Measured against its Pre-Pandemic level, 4q2022 Real GDP had gained 5.03% [previously 5.06% and 5.11%]. ET, May 23, 2023. The initial headline annualized quarterly estimate of inflation-adjusted First-Quarter 2023 Real Gross Domestic Product (GDP) showed doubly negative patterns of activity. The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. -- The University of Michigans full-month release of the April 2023 Consumer Sentiment reading held little changed at 63.5, against its initial estimate of 63.5, up from 62.0 in March 2023, holding shy by 37.1% (-37.1%)[previously by 38.6% (-38.6%) in March] of ever recovering its February 2020 pre-Pandemic peak level of 101.0. Near Record Growth of Currency in Circulation Foreshadows Inflation Risk Aside from some short-term reporting gimmicks, Payroll Employment probably still is the highest-quality economic statistic published by the U.S. Government, at present, given current data and the reporting-compromised conditions of a still-evolving Pandemic/ post-Pandemic environment. The ShadowStats-Alternate Consumer Inflation Measures were created by reverse-engineering the CPI-U-RS series, and adding in estimates of the inflation effects of factors not otherwise estimated by the BLS, such as more-frequent (two-years versus ten-years) reweighting of the CPI series. On Top of an Upside Revision, Housing Starts Gained 4.9% in the Month; This Was Not Statistically Significant at the 90% Confidence Interval The revisions did not change quarterly patterns meaningfully, but did show that broader headline activity generally had been some somewhat slower than previously estimated in the last two years [graphs were plotted in the Subscriber-only e-mail of April 14th]. Real year-to-year growth patterns were kinder to the fourth-quarter GDP, with year-to-year growth increasing from 0.88% to 1.57%, and with the gain against Pre-Pandemic Peak Activity increasing from 5.03% in 4q2022 to 5.31% in 1q2023. What are Shadow's specs? Explored in the pending Commentary, the U.S. economy is and has been much weaker than advertised, not overheating, and the soaring inflation, which is much worse than headlined, again, primarily is being driven by the Feds excessive Money and Liquidity creation, not by an overheating economy, in a policy conundrum previously noted here by ShadowStats. Commentary No. -- Headline Fourth-Quarter 2022 GDP inflation (Implicit Price Deflator [IPD}) came in at a revised third estimate of an annualized pace of 3.92% (previously 3.93% and 3.51%), against an unrevised 4.36% in 3q2022, and up by an unrevised year-to-year 6.41% (initially 6.30%), versus an unrevised 7.15% in Third-Quarter 2022, which remained at a 42-year high, outside of the recent inflation spike. 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 clientslarge and smallincluding talks with members of the business, banking, government, press, academic, brokerage and investment communities. -- Noted regularly here, New Home Sales (likely the least-reliable, least-meaningful, least-significant and most heavily revised headline series published by the Census Bureau) continued to sink year-to-year. Consider that where latest headline 4q2022 GDP was up by an increasingly tepid 0.88%, and by 5.04% against its Pre-Pandemic level, the ShadowStats Alternate was down by 1.16% (-1.16%) year-to year, and down by 1.22% (-1.33%) against its Pre-Pandemic level. Severely Negative Annual Revisions to Industrial Production Mean the Economy Was in Recession Well Before the Pandemic Hit October Industrial Production Continued in L-Shaped Recovery, With Annual Change Flattening Out in Negative Territory A similar pattern is likely with the Census Bureaus May 1st release of March 2023 nominal Construction Spending, given the activity patterns and related needed inflation-adjustments already in play. While shifting focus to the troubled banking system, FOMC hopes and activities still are concentrated on some way of triggering a Recession, again, ostensibly to help contain inflation otherwise being driven by a non-existent overheating economy, where the mounting inflation pressures primarily are due otherwise, to continuing, extreme levels of Money Supply creation. Indeed, setting up accelerating inflation or hyperinflation, current extreme Monetary and Fiscal stimuli likely will be expanded, not reduced. Go to https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/march-2023 for full detail. 1459, again, with updated and expanded details pending in the Subscriber-only e-mails and No. In the charts to the right we show two SGS-Alternate CPI estimates: One based on the pre-1990 official methodology for computing the CPI-U, and the other based on the methodology which was employed prior to 1980. March 2023 Money Supply activity reflected a continuing and intensifying 55-year record-high flight to liquidity in Basic M1 (Currency plus Demand Deposits), with Basic M1 notching higher to 35.0% of the aggregate headline Money Supply M2, its highest proportion since the same level in April 1970, a 53-year high. The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990. Holding Physical Precious Metals Remains the Best Hedge Against Coming Inflation and Market Turmoil, Deepening Economic Woes and Soaring Inflation Ahead (6) April 24th (Census Bureau). U.S. Dollar. The CPI-U (consumer price index) is the broadest measure of consumer price inflation for goods and services published by the Bureau of Labor Statistics (BLS).. The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. Data source: Quarterly Informal Economy Survey (QIES) by World Economics, London. Separately, all as measured against Pre-Pandemic Troughs, traditional M2, which has not been redefined, was up by 34.7% in March 2023, versus readings 36.4% in February 2023 and 37.3% in January, while the broadest ShadowStats Ongoing-M3 Estimate notched lower in March to 30.2%, from 31.9% in both February and January 2023. Here are the results. In summary, Shadow Stats constructed their alternative measure by taking a 5.1% difference between CPIU and CPIURS (the BLS's retroactive adjustment) and misinterpreted it as an ANNUAL difference when it was in fact a CUMULATIVE difference. He received an A.B. FOMC action looms this week, amidst signs of a tanking Economy and a serious Inflation problem. Economic Recovery Is Not as Close as Hyped by the Consensus Outlook 1461. (16) April 3rd (Census Bureau) February 2023 Real Construction Spending) - Despite the usual upside revisions to the prior two months of reporting, February 2023 Real Construction Spending showed its 17th straight month of year-to-year decline (down by 9.5% (-9.5%) from February 2022) [see Note (4)], with First-Quarter 2023 activity track for its fourth consecutive quarter-to-quarter decline, and its sixth consecutive quarterly year-to-year decline. First-Quarter 2021 GDP Remains at Risk of Relapsing into Quarterly Contraction Federal Reserve Chairman Powell: "We Are a Long Way from Full Recovery" 1454, No. Payroll-Employment Benchmark Revisions Showed a Deepening, Accelerating Decline into an April 2020 Trough, With Renewed Deterioration at Present; Recovery from the Pandemic Shutdown Has Stalled and/or Is Regressing Where January 2021 Year-to-Year Manufacturing Contracted by 1.0% (-1.0%), It Also Contracted by 1.8% (-1.8%) from January 2019, Two Years Ago Old Numbers Showed Production Peaked in December 2018 and Flattened Out, February 2020 Pre-Pandemic Peak Was 3.75% Higher Than the Pre-Great Recession Peak That said, the aggregate series quarterly sales, have been in annual decline for each of the last seven quarters, up through the current 1q2023, in an otherwise deepening housing recession. Federal Reserve Sees Continuing Need for Inflation-Boosting Monetary Stimulus, With No Economic Recovery Expected Before 2023 In the Latest Four Months, Pandemic-Driven Unemployment Has Leveled Off Around 12%, Worst Since Before World War II, Other than for the Pandemic For the Second Straight Month, Payrolls Declined Year-to-Year by 6.0% (-6.0%) The Committee remains highly attentive to inflation risks. Note also that the period of time in which the blue line departs from the CPI transformation is 2007-2009, a time in which inflation mania was at its peak. Our estimates of the tax effect . March 2023 Industrial Production, Manufacturing and Capacity Utilization showed meaningful downside benchmark revisions to previously reported activity, but continued in a third month of upturn in context of Federal Reserve regular overestimation of headline Industrial Production. Effectively fully surveyed, Permits were down by a deepening, seasonally adjusted year-to-year drop of 24.8% (-24.8%) in March 2023, against a revised, narrowed 16.5% (-16.5%) [previously a 17.9% (-17.9%) February decline]. Underlying Fundamentals Remain Extremely Strong for Gold and Silver, and Weak for the U.S. Dollar and Stocks, Despite Central Bank or Other Systemic Machinations to the Contrary, January 2021 Manufacturing Declined Year-to-Year for the 19th Consecutive Month, Still in the Downturn Induced by the FOMC 15 Months Before the Pandemic Collapse The headline March 2023 Monetary Base, jumped by 4.7% month-to-month to a seven-month high, as the FOMC fed emergency funding into Reserve Balances with Federal Reserve Banks, at a time of systemic liquidity concerns. Latest Weekly Money Supply M1 Jumped an Unprecedented 72.3% Year-to-Year and growth As repeated here frequently, raising interest rates sharply now only pummels further an already moribund economy, it does little to contain the Feds current monetary inflation problem. Walter J. The service costs $49.95 for a single month, $39.95 per month for a three-month subscription and $34.95 per month for a 12-month subscription. April 2020 Pandemic/Economic Trough Revised Lower by 5.1% (-5.1%) Public Comment on Inflation Measurement & the Chained CPI-U, Update 2016Update 2015Hyperinflation 20142014 Second InstallmentDeficit Reality. New Numbers Show Production Peaked in August 2018 and Entered Protracted Decline, February 2020 Pre-Pandemic Peak Was 1.11% (-1.11%) Below the Pre-Great Recession Peak [April 9th]. That circumstance is reviewed in pending ShadowStats Benchmark Commentary No. If you are not a Subscriber, and wish to be, see the next paragraph. An Increasing Number of Unemployed People Were Misclassified as Employed; Corrected December Unemployment Would Have Jumped, Instead of Holding at 6.7% January 2021 Producer Price Index Monthly Inflation Hit a Record, 10-Year High Negative Implications Here for the July 29th GDP Benchmarking ShadowStats will re-address these numbers at that time. Business-Cycle Conditions Are Collapsing Rapidly, Amidst an Extreme Acceleration in Inflation While the headline number usually is the seasonally-adjusted month-to-month change, the formal CPI is reported on a not-seasonally-adjusted basis, with annual inflation measured in terms . Narrowing Annual Declines in October and November Payrolls Stalled at 6.0% (-6.0%), But the Year-to-Year Drop in December 2020 Payrolls Deepened to 6.2% (-6.2%) On Top of a Downside Revision, October Building Permits Monthly Change Flattened Out at a Statistically Significant 0.0%, Analysis Behind and Beyond Government Economic Reporting, Some Biographical & Additional Background Information. Headline March 2023 CPI-U annual inflation eased to 5.0%, from 6.0% in February, again, due to the relative easing of March 2023 energy prices against the oil and gasoline price spikes triggered by the year-ago by Russian invasion of the Ukraine. Annual-Change Gyrations Are Just Beginning for Economic, Inflation, Money Supply and Financial Return Numbers, as the Pandemic-Driven Collapse Passes It First Anniversary The Federal Reserve Overhauled Its Money Supply Reporting, Redefining Traditional M1 from 34.8% to 93.4% of a Not-Redefined Total M2 Accordingly, comparative year-to-year change in the various March 2021 to March 2022 Money Supply measures against the heavily spiked year-ago activity tended to be depressed, against what otherwise would be the change versus the February 2020 Pre-Recession or Pre-Pandemic Trough (PPT), effectively the Base Circumstance, before the Pandemic emergency liquidity surge. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Holding Physical Precious Metals Remains the Best Hedge Against Developing Inflation and Financial-Market Turmoil, Pandemic-Driven Unemployment Soared to an April 2020 Peak of About 32%, Worse Than in the Great Depression; Such Was Against a January 2020 Pre-Pandemic U.3 Unemployment Rate of 3.5% 1461. 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 G E N E R A L .. H E A D L I N E S .. -- Contrary to the happy political and financial media hype, the Pandemic-driven and FOMC-exacerbated U.S. Economic Collapse continues to harden in protracted non-Recovery, amidst mounting evidence of renewed Economic Downturn and recent excessive Inflation, which is about to re-accelerate, and still vulnerable to evolving Russia-Ukraine War risks, seriously conflicted FOMC monetary policies, and extraordinarily dangerous Administration fiscal activity. 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. Where Pandemic Forced the Shutdown of the U.S. Economy in March 2020, FOMC Rate Hikes Already Had Strangled Business Activity U.S. Government 2021 Financial Statements showed the deepening deficit net worth of the U.S. Governments financial condition hit a record shortfall, or negative net worth, of $123.5 trillion in Fiscal Year 2021 (year-ended September 30), widening from a $113.8 trillion negative net worth in 2020. Consumer Inflation: Official vs ShadowStats | Chart of the Week. IMPORTANT: Commentary postings are advised directly to Subscribers by coincident e-mail, along with a direct link to the posted Commentary and any needed login detail. Contact us to discuss your needs. A fully updated Money Supply Special Report will follow. Separately, the inflation issue is complicated by independently rising gasoline prices, not by any overheating economy! FOR SUBSCRIBERS Beyond the pending monthly Commentary, graphs covering the latest numbers and most other economic, inflation and monetary detail, are available to you by e-mail, as part of your existing, regular subscription.
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