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Flash Commentary No. 1452 Subscription required November 23rd, 2020
• October 2020 Cass Freight Index® Turned Positive Year-to-Year, Gaining 2.4% Against an Unusually Sharp, Unseasonable Decline the Year Before • 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 • Where Pandemic Forced the Shutdown of the U.S. Economy in March 2020, FOMC Rate Hikes Already Had Strangled Business Activity • October Industrial Production Continued in L-Shaped Recovery, With Annual Change Flattening Out in Negative Territory • 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 • On Top of an Upside Revision, Housing Starts Gained 4.9% in the Month; This Was Not Statistically Significant at the 90% Confidence Interval • On Top of a Downside Revision, October Building Permits Monthly Change Flattened Out at a Statistically Significant 0.0%  More ...
Flash Commentary No. 1451 Subscription required November 16th, 2020
• Positive News on COVID-19 Vaccines and Treatments Rallied Stocks to Pre-Pandemic Peaks • Pandemic-Related Structural Damage to the Economy, However, Promises a Troubled Recovery, With Meaningful Fiscal and Monetary Stimulus Likely Continuing Beyond 2021 • FOMC Will Maintain Its Emergency Monetary Expansion For the Duration of the Economic Crisis, Looking to Boost Inflation • At Historic Highs, October 2020 Money Supply Continued to Surge • With Presidential Election Results Under Challenge, Political Uncertainties Can Roil the Financial Markets • Democrat Control of Both the Congress and Executive Branch Would Threaten U.S. Dollar Stability and Exacerbate Inflation Risks • October 2020 Employment Growth Continued Faltering in an L-Shaped Economic Recovery • Headline October Inflation Remained Muted by the Oil-Price War • Third-Quarter 2020 Trade Deficit Was Worst in History  More ...
Flash Commentary No. 1450 Subscription required October 31st, 2020
• Economic Rebound Continues to Falter • Advance-Estimate, Third-Quarter 2020 GDP Growth Exploded at an Unprecedented, Annualized Real Pace of 33.08% • The Third-Quarter 2020 GDP Annual Year-to-Year Decline Also Narrowed to 1.78% (-1.78%), from 9.03% (-9.03%) in Second-Quarter 2020 • Third-Quarter GDP Activity Held Well Shy of Recovery, Even Though It Rebounded Sharply from a Record Annualized 31.38% (-31.38%) Second-Quarter Plunge • The Level of Real, Inflation-Adjusted Third-Quarter GDP Was the Lowest Since First-Quarter 2018 • Unlikely Annualized Fourth-Quarter 2020 Real GDP Growth of 15.2% Still Would Be Needed for a Full Economic Recovery This Year • Instead, Key Monthly Economic Series Have Been Locking Fourth-Quarter Activity Into a Faltering, L-Shaped Recovery  More ...
Flash Commentary No. 1449 Subscription required September 16th, 2020
• Federal Reserve Will Maintain Its 0.00% to 0.25% Targeted Fed Funds Rate and “At Least” the Current Pace of Asset Purchases, For the Duration • Broad FOMC Outlook Appears Little Changed in Wake of September Meeting • Policies Will Continue Until Both Full Employment and Targeted, Prospective Inflation Running Above 2.0% Are Attained • FOMC Projections Suggest No Return to Normal Conditions Before 2024; Expectations Are for GDP Recovery of Pre-Pandemic Levels Around Fourth-Quarter 2021 • ShadowStats Conclusions: Policy Effects Will Mean a Continued Money Supply Spike, With Consumer Inflation Mounting Rapidly in the Next Six-to-Nine Months  More ...
Flash Commentary No. 1448 Subscription required September 14th, 2020
• Evolving, “L”-Shaped Economic Recovery Confirmed by Latest, Consistent Reporting of New Claims for Unemployment Insurance • August 2020 CPI and PPI Core Inflation Continued to Spike • Record Annual Money Supply Growth Foreshadows Higher Inflation • While Record Money Growth Appears to Be Topping, the Leading-Relationship Federal Reserve Monetary Base Annual Growth Is Surging Anew • Pending FOMC Could Look to Accelerate Already Record Money Supply Growth and the Pickup in Core Inflation • Broader Money Measures Should Resume Annual Expansion in September/October With Inflation Accelerating Sharply in Early 2021  More ...
Flash Commentary No. 1447 Subscription required September 8th, 2020
• Economic Rebound Continues to Falter • August 2020 Payroll and Unemployment Details Show Intensifying Flattening in the Developing L-Shaped Recovery • Year-to-Year Decline in Payrolls Has Stabilized Around 7.0% (-7.0%), a Level Last Seen When the U.S. Economy Reset After World War II • Stalling Recovery Will Generate Greater Government Spending and Federal Reserve Monetary Excesses • Developing Record Shortfall in Third-Quarter Real Trade Deficit Has Negative Implications for Third-Quarter 2020 GDP • Handling of Needed Revisions to New Unemployment Claims Rivaled Reporting Games that President Nixon Wanted to Play • Bureau of Labor Statistics Still Cannot Count the Number of Unemployed Persons, Six Months into the Pandemic  More ...
Economic Commentary No. 1446 September 2nd, 2020
• Amidst Mounting Inflation Dangers, the Weakening L-Shaped Recovery from the Pandemic-Shutdown Began to Look Even Softer in July and Early-August Reporting • Revised Second-Quarter GDP and Initial GDI and GNP Reporting Confirmed the Record Collapse, Wiping Out Five Years of Economic Growth, Resetting the Inflation-Adjusted Real U.S. GDP to Its Lowest Levels since 2014 • With the Below-Consensus, Limited Recovery Unfolding in Second-Half 2020, Real Value of the Full-Year 2020 U.S. GDP Will Be Lucky to Top That Seen in 2016 • Statistical Chicanery Surfaces Along With the L-Shaped Recovery; Department of Labor Rejiggers New Unemployment Claims for Happier, Pending Headlines, Without Providing Consistent, Restated Historical Data • Non-Recovering, L-Shaped U.S. Labor Force (Employment Plus Unemployment) Suggests Protracted Economic Collapse; 4.8 Million Unemployed Are Missing • Industrial Production and Employment Numbers Show Deepening Trouble, While Booming Retail and Home Sales Are Running Counter to Sinking Consumer Optimism and Finances • In March, the FOMC Exploded Money Supply and Inflationary Pressures to Fight the Pandemic-Driven Economic Collapse and Related Systemic Instabilities • Record Year-to-Year M1 Money Supply Growth in Early-August Topped 40% • With August Inflation Pressures Mounting, the FOMC Conveniently Has Retargeted Its Long-Standing Goal of 2% Core Inflation to the Upside • Mounting Hyperinflation Risks, Heavy Dollar Selling and Systemic Instabilities Promise New Highs Ahead for Gold and Silver Prices  More ...
Flash Economic Commentary No. 1445 August 12th, 2020
• Mounting, Fundamental Risks for Hyperinflation and Systemic Instabilities Promise New Highs for Gold and Silver Prices, Irrespective of the August 11th Sell-Offs • Historic GDP Collapse Wiped Out the Last Five Years of Economic Growth • Second-Quarter 2020 Real GDP Plunged at an Unprecedented, Albeit Consensus, Annualized Quarterly Pace of 32.9% (-32.9%), Down Year-to-Year by 9.5% (-9.5%) • Given Limited-Quality Hard Data, Has Headline Reporting Turned to the Consensus? • Benchmarked GDP Received a Boost from New Trade-Deficit Reporting Gimmicks • Nonetheless, Rebound from the Pandemic-Driven Economic Collapse Is Faltering • L-Shaped Economic Recovery Has Begun to Take Form, as July Jobs and Unemployment Improvement Decelerated, Amidst Continuing Pandemic-Disrupted Surveying and Reporting Quality Issues • Labor-Market Stress Has Intensified as Unemployment Claims Gyrate Around Still-in-Depression Levels; Fed Sees Early Indications of Renewed Pullback in Consumer Activity • U.S. Sovereign Credit Rating Rumblings Mount as Congress and the White House Negotiate a Second Round of Massive, Expanded Deficit Spending • Stalled Recovery Will Generate Even Greater Spending and Monetary Excesses • Federal Reserve Record Money Supply Expansion Continues, Despite Benchmarked Money Numbers Showing Minimally Slower Growth  More ...
Economic Commentary No, 1444 July 30th, 2020
• FOMC Continues to Hold Its Extraordinary Interest-Rate and Liquidity Policies in Place for Duration of the Pandemic-Disruption, Amidst Signs of Renewed Slowing in Economic Activity • Exploding Gold and Silver Prices, and a Weakening U.S. Dollar Are Sounding the Hyperinflation Klaxon • Major Inflation and Systemic Instabilities Lie Ahead • Reporting of Deepest-Ever GDP Decline Looms on July 30th • Annualized 49.1% (-49.1%) Quarterly Plunge in Household Survey Employed Was Consistent With a Real Second-Quarter 2020 GDP Annualized Collapse of 50% (-50%) and Year-to-Year Drop of 16.1% (-16.1%) • Potential Third-Quarter 2020 GDP Annualized 20% Rebound Still Would Be Down 12.7% (-12.7%) Year-to-Year, Rivaling Great Depression Depths and Post-World War II Readjustment • Economic Recovery Will Be Protracted • Not Credible! June Real Retail Sales Recovered Pre-Pandemic Levels, Contrary to Better-Quality Numbers; Yet Second-Quarter Real Sales Still Fell at an Annualized 24.2% (-24.2%) Pace • June Cass Freight Index® Fell 17.8% (-17.8%) Year-to-Year, Its 19th Consecutive Annual Decline • Second-Quarter Industrial Production Annualized Plunge of 42.6% (-42.6%) Was Worst Since the Post World-War II Production Readjustment  More ...
Flash Commentary No. 1443 July 23rd, 2020
• Previewing Special Economic Commentary No. 1444 • Soaring Gold and Silver Prices, and a Weakening U.S. Dollar Increasingly Foreshadow Potential Hyperinflation and Systemic Instabilities • Reporting of Deepest-Ever GDP Decline Looms on July 30th • Annualized 49.1% (-49.1%) Quarterly Plunge in Household Survey Employed Was Consistent With a Real Second-Quarter 2020 GDP Annualized Collapse of 50% (-50%) and Year-to-Year Drop of 16.1% (-16.1%) • Potential Third-Quarter 2020 GDP Annualized 20% Rebound Still Would Be Down 12.7% (-12.7%) Year-to-Year, Rivaling Great Depression Depths and Post-World War II Readjustment • Economic Recovery Will Be Protracted  More ...
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(December 2nd to December 4th)– Pending Publications: Flash and Special Benchmark Commentaries will post this weekend and next week (see the Posting Schedule). - Pending Data: November 2020 Payrolls and Unemployment, October Trade Deficit (Friday, December 4th).

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.

Best Wishes -- John Williams

Have you ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences? The problem lies in biased and often-manipulated government reporting.
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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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