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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 Subscription required 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 Subscription required 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 Subscription required 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 Subscription required 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 ...
Flash Commentary No. 1442 Subscription required July 9th, 2020
• Soaring Gold and Silver Prices Reflect Intensifying Investor Concerns for Inflation Risk and Systemic Instabilities • Rising Gold Prices Suggest Central Banks and Treasury Departments Are Not Doing Their Jobs; Any Related Market-Dampening Interventions Should Prove to Be Short-Lived • Annual Growth in June 2020 Money Supply Measures Set Record Highs; Consider That June Money Supply M1 Year-to-Year Growth Hit 37% • June 2020 Financial-Weighted U.S. Dollar Just Turned Negative Year-to-Year • July 30th Second-Quarter 2020 Gross Domestic Product Initial Reporting Should Show Unprecedented, Annualized Real Contraction of About 50% (-50%) • Consensus Forecasts Are Centering on a More-Modest Record Plunge of 35% (-35%), Yet, Bottom Bouncing Headlines for Some April and May Numbers Were Not Reliable • June and July Reopening Instabilities Threaten Hopes for a Meaningful, Nascent Upturn; Protracted Recovery Likely Will Be L-Shaped, Not V-Shaped • First Full Second-Quarter 2020 Headline Reporting: Household Survey Employed Plunged at an Annualized Quarterly Pace of 49.1% (-49.1%), as Corrected by the Bureau of Labor Statistics for Continuing Misclassification Errors • May 2020 U.S. Trade Deficit Deepened Sharply, Signaling Second-Quarter GDP Trouble • Both Collapsing May Exports and Imports Signaled a Collapsing Global Economy  More ...
Special Commentary No. 1441 Subscription required June 24th, 2020
• U.S. Economic Activity Was Faltering Before the Pandemic-Driven Collapse • Pre-Pandemic Economic Troubles Were Driven Primarily by Intensifying Federal Reserve Policy Malfeasance • March 2020 Economic Numbers Took the Initial Hit of the Pandemic Shutdown, Pulling First-Quarter 2020 GDP into an Annualized 5.0% (-5.0%) Contraction • April 2020 Saw the Worst-Ever Monthly Collapses in Industrial Production, Nonresidential Construction, Payrolls and Retail Sales • May 2020 Saw Dead-Cat Bounces in Monthly Production and Construction, Some Bottom-Bouncing in Payrolls and Rebounding Retail Sales; the Latter Two Series of Questionable Reporting Quality • In Its 18th Straight Month of Annual Decline, the May 2020 Cass Freight Index? Notched Lower, Closing in on Its Record Trough of the Great Recession • Second Year of Federal Reserve Reporting Delays Look to Exclude Long Overdue, Pre-Pandemic Downside Revisions to Industrial Production from the July 30th Second-Quarter 2020 GDP Estimate and Annual Benchmark Revisions • All Considered, Initial Second-Quarter 2020 Real GDP Holds on Track for the Deepest-Ever Annualized Quarterly Contraction, Down by Roughly 50% (-50%) • Protracted Recovery Likely Will Be L-Shaped, Not V-Shaped  More ...
Flash Commentary No. 1440 Subscription required June 13th, 2020
• June FOMC Outlook: Deepening Near-Term Economic Collapse, Protracted Recovery • Unlimited Money Creation and 0.00% to 0.25% Fed Funds Promised for Foreseeable Future • May 2020 Money Supply M1, M2 and M3 Annual Growth Rates Accelerated to Record Highs • Additional Explosive U.S. Government Deficit Spending and Debt Expansion Likely Follow • Early Inflation-Danger Signal: Monthly May Producer Price Inflation for Goods Spiked at a Record Pace, Reflecting Shortage-Induced 44% Surge in Meat Prices • Fed Chairman Powell Confirmed Second-Quarter 2020 Real Gross Domestic Product Likely Will Show Its Deepest Quarterly Contraction in History • ShadowStats Forecast for Second-Quarter 2020 Real GDP Contraction Remains Order of Magnitude 50% (-50%) Annualized Quarter/Quarter, 16% (-16%) Year/Year • Third- and Fourth-Quarter GDP Could See Some Bottom Bouncing, Depending on the Magnitude and Success of Reopening Efforts • Federal Reserve Board Members Forecast Fourth-Quarter 2020 Real GDP Annual Decline of 6.5% (-6.5%), Worst in Modern Quarterly Reporting, Other Than for Likely Deeper, Intervening Second- and Third-Quarter Annual Contractions  More ...
Flash Commentary No. 1439 Subscription required June 9th, 2020
• May 2020 Payroll Gain and Unemployment Drop Were Not Credible • Extreme Pandemic-Shutdown Disruptions to Labor Market Conditions, and Surveying of Same, Heavily Distorted Bureau of Labor Statistics Reporting • Headline Employment and Economic Bottom Bouncing Likely Are Still a Month or Two Away • Second-Quarter 2020 Real Gross Domestic Product Remains on Track for Its Deepest Ever Annualized Contraction, Order of Magnitude 50% (-50%) • Third- and Fourth-Quarter GDP Could See Some Bottom Bouncing, Depending on the Magnitude and Success of Reopening Efforts • Recession Began Fourth-Quarter 2019, per the National Bureau of Economic Research, Recovery - Regaining the Pre-Recession Peak - Could Take Years, per ShadowStats • FOMC June 10 Press Conference: Fed Funds Likely Will Hold at 0.00% to 0.25%; Economic Forecasts Probably Will Not Be Overly Optimistic  More ...
Special Commentary No. 1438 June 3rd, 2020
• Entire Economic Expansion Since the Great Recession Is at Risk of Collapse • Driven by the Pandemic, U.S. Economic Plunge and Financial Market Turmoil Are Accompanied by Rapidly Mounting Risk of a Hyperinflationary Systemic Implosion • The Fed Is Creating Unlimited Money, Liquidity and Bailouts, With the Federal Government Embarking on Unlimited Deficit Spending and Bailouts • Annual Growth in Money Supply M1, M2 and the ShadowStats M3-Continuation Jumped to Historic Highs in April 2020, With Accelerating Expansion in Early-May • Ratio of Collapsing GDP to Exploding Federal Deficit and Debt Shows Historic Low Ability of the U.S. Economy to Cover U.S. Government Obligations • GDP Inventory Changes Suggest Developing Shortages; Infinite Money Creation Chasing Too Few Goods Can Trigger Early, Rapid and Meaningful Inflation, As Seen Already With Meat and Other Foods • Headline CPI-U Inflation in the United States from 1970, the Last Year of the Gold-Backed U.S. Dollar, to Date Has Been 561% • Corrected for U.S. Government Understatement of the CPI-U ShadowStats Alternate CPI Inflation (1970 to Date) Has Been 4,257% • Increase in the U.S. Dollar Price of Gold (1970 to Date) Has Been 4,314% • Gold and Silver Prices Remain the Canary in the Coal Mine of Hyperinflation  More ...

DAILY UPDATE (September 8th to 10th) – Flash Commentary, Issue No. 1447 Has Been Posted -- Next Publication: September 12th Weekend - Flash Commentary, Issue No. 1448. Pending Data: September 10th/ 11th – August 2020 Producer/ Consumer Price Indices

? G E N E R A L .. H E A D L I N E S .. - Pandemic-Driven U.S. Economic Collapse Faces Protracted “L”-Shaped Recovery

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

- With 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.

? L A T E S T .. August 2020 Payrolls Continued to Show an Unfolding “L”-Shaped Economic Recovery, With the Headline Unemployment Rate Understated for the Sixth Straight Month (September 4th, Bureau of Labor Statistics - BLS). Meaningful quality and credibility issues continue to plague the “improving” headline labor numbers. The August 19th preliminary annual downside benchmark revision of 173,000 (-173,000) to March 2020 payrolls (see No. 1446) will not be adjusted into headline monthly reporting until February 2021. While August Payrolls gained month-to-month for the fourth month, the monthly slowing in annual decline is taking on the form of an “L”-shaped recovery. Year-to-year payrolls declined into an initial April 2020 trough of 13.4% (-13.4%), narrowing to 11.7% (-11.7%) in May, but have begun to flatten out at 8.7% (-8.7%), 7.7% (-7.7%), and 7.0% (-7.0%) in June through August. Similar patterns in industry payrolls ranging from Retail Sales and Construction to Manufacturing suggest a slowing pace of economic recovery.

The BLS acknowledged that continued misclassification of “unemployed” persons as “employed” persons in the Household Survey might have reduced a potential headline July U.3 unemployment rate of 9.1% to the headline 8.4%. Whatever the difference, official headline unemployment was understated meaningfully for the sixth straight month, due to survey “misclassifications.” Headline U.3 unemployment dropped to 8.42% in August, from 10.22% in July, headline August U.6 declined to 14.24% from 16.53%, with the headline August ShadowStats Alternate Measure, on top of U.6, at 28.0%, down from 30.0%, as graphed and detailed on the ALTERNATE DATA tab, linked above. See No. 1447.

(September 3} Deliberately Misleading Headline 130,000 (-130,000) Drop in New Claims for Unemployment Insurance –- Consistent Reporting Would Have Shown a Small Increase (September 3rd, Department of Labor - DOL). Detailed in ShadowStats Special Economic Commentary No. 1446, the DOL announced last week (confirmed with the September 3rd Press Release) that it had changed the Seasonal Adjustment Methodology from one week to the next, without providing a consistent, revised historical series for context [not available until January 2021].

Consider that year-to-year change in both the consistently reported seasonally-adjusted and unadjusted (not revised) series always have run neck and neck. The DOL announced a seasonally-adjusted weekly decline [new definition] in New Claims for the week-ended August 29th of 130,000 (-130,000), with no discussion of the week-to-week comparability issues. ShadowStats estimated (No. 1446) that the change in methodology, by itself, would reduce those revamped headline New Claims from the now non-comparable numbers of the prior week, by about 140,000 (-140,000). Not seasonally adjusted (which was not revised), the August 22nd year to year-changes were an adjusted 3.67%, unadjusted 3.70%, where the August 29th adjusted (revised) dropped to 3.02%, with the unadjusted (not revised) held at 3.64%. Although the DOL has been open about making the changes, albeit with just one week’s notice, it did not discuss inconsistency issues for the break in the adjusted data (unadjusted data were not affected) in its Press Release. As presented, the September 3rd headline reporting effectively was a fraud against the data-consuming public. An early story in the financial press touted the headline decline as taking claims to a post-shutdown low, where a revised, corrected story followed in short order (see No. 1447).

(September 3) The July 2020 Trade Deficit Widened Sharply, Unexpectedly, Likely Taking a Notch Out of Third-Quarter GDP Expectations (Census, Bureau of Economic Analysis - BEA). The U.S. Trade Deficit widened by $10.1 billion in July, to $63.6 billion, up from a revised $53.5 billion (initially $50.7 billion) in June. Surging imports of automobiles from Canada were a factor. Net of inflation, the real Merchandise Trade Deficit widened sharply in July, putting 3q2020 on track for an annualized $1.086 trillion deficit, versus a revised $987.6 [previously $990.3] trillion in 2q2020. Such should dampen the consensus outlook a bit for 3q2020 GDP growth (see No. 1447).

(September 1) On Top of Upside Revisions to May and June Activity, Nominal July 2020 Construction Spending Gained 0.1% in the Month [Up 0.7% Net of Revisions] and Was Down by 0.1% (-0.1%) Year-to-Year (Census). In real terms, net of related inflation, total Construction Spending declined by 0.5% (-0.5%) in the month, down by 2.2% (-2.2%) year-to-year, broadly consistent with the annual decline of 4.3% (-4.3%) in July 2020 Construction Payroll Employment, and consistent with something less than an “L”-shaped post-Pandemic shutdown recovery. The dominant positive component in July activity was Residential Construction, up by a nominal 2.1% in the month (up 2.4% net of revisions). Expanded detail in No. 1446.

(August 27) Record Collapse in Second-Quarter 2020 GDP Eased Minimally in Revision, With Even-Weaker Initial GDI and GNP Reporting (Bureau of Economic Analysis - BEA). Annualized Second-Quarter 2020 Real Gross Domestic Product (GDP) -- broadest measure of the U.S. economy –- showed a revised collapse of 31.70% (-31.70%) [previously 32.90% (-32.90%], with a revised annual drop of 9.14% (-9.14%) [previously 9.54% (-9.54%)]. Broader Gross National Product (GNP) [GDP net of the trade deficit in factor income (interest and dividends)] showed respective quarterly and annual declines of 34.48% (-34.48%) and 9.19% (-9.19%). Gross Domestic Income (GDI) [the income-side equivalent to the product-side GDP] showed declines of 33.09% (-33.09%) and 9.21% (-9.21%). Extended detail and discussion in No. 1446.

(August 27) Federal Reserve Chairman Powell Confirmed the FOMC Will Generate Higher Inflation for a While [Somewhat After the Fact] (Federal Reserve Board). This morning, the FOMC announced a shift in policy whereby, “following periods when [“core”] inflation has been running persistently below 2 percent [the current circumstance], appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.” Fortuitously, such policies already are in effect, having been put in place at the onset of the Pandemic-induced economic/ financial collapse. See the Inflation discussion in No. 1446.

(August 26th) Pandemic-Driven Net New Order Cancellations of $38.1 Trillion for Commercial Aircraft Since March Continue to Savage New Orders for Durable Goods (Census). Allowing for minor downside revisions to June and May activity, the nominal monthly gain of 11.2% in July New Orders was dominated again by surging (up 23.8%) orders for Motor Vehicles, which have recovered pre-Pandemic levels. Yet, another -- albeit narrowed -- monthly $5.8 billion in cancelled July Commercial Aircraft Orders (June cancellations were $10.5 billion) took the aggregate Pandemic-driven losses in that industry to $38.1 billion since March. Net of inflation, aggregate Real New Orders gained 11.0% in July, but were down 6.7% (-6.7) year-to-year; Ex-Commercial Aircraft, July Real New Orders gained 8.4% in the month, down 0.2% (-0.2%) year-to-year. See expanded detail on this and other recent reporting in No. 1446.

(August 25, 21) On Top of Upside Revisions, a Statistically Worthless 13.9% Jump in July 2020 New-Home Sales (NHS) Extended Its Recovery into a Second Month, While Existing-Home Sales (EHS) Surged 24.7% in the Month, Achieving Initial Recovery of Its Pre-Pandemic Levels (NHS - Census / EHS - National Association of Realtors? [NAR] at – see the NAR Press Release). In context of unusually extreme monthly gyrations and massive revisions, the July 2020 New-Home Sales (Census) monthly gain of 13.9% (on top an upwardly revised 38.8% gain off its April trough) was not statistically meaningful at the 90% confidence interval, although its 36.3% annual gain was enough to indicate that year-to-year change likely was positive. Having recovered its pre-Pandemic levels, NHS still held shy by 35.1% (-35.1%) of ever recovering its pre-Great Recession peak activity. July 2020 Existing-Home Sales (NAR) jumped 24.7% in the month, on top of a 20.7% June gain off its May trough, turning positive year-to-year in July by 8.7%.

(August 19) July 2020 Cass Freight Index? Held in Deep Annual Contraction, Consistent With Bottom–Bouncing Manufacturing, but Running Increasingly Counter to “Booming” Retail Sales (, see detail at The year-to-year annual decline of 13.1% (-13.1%) in the July 2020 Cass Freight Index? remained deep in Pandemic-driven recession territory, having moved off its 17.8% (-17.8%) drop in June, and the near-record 23.6% (-23.6%) contraction in May, which held shy of the April 2009 Great Recession trough record plunge of 25.0% (-25.0%). The Cass Index’s consecutive monthly year-to-year declines and deepening month-to-month declines in the 12-month trailing average held in place for the 20th straight month. Those year-to-year and 12-month-moving-average metrics neutralize seasonality in this unadjusted series. 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.

(August 18) Wildly Volatile July 2020 New Residential Construction Growth Exploded on Top of Major Upside Revisions (Census). In context of regular extreme and nonsense monthly volatility, July Building Permits and Housing Starts respectively showed statistically meaningful monthly gains of 18.8% and 22.6%, against upwardly revised monthly June gains of 3.5% (previously 2.1%) and 17.5% (previously 17.3%). The June Housing Starts gain was on top of an upwardly revised 11.1% (previously 9.2%). Where the monthly gains were heaviest in the Multiple-Unit categories (i.e. 56.7% growth in five units or more Building Permits), those gains were not meaningful at the 95% confidence interval. Both the July Permits and Starts held shy of ever recovering their pre-Great Recession peak levels, respectively by 33.9% (-33.9%) and 34.2% (-34.2%).

(August 13) July 2020 Industrial Production Reflected Pandemic Disrupted Data, Collapsing Oil Production and an Unfolding “L”-Shaped Recovery in the Dominant Manufacturing Sector (Consistent with Underlying Payrolls) (Federal Reserve Board – FRB). The headline July 2020 monthly aggregate Production gain of 3.03% was 2.78%, net of revisions, very specifically, to the Mining sector, which showed a headline 0.83% gain in the month, but was down by 2.28% (-2.28%), net of a 3.43% (-3.43%) downside revision to June activity and earlier (likely catching up with Pandemic-disrupted surveying). Noted by the issuing FRB, “... a downward revision to crude oil extraction in May left the utilization rates for mining in May, June and July lower than any previous rates in the history of the series (since 1967).” In the context of a minimal 0.08% upside revision to the dominant Manufacturing sector, which gained a headline 3.37% in the month, and a 0.98% upside revision to the randomly volatile Utilities (up by 3.28% for the month), Industrial Production fell year-to-year by 8.18% (-8.18%), with Manufacturing down by 7.72% (-7.72%), Mining down by 16.97% (-16.97%) and with the random Utilities number gaining 0.56%. Those numbers broadly were in line with ongoing annual contractions in the underlying employment numbers. See general discussion in No. 1445 and No. 1446.

(August 13) Running Counter to a Continuing Collapse in Related Payrolls and Freight Activity, Fully Recovered July 2020 Retail Sales Were Increasingly Not-Credible; Unexpected Headline Monthly “Weakness” Was Due Only to Upside Revisions to the June Numbers (Census). Nonsense monthly reporting continued for headline Retail Sales, where both the nominal and the inflation-adjusted real Series hit record highs in July 2020, fully recovered from the Pandemic driven economic collapse. Headline July 2020 sales gained a nominal 1.24% (2.22% net of revisions) in the month, 2.74% year-year, gaining in real terms 0.65% (1.63% net of revisions) in the month and 1.69% year-to-year. The problem here is that these numbers run counter to related annual contractions in underlying payrolls, even when adjusted for a Pandemic driven shift in activity to “online retailers.” Year-to-year change in the underlying Retail Trade and Leisure and Hospitality sector payrolls dropped by 15.3% (-15.3%) in July 2020, slightly narrowed from 17.9% (-17.9%) in June. Issues with Retail Sales reporting are explored in No. 1446.

(August 12) Inflation Pressures Continue to Mount, With July 2020 Consumer Price Index (CPI) Increasing 0.6% Month-to-Month, Double Market Expectations; Core CPI Hit 29-Year Monthly High of 0.6% (BLS). Headline CPI-U jumped 0.6% for the second straight month (by 0.59% in July, by 0.57% in June), up at an annualized pace of 7.1%. “Core” inflation also gained 0.62% in the month, the highest since January 1991, counter to what the FOMC would hope for in stable, normal times. Headline annual CPI-U growth still is subpar at 1.03%, but the dominating annual decline from energy prices, post oil-price war continues to shrink, although still meaningful, now down just 11.16% (-11.16%) year-to-year.

July 2020 ShadowStats Alternate CPI (1980 Base) Rose to 8.6% Year-to-Year, from 8.3% in June and 7.7% in May. The ShadowStats estimate restates current headline inflation so as to reverse the government’s inflation-reducing gimmicks of recent decades. Related graphs and methodology are available to all on the ALTERNATE DATA tab above, also accessible by clicking on the mini-graph below. 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 Crashes Should Intensify, Moving Towards a Hyperinflationary Economic Collapse. Economic, FOMC, financial-market, political and social circumstances continue to evolve along with the Pandemic, but the broad outlook has not changed. The July FOMC reconfirmed its extraordinarily expansive, accommodative money policies, and its Fed Funds targeted rate of 0.00% to 0.25%, will continue for the duration of the Pandemic-driven economic collapse. Systemic turmoil is just beginning, with the Fed and U.S. Government driving uncontrolled U.S. dollar creation, with annual Money Supply growth soaring to successive record highs (see the ALTERNATE DATA TAB and extended discussion in Special Hyperinflation Commentary, Issue No. 1438, 1440, 1442, and 1444. Discussed in No. 1446, the FOMC has opted to increase its targeted “core” inflation rate).

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 [irrespective of the August 11th sell-off], (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 August 2020 Producer Price (PPI)and the Consumer Price Indices (CPI) will be published by the Bureau of Labor Statistics respectively on September 10th and 11th at 8:30 a.m. ET. ShadowStats coverage should post by 11:30 a.m. ET on both dates.

SHADOWSTATS COMMENTARIES: Subject to Change – Flash Economic Commentary, Issue No. 1448 will follow over the September 12th weekend, reviewing August 2020 Money Supply, and CPI and PPI inflation. Commentary postings are advised to Subscribers by e-mail, along with appropriate links.

? ARCHIVES - VIEWING EARLIER COMMENTARIES. ShadowStats postings of June 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.

Best Wishes -- John Williams

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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 (Shadow Government Statistics) in 2004.  The newsletter is published as part of my economic consulting services. — John Williams


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