Deflator inflation held at a 31-year high, with upwardly revised annualized quarterly inflation of 4.29% [previously 4.07%]. Adjusted for the effects of understated inflation used in deflating the GDP, annualized 1q2021 ShadowStats Corrected Real GDP growth was 4.24%, holding shy of recovering its 4q2019 Pre-Pandemic Peak by 3.36% (-3.36%). Expanded detail and graphs follow in No. 1460b.
(May 27) Real April 2021 New Orders for Durable Goods declined by 1.6% (-1.6%) in the month, subsequent to the major downside benchmark revisions to prior history reported May 14th (Census, see the May 31 paragraph above). Against Pandemic-collapsed April 2020 activity, April 2021 Real New Orders gained 45.0%, yet they were up by just 1.9% against the February 2020 pre-Pandemic peak, and they were down by 8.6% (-8.6%) measured with a two-year stacked change (against April 2019), as commonly used with the Cass Freight Index® (see the discussion in No. 1459 on Pandemic disrupted annual growth). Net of a renewed monthly surge in Commercial Aircraft Orders, April 2021 Real New Orders declined by 2.1% (-2.1%) in the month, having gained by 1.5% in March. Expanded detail and graphs follow in No. 1460b.
• S Y S T E M I C .. R I S K -- The June 2021 FOMC Meeting produced some upside revisions to Inflation and GDP forecasts, but nothing that altered near-term Policy or the broad Systemic Outlook (June 16th, Federal Reserve Board’s Federal Open Market Committee [FOMC] Statement and Federal Reserve Chairman Jerome S. Powell’s Press Conference). Other than shifting near-term forecasts (current year) on inflation to match what already has happened, little of substance came out of the June FOMC. Where the Fed has problems forecasting circumstances one quarter ahead, shifting the outlook for raising interest rates two years from now (as they did raising the predicted targeted Fed Funds rate in 2023) is nonsensical. That outlook likely will flip in the other direction, come the September 2021 FOMC, when the unfolding renewed economic crash has begun to savage near-term headline activity. Of substance, existing stimulus and federal funds rate policies are expected to continue into the foreseeable future.
The June 16th Federal Reserve Press Release reconfirmed, once again, with updated language only of “inflation having run” instead of the prior “inflation running”: “The Committee [FOMC] seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation having run persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved.”
(May 26) MONEY SUPPLY -- April 2021 Money Supply and Monetary Base growth continued to explode (Federal Reserve Board – FRB, ShadowStats). April 2021 Money Supply details have been posted on the ALTERNATE DATA TAB (linked above). Where the Pandemic hit the U.S. economy and financial system hard in March and April 2020, the Federal Reserve responded with massive expansion of the Money Supply -- Systemic Liquidity. Accordingly, comparative year-to-year change in the various March and April 2021 Money Supply measures against the heavily spiked year-ago activity tend to be depressed, against what otherwise would be the change versus the February 2020 Pre-Pandemic trough, before the emergency liquidity surge. Background definitions and related detailed discussion, historical data and graphs for each of the Money Supply Series were covered in Benchmark Commentary No. 1459, with updated details pending in No. 1460b.
Here is how the April 2021 Money Supply numbers shape up. ShadowStats “Basic M1” (Currency plus Demand Deposits) gained a depressed 53.7% year-to-year in April 2021, versus 62.3% in March 2021 and 69.8% February 2021. Yet, against the February 2020 Pre-Pandemic Trough, April 2021 gained 73.7%, versus an upwardly record 73.8% in March 2021, and against 69.8% annual growth in February 2021.
In like manner for the broader Money Supply measures, April 2021 activity versus the February 2020 Pre-Pandemic trough for the newly redefined headline M1 was up by a record, albeit inconsistent, 370.1%, versus 364.2% in March 2021 and 357.2% in February 2021 [or by 35.8%, versus 34.1% and 32.1% on what will be a more definitionally consistent reporting basis, going forward to May 2021 reporting, against what was the May 2020 redefined series]. Separately, M2 was up by a record 30.0% in April 2021, versus 28.7% in March and 27.1% in February, against the Pre-Pandemic Trough. Also against the Trough, ShadowStats Ongoing M3 Estimate was up by 24.7% in April 2021, versus 23.7% in March and 22.7% in February. The flight of cash to relatively greater liquidity appears to continue.
(Updated June 12) March and April 2021 Monetary Base Growth Continued to Explode (FRB). Moving on a parallel basis with the Money Supply, although not hitting the record annual growth levels of the 2007-2008 Banking System Collapse, annual growth in the Monetary Base continued to explode through April 2021 up by 74.0% from its February 2020 Pre-Pandemic trough, versus a parallel gain of 69.0% in March 2021. Currency in Circulation hit a record high of 19.9% in April, up from 17.8% in March and 16.9% in February, with Reserve Balances at Federal Reserve Banks surging to 134.6% in April, versus 124.6% in March and 101.9% in February, as though it were the 2007-2008 collapse, once again. Preliminary Monetary Base activity for May 2021 and early trends in June, follow in No. 1460b. There remain intensifying signals of Banking-System stress in these numbers.
(April 6) U.S. Government 2020 Financial Statements. -- The deepening deficit net worth of the U.S. Government’s financial condition hit a record shortfall – negative net worth – of $113.8 trillion in fiscal year 2020 (year-ended September 30), widening from a $103.4 trillion negative net worth in 2019. That 2020 shortfall reflected an operating deficit “Net Position” or operating negative net worth of $26.8 trillion in 2020, widening from a Net Position deficit of $23.0 trillion in 2019, plus deepening unfunded Social Security and Medicare net liabilities (Closed Group) of $87.0 trillion in 2020, versus $80.4 trillion in 2019. As did her predecessors, Treasury Secretary Janet L. Yellen described the current “Fiscal Path” as “Unsustainable,” with the government’s current Debt-to-GDP ratio at 100% in 2020, predicted to go to 623% before the end of the Century. Those indications are overly optimistic in the extreme. Allowing for the “Unfunded” Liabilities, the Debt-to GDP ratio was 531% in fiscal 2020. The 2020 Financial Report is available here: https://www.fiscal.treasury.gov/reports-statements/financial-report/ -- ShadowsStats will provide extended analysis in the pending Benchmark Commentary.
Systemic Turmoil is just beginning, with both the Fed and U.S. Government driving uncontrolled U.S. dollar creation, between unconstrained Money Supply growth and uncontained Deficit Spending. Again, continued extraordinary Monetary and Fiscal Stimulus will be needed at least into 2022, irrespective of the nature of the COVID-19 vaccines. Indeed, likely leading into accelerating inflation, Hyperinflation, both extreme Monetary and Fiscal stimuli are underway. Discussions on the inflation threat and re-accelerating money growth are found in Special Hyperinflation Commentary, Issue No. 1438, subsequent missives including particularly No. 1451 and No. 1454, with a fully updated and expanded review pending in the Benchmark Economic Commentary.
Economic, FOMC, financial-market, political and social circumstances all continue to evolve along with the Pandemic and unfolding political circumstances. COVID-19 vaccines and improved treatment hold out some prospect of limited economic improvement in 2021 or 2022. Still, many segments and regions of the U.S. economy, and individual, personal circumstances have suffered severe structural damage from the shutdown, areas that likely will take years to recover fully. Accordingly, ongoing massive Fiscal and Monetary Stimuli will be needed and likely will expand well into 2023, per both the current FOMC outlook and the ongoing ShadowStats assessment.
SHADOWSTATS ALERT: In context of the still-evolving Coronavirus Pandemic and related or economic crises, near-term financial-market risks from negative economic, liquidity and political issues, are intensified by potential Hyperinflation, long viewed by ShadowStats as the ultimate fate of the U.S. Dollar. That said, irrespective of recent relative weakness in gold prices and related Central Bank or other market machinations, the ShadowStats broad outlook in the weeks and months ahead remains 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 selling pressure on the U.S. dollar, against the Swiss Franc and other stronger currencies, and (4) Despite recent extreme Stock Market volatility, continuing high risk of major instabilities and heavy stock-market selling, complicated by ongoing direct, supportive market interventions arranged by the U.S. Treasury Secretary, as head of the President's Working Group on Financial Markets (a.k.a. the “Plunge Protection Team”), or as otherwise gamed by the FOMC.
• P O S T I N G .. S C H E D U L E .. (Updated June 18th, Subject to Change) –- Commentary sequence has been flipped, with Flash Commentary No. 1460b reviewing the FOMC Meeting, related issues and Financial Market reactions, all posting on Saturday (June 19th). Full Economic Commentary No. 1460c then will post early next week, with a comprehensive Economic Review. ShadowStats.com reporting schedule remains fluid, with actual postings advised to Subscribers by a coincident e-mail, along with appropriate links.
PENDING ECONOMIC NUMBERS: On Tuesday, June 22nd, the Federal Reserve Board will publish May 2021 Money Supply Numbers (scheduled for 1:00 pm EDT). ShadowStats coverage here will be late day..
• ARCHIVES - VIEWING EARLIER COMMENTARIES. ShadowStats postings of February 2021 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.
• ALTERNATE DATA TAB provides the latest headline data, exclusive ShadowStats Alternate Estimates and related Graphs of Inflation, GDP, Unemployment, Money Supply and the ShadowStats Financial-Weighted U.S. Dollar. Data downloads and the Inflation Calculator are subscriber only.
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Some Biographical & Additional Background Information
Walter J. "John" Williams was born in 1949. He received an A.B. 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. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies.
Although I am known formally as Walter J. Williams, my friends call me “John.” For 30 years, I have been a private consulting economist and, out of necessity, had to become a specialist in government economic reporting.
One of my early clients was a large manufacturer of commercial airplanes, who had developed an econometric model for predicting revenue passenger miles. The level of revenue passenger miles was their primary sales forecasting tool, and the model was heavily dependent on the GNP (now GDP) as reported by the Department of Commerce. Suddenly, their model stopped working, and they asked me if I could fix it. I realized the GNP numbers were faulty, corrected them for my client (official reporting was similarly revised a couple of years later) and the model worked again, at least for a while, until GNP methodological changes eventually made the underlying data worthless.
That began a lengthy process of exploring the history and nature of economic reporting and in interviewing key people involved in the process from the early days of government reporting through the present. 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.
Nonetheless, the quality of government reporting has deteriorated sharply in the last couple of decades. 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.
Over the decades, well in excess of 1,000 presentations have been given on the economic outlook, or on approaches to analyzing economic data, to clients—large and small—including talks with members of the business, banking, government, press, academic, brokerage and investment communities. I also have provided testimony before Congress (details here).
An old friend—the late-Doug Gillespie—asked me some years back to write a series of articles on the quality of government statistics. The response to those writings (the Primer Series available at the top-center of this page) was so strong that we started ShadowStats.com (Shadow Government Statistics) in 2004. The newsletter is published as part of my economic consulting services. — John Williams
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