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• G E N E R A L .. H E A D L I N E S .. - Pandemic-Driven U.S. Economic Collapse Continues in a Hardening, Protracted “L”-Shaped Recovery

- Severe Systemic Structural Damage from the Shutdown Will Forestall Meaningful Economic Rebound Into 2022 or Beyond, Irrespective of Coronavirus Treatments and Vaccines

- Panicked, Unlimited Federal Reserve Money Creation and Federal Government Deficit Spending Continue and Will Expand, Triggering Major Domestic Inflation

- With Fundamental Dollar Debasement Intensifying, Holding Physical Gold and Silver Protects the Purchasing Power of One’s Assets

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.

• E L E C T I O N .. (Updated November 30th) Where the non-authoritative U.S. news media declared Joseph Biden to be President-Elect, about mid-day New York time, on November 7th, following the November 3rd Election, Mr. Biden happily acknowledged same and addressed the Nation that evening. Yet, President Donald Trump did not concede and has launched legal challenges, claiming election fraud. Republicans have serious and meaningful issues with the Election “results” in a number of key states. The President’s defense team continues to pursue the matter in the courts. While the President has allowed transition moves, he is not looking to concede. As the legal actions advance to the Supreme Court, keep in mind that the financial markets do not like uncertainty and likely would provide an early signal of shifting sentiment. Republicans still are expected to retain control of the U.S. Senate, but such will not be determined until the January Georgia run-off elections. Democrats have retained control of the U.S. House of Representatives, but with a reduced majority. Extended analysis of election-related impact, implications of COVID-19 developments and related financial-market risks are discussed in Flash Commentary No. 1451, No. 1452 the SYSTEMIC RISK section and pending Special Benchmark Commentary No. 1454.

• L A T E S T .. N U M B E R S .. Aggregate Nominal October 2020 Construction Spending gained 3.7% in the year, 1.3% in the month, on top of upside revisions to the booming Private Residential Construction sector in August and September. (December 1st, Census Bureau). In a repeating monthly pattern, aggregate October Construction Spending jumped in the month, on top of major upside revisions to Private Residential Construction and minimal revisions to relatively flat month-to-month Private Nonresidential and Public Construction Spending. In real terms, net of growth in inflation, the dominant Private Residential Construction sector gained 12.3% year-to-year in October 2020, versus a revised 9.4% [previously 7.9%] gain in September, and a revised 9.0% [previously 5.3%] gain in August, with month-to-month real gains of 4.3% in October, 0.5% [previously 2.7%] in September and 6.7% (previously 3.1%) in August. Extended coverage and graphs follow in Flash Commentary No. 1453.

November 25) Major Reporting Issue: Minimally revised second estimate of Third-Quarter 2020 Gross Domestic Product (GDP) held at 33.1% annualized real quarterly growth, with the initial estimate of third-quarter Gross National Product (GNP) at 33.7%, but with Gross Domestic Income (GDI) -- theoretical GDP equivalent – only bouncing back by 25.5% (Bureau of Economic Analysis - BEA). Following annualized quarterly collapses in inflation-adjusted real GDP of 4.96% (-4.96%) in 1q2000, 31.38% (-31.38%) in 2q2020 and annualized rebound of 33.07% in 3q2020, unlikely annualized real Fourth-Quarter 2020 GDP growth of 15.2% would be needed to recover pre-Pandemic activity. The needed growth, however, would be 21.3% for the GDI, which is the theoretical income-side equivalent of the product-side GDP. Where the two series largely are surveyed independently, there clearly are some reporting-quality issues surfacing as to the scope of headline economic collapse and recovery from same. Even so, the headline GDP remains well shy of full recovery, which increasingly has turned “L”-Shaped, flattening out in negative year-to-year growth, as seen in underlying monthly data such as employment and production, through October. In constant dollars –- adjusted for inflation -- the level of Third-Quarter GDP was the lowest since First-Quarter 2018. Expanded detail follows in Nos. 1453 and 1454.

(November 25) October 2020 Nominal New Orders for Durable Goods Gained 1.3% in the Month, Boosted by Gains in Commercial Aircraft Orders, on Top of Upside Revisions to September Activity (Census Bureau). October Commercial Aircraft orders gained for the second straight month, the first net monthly gains seen in the industry since May 2020. Net of related inflation, seasonally-adjusted real aggregate New Orders gained 0.9% in the month, versus a revised 1.9% [previously 1.6%] in September, down year-to-year by 2.3% (-2.3%) in October 2020, versus a revised annual drop of 3.8% (-3.8%) [previously 4.0% (-4.0%)] in September 2020. Ex-Commercial Aircraft order activity, real New Orders gained 0.06% in the October, unchanged at 0.0% year-to-year, having declined by 0.3% (-0.3%) in the month of September, down by 1.5% (-1.5%) year-to-year (see No. 1453).

(November 25/19) Headline October 2020 New-Home Sales [NHS] held flat, near an elevated pace of one million units per month, net of the usual, nonsensically volatile monthly revisions, catching up from having troughed at a Pandemic-impaired low of 570 thousand units in April. October Existing-Home Sales [EHS] gained in the month on top of a downside revision (NHS – Census, EHS - National Association of Realtors [www.nar.realtor]). In context of continued, statistically unstable reporting, October 2020 New-Home Sales monthly activity dropped by 0.3% (-0.3%) [up by 4.2% net of revisions] against an upwardly revised 0.1% [previously down by 3.5% (-3.5%)] in September. October 2020 activity was up year-to-year by 41.5%, in its catch up activity. At present, NHS remained shy of ever recovering their pre-Great Recession peak activity by 28.1% (-28.1%). October 2020 Existing-Home Sales gained 4.3% in the month, up by 4.7% net of revisions, up by 26.6% year-to-year.

(November 19) On a Positive Note, October 2020 Cass Freight Index® Rallied 2.4% Year-to-Year, Its First Annual Gain Since November 2018, When Federal Reserve Tightening Was Strangling U.S. Economic Activity (CassInfo.com). See detail at https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/october-2020). [Updated Nov. 23] Discussed and graphed in Flash Commentary No. 1452, increasingly positive annual growth in freight activity usually signals positive economic activity. That said, the annual gain October 2020 was against an unseasonably sharp decline in October 2019. The October 2020 numbers coincided with an upturn in annual growth for Real Retail Sales, but ran counter to still-declining annual activity in Industrial Production and most other economic series (see the second and first Comments following). At the same time, the prior 12-month moving average of the Cass Freight Index® notched higher. Those year-to-year and 12-month-moving-average metrics tend to neutralize seasonality in this unadjusted series. Both measures turned negative in December 2018, when excessive FOMC tightening and rate hikes were being used to drive the U.S. economy into an economic downturn. The March 2020 Pandemic-driven economic collapse dominated and supplanted what already was an unfolding recession downturn.

Nonetheless, with both freight metrics having reversed their recession signals, circumstances suggest the Pandemic-collapsed economy is bottoming out. ShadowStats regularly follows and analyzes the Cass 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.

(November 18) October 2020 Building Permits flattened out on top of a downside revision, while Housing Starts jumped a statistically insignificant 4.9% on top of an upside revision (Census). In context of a relatively minor downside revision to September activity, October 2020 Building Permits were unchanged for the month at 0.0%. In contrast, October Housing Starts gained a statistically meaningless 4.9% in the month at the 90% confidence interval, which would have been a still statistically meaningless gain of 8.1%, net of an upside revision of 3.1% to the level of September activity, which followed a downside revision of 1.1% (-1.1%) to the previously reported level of August activity.

Where the headline level of October 2020 Building Permits has rebounded by 44.9% from its Pandemic-driven April 2020 trough, it also now stands at 0.6% above its January 2020 pre-Pandemic peak. The headline level of October 2020 Housing Starts has rebounded by 63.8% from its Pandemic-driven April 2020 trough, yet it also now stands at 5.4% (-5.4%) below its January 2020 pre-Pandemic peak. That said, both headline October 2020 Permits and Starts still hold shy of ever recovering their pre-Great Recession peak levels of activity, respectively by 31.7% (-31.7%) and 32.7% (-32.7%).

(November 17) Monthly October 2020 Industrial Production gained 1.08%, on top of upside revisions, yet it was down by 5.34% (-5.34%) year-to-year, still far from escaping the Pandemic-induced collapse, on top of the economic downturn that had been induced by excessive FOMC tightening in 2019 (Federal Reserve Board - FRB). October Production gained 1.08%, having declined by a revised 0.37% (-0.37%) [previously 0.63% (-0.63%)] in September with a gain of 0.73% [previously 0.44%] in August. Over the same period, October 2020 Production declined year-to-year by 5.34% (-5.34), September dropped 6.73% (-6.73%) [previously 7.28% (-7.28%)] with August down by 6.71% (-6.71%) [previously 7.01% (-7.01%)]. Industrial Production has been in annual decline since September 2019, for thirteen straight months. The dominant Manufacturing sector gained 0.99% for the month of October, against a revised gain of 0.07% [previously a 0.29% (-0.29%) decline] in September. In annual decline since July 2019, Manufacturing was down year-to-year by 3.90% (-3.90%) in October 2020, versus a revised 5.37% (-5.37%) [previously 5.99% (-5.99%] drop in September, all consistent with annual declines in Manufacturing payrolls. The Mining Sector was down by 0.63% (-0.63%) in the month of October, down year-to-year by 14.5% (-14.45%), its seventh straight monthly annual drop since the Oil Price War. Extended detail follows in pending Issue No. 1454.

(November 17) Heavily gamed and otherwise not credible, headline nominal October 2020 Retail Sales gained 0.3% (0.25%) in the month and 5.7% (5.68%) year-to-year, on top of upside revisions. The numbers gaming was evident where the unadjusted September 2019 data were not revised, yet the adjusted numbers were lowered for September 2019 and increased for September 2020 (Census). ShadowStats assesses Retail Sales in real terms, net of growth due to CPI-U inflation, and as otherwise calculated by the St. Louis Fed. October 2020 Real Retail Sales rose by 0.2% in month, versus 1.4% [previously 1.7%] in September and 1.0% [previously 0.2%] in August, with respective real annual growth of 4.4% in October 2020, 4.5% [previously 3.9%] in September, and 2.3% [previously 1.4%] in August.

Separately, the booming annual real growth of 4.4% in October 2020 Retail Sales was not credible against ongoing annual declines in related, and more-stable, Payroll and Production reporting. Year-to-year, related Retail Trade and Leisure and Hospitality payrolls were down by 11.6% (-11.6%) in October. Separately, Production of Consumer Goods in October was down by 0.60% (-0.60%) year-to-year, the 17th straight month of annual decline.

(November 12) October 2020 CPI Monthly Gain of 0.04% Was Constrained by a Deepening Collapse in Gasoline Prices (BLS). The October 2020 Consumer Price Index (CPI-U) gained 0.04% in month, having gained 0.20% in September, up by 1.18% year-to-year, versus 1.37% in September. A renewed, deepening crash in gasoline prices restrained Energy-sector inflation, which was up 0.14% in the month, down 9.19% (-9.19%) in the year, with gasoline prices down by 0.49% (-0.49%) in the month, down by 18.02% (-18.02%) year-to-year. Food-sector inflation gained 0.19% in the month up 3.93% year-to-year, with “Core” inflation (net of Food and Energy) up by 0.01% in the month, 1.63% year-to-year.

The October 2020 ShadowStats Alternate CPI (1980 Base) rose by 8.9% year-to-year, slowing versus 9.1% in September and 9.0% in August. A more-realistic 2021 Social Security Cost of Living Adjustment (COLA) would have been 9.0%, using ShadowStats adjustments, instead of the formal 1.3%, which was based on the headline year-to-year change in the September 2020 CPI-W. The ShadowStats Alternate CPI estimate restates current headline inflation so as to reverse the government’s inflation-reducing gimmicks of recent decades, which were designed specifically to reduce/ understate COLAs. Related graphs and methodology are available to all on the ALTERNATE DATA tab above. Subscriber-only data downloads and an Inflation Calculator also are available there.

• S Y S T E M I C .. R I S K - Ongoing Outlook: Economic and Systemic Risks continue to intensify, moving towards a Hyperinflationary Economic Collapse. Economic, FOMC, financial-market, political and social circumstances continue to evolve along with the Pandemic. Positive announcements on COVID-19 vaccines hold out prospects for some economic recovery in 2021. Still, the U.S. economy and personal finances have suffered meaningful structural damage from the shutdown, and ongoing massive Fiscal and Monetary Stimulus likely will expand well into 2021 and 2022. At his November FOMC Press Conference, Federal Reserve Chairman Jerome Powell reconfirmed that extraordinarily expansive and accommodative Monetary policies, and Fed Funds targeted at 0.00% to 0.25%, would continue for the duration of the Pandemic-driven economic collapse, and until the Fed’s “new” policy, of formally debasing the U.S. Dollar at a greater pace, shows results. Specifically, the FOMC looks for headline “Core” PCE inflation to move above what had been its formal 2.0% target, for an extended period (see No. 1449, with expanded analysis pending in No. 1454).

Full-month October 2020 Money Supply levels hit historic highs, with record annual growth in M1 and M2, all signaling intensifying inflation pressures (Updated November 30, FRB and ShadowStats, see the ALTERNATE DATA tab above for updated graphs and subscriber-only data downloads). Full-month dollar levels of key Money Supply measures hit record highs for M1, M2 and M3, with those trends continuing in November. Negligibly revised in the latest weekly update, monthly annual growth in M1 hit an historic peak of 42.26%, up from 41.00% in September, with October M2 at a record 24.17%, up from 24.13% in September. Although the ShadowStats Ongoing Estimate of M3 softened year-to-year to 22.63%, down from June’s record 24.91%, again, the dollar level of M3 also rose to a record high.

Targeted at boosting headline inflation, annual growth in the FOMC-controlled October 2020 Monetary Base eased back to 51.2% from 52.4% in September, off a near-term low of 44.2% in July, having peaked earlier at 58.7% in May 2020, as part of the Fed’s initial Pandemic monetary stimulus. Separately, unadjusted annual growth in October 2020 Currency in Circulation (part of the Monetary Base) jumped to 15.2%, its highest level since Alan Greenspan’s extraordinary Y2K precautionary cash build-up. Both measures are spiking into November.

That said, systemic turmoil is just beginning, with both the Fed and U.S. Government still driving uncontrolled U.S. dollar creation, between unconstrained Money Supply growth and uncontained Deficit Spending. Continued extraordinary Monetary and Fiscal Stimulus will be needed into 2022, irrespective of the nature of new COVID-19 vaccines and treatments, and irrespective of the next Administration. Extreme fiscal-deficit spending and stimulus, and accelerated Hyperinflation risk, likely would follow if the Democrats should gain control of both Houses of Congress and the White House, come January. See extended discussions on the inflation threat and re-accelerating money growth in Special Hyperinflation Commentary, Issue No. 1438, subsequent missives including particularly No. 1451 and pending No. 1454.

SHADOWSTATS ALERT: In context of the evolving Coronavirus Pandemic and related or exacerbating 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, the ShadowStats broad outlook in the weeks and months ahead continues for: (1) A continuing, rapidly 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 (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 S .. SHADOWSTATS CONCURRENT ANALYSES OF NEW DATA. The next major government economic releases are November 2020 Payroll Employment, November Employment and Unemployment (Bureau of Labor Statistics) and the October Trade Deficit (Census Bureau, BEA), all on Friday, December 4th at 8:30 am ET. ShadowStats analysis should post here by 1:00 pm ET, with coverage in No. 1453 over the weekend.

SHADOWSTATS COMMENTARIES: Reordered by e-mail server disruptions, Special Benchmark Commentary, Issue No. 1454 [previously 1453] will publish early next week, providing an updated broad review and ShadowStats outlook for the Economy, Inflation and Markets into 2021 and beyond. New Flash Commentary, Issue No. 1453, will follow over the weekend, covering the November labor numbers. Commentary postings are advised to Subscribers by e-mail, along with appropriate links.

• ARCHIVES - VIEWING EARLIER COMMENTARIES. ShadowStats postings of September 2020 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.