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The EU has launched an Excessive Debt Proceeding against France. It won’t stop there.

Debt Proceedings

Please note the EU Rebukes France, Italy and Others Over Excessive Debt.

The assessments of the 27 EU states’ budgets and economies will be published by the European Commission on Wednesday, with France, Italy and Belgium among the member states to be reprimanded over their accumulated excessive new debt.

The Commission said it was satisfied that “the opening of a deficit-based excessive deficit procedure is warranted” in the case of seven countries. The group also included Hungary, Malta, Poland and Slovakia.

The EU suspended debt and deficit regulations to help countries cope with the economic fallout of the COVID-19 pandemic and Russia’s invasion of Ukraine.

The rules are now back in place and now any EU country going over debt and deficit limits run the risk of legal action.

EU’s Golden Rules

According to the reformed rules, an EU member state’s debt may not exceed 60% of gross domestic product (GDP).

Highly indebted EU countries with debt levels over 90% of GDP have to reduce their debt ratio by one percentage point annually, countries

Additionally, the general government deficit — the shortfall between government revenue and spending — must be kept below 3%.

According to the commission’s economic forecast, France is at -5.5%, Italy is at -4.4% and Belgium is at -4.4% and will breach this deficit limit in 2024.

Austria, Finland, Estonia, Hungary, Malta, Poland, Romania, and Slovakia also have deficits that are too high according to the rules. Spain is at exactly -3.0%.

Snap Elections

French President Emmanuel Macron was hammered in the European Parliamentary elections as expected in this corner, and generally elsewhere.

Winners: The Far Right

Losers: Renew Europe (Macron), and the Greens.

The response by Macron caught everyone off guard. He dissolved parliament and called for snap elections.

…click on the above to read the rest of the article…

California Governor Escalates the War on Gasoline Impacting Neighboring States

May 23, 2024

California Governor Escalates the War on Gasoline Impacting Neighboring States

The War on Gasoline a Gift to Trump

The Wall Street Journal says Gavin Newsom’s War on Gasoline Is a Gift to Donald Trump.

California’s prices are the highest in the country—$5.21 a gallon on average vs. $3.59 nationwide—owing to hefty taxes and burdensome regulations, such as its cap-and-trade program and low-carbon fuel standard. Here’s the rub: California refineries supply nearly 90% of Nevada’s gasoline and half of Arizona’s.

Mr. Newsom is escalating his war on the industry. The California Energy Commission is planning to impose a tax on refineries’ “gross margins”—i.e., the difference between wholesale gasoline and crude prices plus certain regulatory costs. The gross margin notably doesn’t include refiners’ operating costs, which include employee pay.

Mr. Newsom conflates profits and gross margins. According to the commission’s data, refiners lost between 10 and 38 cents on each gallon they produced from October 2023 through February 2024, while their gross margins ranged from 56 to 79 cents a gallon. In December, California refineries lost 31 cents a gallon while the state imposed $1.15 a gallon in taxes and regulatory fees.

The price gougers in Sacramento now want to penalize drivers even more. Mr. Newsom is pushing the commission to finalize the refinery tax at the same time as the California Air Resources Board, or CARB, prepares to tighten its low-carbon fuel standard and greenhouse-gas emissions cap. These regulations add about 54 cents to the price of each gallon of gasoline. CARB’s rules will increase the cost by an estimated 88 cents a gallon in 2026 and $1.01 by 2031.

…click on the above link to read the rest of the article…

Hoot of the Day: No One Wants Green Energy if It’s Too Cheap

May 22, 2024

Hoot of the Day: No One Wants Green Energy if It’s Too Cheap

Treasury Secretary Janet Yellen wants the EU to hike tariffs on China just as the US did.

Curbs on Cheap Chinese Exports

The Guardian reports Janet Yellen urges EU to join US in curbs on cheap Chinese exports

Janet Yellen, the US treasury secretary, has urged the EU to intervene urgently to dampen the growing export levels of Chinese cut-price green technology including solar panels and wind turbines, pushing European leaders to move to a full-scale trade war.

At the same time she urged German bank executives on Tuesday to step up efforts to comply with sanctions against Russia and shut down efforts to circumvent them to avoid potential penalties themselves that could see the US cut them off from dollar access.

Her remarks, in Frankfurt, come just hours after the European Commission president, Ursula von der Leyen, gave her strongest hint yet that the EU would join the US and impose tariffs on Chinese electric vehicles after a soon-to-be completed investigation into alleged state subsidies into the automotive industry in China.

Wind turbine manufacturers in the EU have protested that Chinese rivals are undercutting them by 50% in a move that is appealing to cash-strapped state and regional authorities facing targets in reductions of greenhouse gases.

China has signaled it will retaliate against any tariffs with potential duties on French brandy, EU wine and dairy products.

Von der Leyen said Europe would take a different approach to the US. While an increase in tariffs is expected, they are unlikely to match the rate imposed by the US.

Von der Leyen told the Financial Times that China had “massive overcapacity” that was “flooding” the EU market with “artificially cheap products”.

She said she expected the investigation into alleged Chinese state subsidies launched last September and due to be finished by 5 June, to conclude there were “excessive production subsidies”.

Wind Power

…click on the above link to read the rest of the article…

Is China Dumping US Treasuries and Buying Gold? Bloomberg Says Yes, Pettis Uncertain

May 18, 2024

Is China Dumping US Treasuries and Buying Gold? Bloomberg Says Yes, Pettis Uncertain

Bloomberg reported that China is selling a record amount of US debt while buying gold. Previous reports of debt selling were false. Let’s check in with Michael Pettis at China Financial Markets for another opinion.

China Sells Record Sum of US Debt

Bloomberg reports China Sells Record Sum of US Debt Amid Signs of Diversification

China sold a record amount of Treasury and US agency bonds in the first quarter, highlighting the Asian nation’s move to diversify away from American assets as trade tensions persist.

Beijing offloaded a total of $53.3 billion of Treasuries and agency bonds combined in the first quarter, according to calculations based on the latest data from the US Department of the Treasury. Belgium, often seen as a custodian of China’s holdings, disposed of $22 billion of Treasuries during the period.

China’s investments in the US are garnering renewed investor attention amid signs that tensions between the world’s largest economies may worsen. President Joe Biden has unveiled sweeping tariff hikes on a range of Chinese imports, while his predecessor Donald Trump said he might impose a levy of more than 60% on Chinese goods if elected.

“As China is selling both despite the fact that we are closer to a Fed rate-cut cycle, there should be a clear intention of diversifying away from US dollar holdings,” said Stephen Chiu, chief Asia foreign-exchange and rates strategist at Bloomberg Intelligence. “China’s selling of US securities could speed up as US-China trade war resumes” especially if Trump returns as president, he said.

China is Buying Gold

One part of the story is not in question. That part pertains to China buying gold.

Is China Dumping US Debt?

I asked Michael Pettis that question yesterday. Pettis graciously replied with an email this morning plus a five-part Tweet.

…click on the above link to read the rest of the article…

Unsold Tesla’s Pile Up in Mall Parking Lots, Big Discounts Likely

May 17, 2024

Unsold Tesla’s Pile Up in Mall Parking Lots, Big Discounts Likely

Tesla is renting parking lots to store thousands of vehicles. This helps explain the mass layoffs.

Tesla Cranking Out Cars, But to Where?

Please consider Tesla’s Storing Unsold Inventory In An Abandoned Mall Parking Lot

Parking lots full of Tesla vehicles are becoming impossible to ignore as the electric automaker seemingly can’t sell enough cars and trucks to match its rate of production. According to its own figures, the electric automaker produced 46,561 more vehicles than it delivered to customers during the first quarter of 2024. Where are all these cars going? Parking lots at its factories, malls and airports.

Recent drone footage from the automaker’s Fremont, California factory shows that cars are still rolling off the assembly lines at a high rate to fill the site’s lots. Things aren’t different on the other side of the Atlantic. Neuhardenberg, a small town in Germany of less than 3,000 residents, is complaining about the noise Tesla transporters are making as the company parks cars at the nearby regional airport.

Spotlight Germany

From the above link …

The residents of Neuhardenberg and the surrounding communities are annoyed by the traffic noise: many trucks loaded with Tesla cars drive across the streets to the airport where the cars are stored. It should continue like this at least until June.

Around Neuhardenberg the rural peace is over: columns of trucks from the Tesla factory in Grünheide thunder across the streets several times an hour. The reason: Since last summer, the nearby regional airport has been used as a parking area for Tesla vehicles.

The contract between Tesla and the airport operator runs until June 2024. It is still unclear whether it will be extended. The people of Neuhardenberg will have to continue to adapt to the trucks.

In Preparation for Next Phase of Growth

…click on the above link to read the rest of the article…

Producer Price Inflation Has Bottomed and Is Now Heading Back Up

May 16, 2024

Producer Price Inflation Has Bottomed and Is Now Heading Back Up

Producer prices were a bit higher than expected today but negative revisions take that away. Importantly, prices appear to have bottomed.

Producer Price Index data from the BLS, chart by Mish

The BLS reports the month-over-month PPI for April was 0.5 percent vs the Bloomberg Econoday consensus o 0.3 percent.

However, the BLS revised March from +0.2 to -0.1 so the year-over-year Econoday expectation was right on the mark at 2.2 percent.

PPI Details

The Producer Price Index for final demand rose 0.5 percent in April.
Final demand prices declined 0.1 percent in March and advanced 0.6 percent in February.
On an unadjusted basis, the index for final demand moved up 2.2 percent for the 12 months ended in April, the largest increase since rising 2.3 percent for the 12 months ended April 2023.
Nearly three-quarters of the April advance in final demand prices is attributable to a 0.6-percent increase in the index for final demand services.
Prices for final demand goods moved up 0.4 percent. The index for final demand less foods, energy, and trade services moved up 0.4 percent in April after rising 0.2 percent in March.
For the 12 months ended in April, prices for final demand less foods, energy, and trade services increased 3.1 percent, the largest advance since climbing 3.4 percent for the 12 months ended April 2023.

Spotlight Services

Services have a bigger weight in the overall PPI than goods and they are rising steeper. Goods are influenced heavily by food and energy, both quite volatile.

PPI Final Demand Year-Over-Year Four Ways

PPI Year-Over-Year Details

Final Demand: 2.2%
Final Demand Goods: 1.3%
Final Demand Services: 2.7%
Final Demand Food: 0.5%
Final Demand Less Food and Energy: 2.4%

For now, food is holding down the PPI. How much longer that remains is unknowable. But the key takeaway is the strength in services. If that filters through to the CPI, the Fed will have some difficulty unless rents turn lower.

…click on the above link to read the rest of the article…

CPI Up 0.3 Percent With Rent Still Rising Steeply, Food a Bright Spot

May 16, 2024

CPI Up 0.3 Percent With Rent Still Rising Steeply, Food a Bright Spot

Rent rose another 0.4 percent in April. Food and beverages were flat with food at home declining but food away from home rising.

Bloomberg Econoday economists were correct across the board on the April CPI report. As expected, the CPI rose 0.3 percent, 0.3 percent excluding food and energy, and 3.4 percent year-over-year.

CPI Food

Food was the bright spot in April, provided you eat at home. Food at home declined 0.2 percent with food away from home rising 0.3 percent. Overall, food was unchanged.

CPI Month-Over-Month Medical Care

I added this series new this month. It is so amazingly volatile and unbelievably so. The year-over-year chart makes it easier to spot trends.

CPI Month-Over-Month Energy and Gasoline

Energy is another very volatile series. The last three months have not been good to consumers.

Month-Over-Month Synopsis

CPI: +0.3 percent
CPI excluding food and energy: +0.3 percent
Rent: +0.4 percent
Owners’ Equivalent Rent OER: +0.4 percent
Food at Home: -0.2 percent
Food Away From Home: +0.3 percent
Medical Care Commodities: +0.4 percent
Medical Care Services: +0.4 percent
Energy: +1.1 percent
Gasoline: +2.8 percent

Other than food at home, there is not that much to cheer about this month. Rent remains the killer.

Yet Another Groundhog Day for Rent

Rent of primary residence, the cost that best equates to the rent people pay, jumped another 0.4 percent in March. Rent of primary residence has gone up at least 0.4 percent for 32consecutive months!

The “rents are falling” (or soon will) projections have been based on the price of new leases and cherry picked markets. But existing leases, much more important, keep rising.

…click

CPI Year-Over-Year Percent Change Medical Care

CPI Year-Over-Year Details

The CPI is up 3.4 percent from a year ago. That’s negative progress compared to the 3.0 percent registered in June of 2023, 10 months ago.

…click on the above link to read the rest of the article…

Shocking Headline of the Day: Germany to Re-Introduce Slavery

May 14, 2024

Shocking Headline of the Day: Germany to Re-Introduce Slavery

Young Germans will have to choose between the Bundeswehr (military service) and unpaid social service work. Libertarians to a person, will call this slavery, because that is what it is.

Germany to Re-Introduce Slavery

Please consider the Eurointelligence headline story Germany to Re-Introduce Slavery

The headline might be bordering on the hysterical, but the big idea in German politics right now is to re-introduce the general draft. This is not happening because Germany expects to be at war. It is not about the military at all. Under the plans, young people, male and female, can choose between the Bundeswehr or a year of forced labour in the social services, essentially uncompensated.

The main reason we see is that their fiscal rules have depleted them with the resources to fund the Bundeswehr and critical social services like old-age care. For example, there is a big row going on right now within the coalition currently between Boris Pistorius, the defence minister, and Christian Lindner, over Pistorius’ demands for another €6bn for the Bundeswehr. The discussions on the reintroduction of the draft are at an early stage. They won’t affect the current budget dispute. But it could go some way to fix the Bundeswehr’s budget issues.

The SPD leader Lars Klingbeil sugar-coated the idea as giving young people an opportunity to serve the state at one point in their lives. Another underlying assumption is that young people are infinitely stupid. German high school goes until the age of 19. This is higher than elsewhere because German children do not start school until they are 6. With a year of enforced military or social services, they won’t start their studies or apprenticeship until they are 20…

…click on the above link to read the rest of the article…

Another Round of Mass Firings at Tesla, Sales Must Be Imploding

May 8, 2024

Another Round of Mass Firings at Tesla, Sales Must Be Imploding

Tesla announced yet another round of layoffs today. News came in the typical way, an email starting “Hello Employee”. It seems “Hello Ex-Employee” would be more fitting.

Another 10,000 Employees

Don’t worry, it’s just another 10,000 employees.

Almost Like Vaporware

Clearly this is 4-D chess … in an attempt to hide the vaporware.

Cash Constraints

It think it’s order constraints. Orders are crashing.

Question of the Day: 10% or 20%?

Electrek reports Tesla (TSLA) launches another round of layoffs

Three weeks ago, Tesla started a significant wave of layoffs. The automaker announced it was laying off about 10% of its workforce. However, we reported prior to the announcement that the layoffs could be closer to 20% of the workforce once everything is said and done.

Sure enough, Tesla had another significant wave of layoffs last week.Now, we hear of yet another round of layoffs at Tesla.Several sources familiar with the matter told Electrek that workers across several departments, including software, service, and engineering, have received the dreaded “employment level” email between Friday and Sunday.

The layoffs were expected after CEO Elon Musk made an example of Rebecca Tinucci, Tesla’s former head of charging, and her entire team by firing everyone last week. After the move, he emailed other executives and told them that they would also be let go if they don’t let go higher percentages of their teams.

Balls to the Walls for Autonomous Driving

“Not quite betting the company, but going balls to the wall for autonomy is a blindingly obvious move.”

That’s an admission Tesla will give up on the entry-level market after promising for decades he would make one.

Preparation for Growth

On April 15, I noted Elon Musk Fires 10 Percent of Tesla Workforce, Prepares for “Next Phase of Growth”

Preparing for Growth

…click on the above

Home Prices Hit New Record High, Don’t Worry, It’s Not Inflation

May 5, 2024

Home Prices Hit New Record High, Don’t Worry, It’s Not Inflation

The Case-Shiller national home price index hit a new high in February. That’s the latest data. Economists don’t count this as inflation.

Case-Shiller national and 10-city indexes via St. Louis Fed, OER, CPI, and Rent from the BLS

Chart Notes

National and 10-City Case-Shiller home prices hit new record highs in February
OER, CPI, and Rent are indexes measured by the Bureau of Labor Statistics (BLS).
OER stands for Owners’ Equivalent Rent. It’s the price one would pay to rent one’s own house unfurnished and without utilities.

Case-Shiller measures repeat sales of the same home over time and the indexes attempt to weed out major home improvements.

Case-Shiller is a far better measure of home prices than median or average prices which do not factor in the number of rooms, location, lot size, or amenities.

Not Inflation?!

Economists, including the Fed, consider homes a capital expense, not a consumer expense.

As a result, they all ignore economic bubbles and blatantly obvious inflation on grounds it’s not consumer inflation. This has gotten the Fed into trouble at least three times. The first was the dot-com bubble, then the Great Recession housing bubble and now.

It’s really pathetic when you make the same major mistake over and over and over. It’s a result of group think.

They all believe in the same silly models based on disproved theories including inflation expectations and the Phillips curve. You do not get in the good ole boys Fed club unless you think like a good ole boy.

Inflation Expectations

Fed Chair Jerome Powell mentions inflation expectations at every meeting. So did former Chairs Janet Yellen and Ben Bernanke.

In my post How Do Inflation Expectations Impact Wages and Future Consumer Inflation? I explain why inflation expectations are irrelevant to future inflation.

Moreover, two Fed studies agree.

…click on the above link to read the rest of the article…

What Are the Odds the Fed Hikes Interest Rates to 8 Percent?

May 5, 2024

What Are the Odds the Fed Hikes Interest Rates to 8 Percent?

8 Percent “Prediction” or “Possibility”?

This headline by TFTC caught my eye: JP Morgan Predicts Crushing 8% Interest Rate Spike

JP Morgan forecasts interest rates rising to 8%, potentially triggering a recession and banking crisis similar to past financial downturns.

JP Morgan, the largest bank in the United States, has released a 61-page shareholder letter predicting an increase in interest rates to 8%—a figure that hasn’t been seen since the era of the late eighties. This dire forecast comes on the heels of staggering stagflation numbers and warns of potentially catastrophic consequences for the economy and the banking system.

The last time the country grappled with 8% interest rates, it triggered the recession during the first Bush administration, resulting in mortgage rates soaring to 10% and ten-year bond yields hitting 9%. The implications of such rates in today’s climate could be devastating. An analysis suggests that the housing market, already struggling, would face further decline, with a 7% rate hike serving as a crippling blow to prospective young American homeowners, increasing their purchasing costs by an estimated 50%.

No Such Prediction

That sounds dire, and it surely would be. However, Jamie Dimon, CEO of JPMorgan, made no such prediction in its 2023 Annual Shareholder Letter (link repeated from above). Here is the pertinent snip:

Equity values, by most measures, are at the high end of the valuation range, and credit spreads are extremely tight. These markets seem to be pricing in at a 70% to 80% chance of a soft landing — modest growth along with declining inflation and interest rates. I believe the odds are a lot lower than that. In the meantime, there seems to be an enormous focus, too much so, on monthly inflation data and modest changes to interest rates…

…click on the above link to read the rest of the article…

Europe Scraps Net Zero, Biden Should But Won’t, Why?

May 5, 2024

Europe Scraps Net Zero, Biden Should But Won’t, Why?

“Unaffordable climate commitments have two leftist British parties racing to exit stage left.”

Europeans Ditch Net Zero

The Wall Street Journal reports Europeans Ditch Net Zero, While Biden Clings to It

You know you’ve stumbled through the looking glass when European politicians start sounding saner on climate policy than the Americans do. Well here we are, Alice: Europeans are admitting the folly of net zero quicker than their American peers.

The latest example—perhaps “victim” is more apt—is Humza Yousaf, who resigned this week as Scotland’s first minister. That region within the U.K. enjoys substantial devolved powers over its own affairs, including on climate policy. An administration led by Mr. Yousaf’s left-leaning Scottish National Party had hoped to rush ahead of the national government in London in slashing carbon emissions.

Until, that is, someone noticed the costs. A recent report from the U.K.’s Climate Change Committee noted Scotland had fallen far behind on its climate goals. The government aimed to reduce by 20% the aggregate distance driven by Scottish motorists, compared with 2019 levels, but had no plan to accomplish the reduction in personal mobility by the 2030 deadline. To get back on track with the government’s goal of a transition to home electric heat pumps, Scotland would have to replace natural-gas fire boilers at a rate of more than 80,000 households a year by the end of the decade. That’s a big ask considering that in 2023 it managed 6,000 boiler replacements. The government resisted imposing an aviation tax to discourage excess flying. And so on.

Mr. Yousaf did the only thing he could under the circumstances: He all but abandoned net zero. His administration announced it is ditching firm annual emission-reduction targets in favor of fuzzier “carbon budgets.”…

…click on the above link to read the rest of the article…

Can the US Legally Seize Russian Assets? Should It?

April 28, 2024

Can the US Legally Seize Russian Assets? Should It?

Congress’s aid package encourages the president to seize frozen Russian reserves to support Ukraine. But the legality and desirability are both questionable.

REPO Act Lets Biden Boost Ukraine

The Wall Street Journal writer, Robert B. Zoellick, says REPO Act Lets Biden Boost Ukraine

Now that Congress has approved assistance for Ukraine, the Biden administration should forge a long-term economic and military plan that will sustain that country in its war of attrition.

If the U.S. continues to dribble out support, it would be making a huge mistake. American public support is likely to wane, and the Europeans are absorbed with internal debates. The nature of the war has changed—militarily, technologically and economically—over more than two years. President Biden’s reactive approach reflects his senatorial style: He waits for events, issues statements and fails to seize the initiative. Congress is giving him one last chance to be a wartime leader.

The aid package’s hidden gem is the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act, or REPO. It encourages Mr. Biden to transfer frozen Russian reserves to a trust fund for Ukraine. Members of Congress from both parties recognize that taxpayers want Mr. Biden to use an estimated $300 billion of Russian money to sustain Ukraine economically before asking Americans to pay more. The administration has hesitated to take this step but must do so now.

Last year Treasury Secretary Janet Yellen justified inaction by raising concerns about how such transfers might affect the value of the dollar and the euro. But two years after freezing the Russian reserves, the dollar is stronger and the euro is fine—in part because the alternatives are poor. China’s yuan isn’t a trustworthy reserve asset. The world would be safer if countries realized that their foreign reserves would be imperiled if they invade the neighbors.

…click on the above link to read the rest of the article…

Growth in Spending Exceeds Growth in Income for Most of the Last 10 Months

April 27, 2024

Growth in Spending Exceeds Growth in Income for Most of the Last 10 Months

A deeper dive into personal income and outlays for March shows significant signs of consumer stress to maintain standards of living.

Real Income and spending data from the BEA, chart by Mish

This is a follow-up with a couple new charts to my post on Friday, Personal Spending Jumps More than Income in March

Income Minus Spending Chart Notes

Real means after inflation. DPI means disposable Personal Income after taxes.
Only twice in the last 10 months has growth in real income been greater than growth in real spending.

Personal Income Four Ways

Understanding Personal Income

The difference between PI (red) and DPI (blue) is taxes, just over 3 trillion dollars annually.
The difference between DPI (blue) and Real DPI (yellow) is inflation.
The difference between Real DPI (yellow) and Real DPI Minus PCTR (green) is Personal Current Transfer Receipts

PCTR are government benefits that include Medicare, Medicaid, food stamps, Social Security, and disability payments.

Personal Income and Real Hourly Wages

Income data from the BEA, hourly earnings from the BLS, chart by Mish

Percentage Increases in Income and Hourly Earnings

DPI is up 25.2 percent since pre-pandemic
Real DPI is up 6.6 percent since pre-pandemic
Real Average Hourly Earnings are up 0.9 percent since pre-pandemic

Income includes wages and salaries, Social Security and other government benefits, dividends, and interest.

Who’s Doing Well and Who Isn’t?

Those dependent on wages and salaries alone have not fared well since the pandemic. That also includes many on government benefits.

The asset holders (those with interest income, rental income, dividend income etc., are doing much better.

On average, things look at least OK, if not good.

But for millions of people struggling with food and rent on real hourly earnings that have gone nowhere in four years, the economy does not look OK.

Expect Big Negative Revisions to BLS Monthly Jobs in 2023, GDP Too

April 26, 2024

Expect Big Negative Revisions to BLS Monthly Jobs in 2023, GDP Too

Yesterday, the BLS released a little-read jobs report that shows reported jobs in 2023 may be wildly overstated. In turn, that means GDP is likely overstated as well.

Business Employment Dynamics (BED) data and and Monthly Job Data both from the BLS, chart by Mish

BED Chart Notes

Data is from the BLS Business Employment Dynamics (BED) report and the BLS monthly jobs reports (CES).
BED data is less timely but far more accurate than the BLS monthly jobs reports/
For 2023 Q3, the BED reports shows gross job gains of 7.559 million and gross job losses of 7.751 million for a net loss of 192,000 jobs.
The BLS monthly jobs reports show a gain of 640,000 jobs.

BED Job Gains and Losses by Quarter

Summary of Major Differences

Note that BED data is based on 9.1 million establishments while the monthly jobs reports are only based on 670,000 establishments.

The monthly reports are timely but inaccurate. And the BLS annual benchmark revisions do not also revise the monthly numbers. This makes year-over-year comparisons inaccurate as well.

I created the lead chart by netting BED data and comparing the BED net jobs to net quarterly jobs from the CES data.

BED vs CES

2023 Q2 BED: +332,000
2023 Q3 BED: -192,000
2023 Q2 CES: +821,000
2023 Q3 BED: +640,000

CES Overstatement

2023 Q2 CES Overstatement: 489,000 Jobs
2023 Q3 CES Overstatement: 832,000 Jobs
Q2+Q3 Overstatement: 1.321 Million Jobs

Thus, the BLS says that the BLS monthly job reports for 2023 Q2 and Q3 are overstated by a total of 1.321 million jobs.

Jobs Up 303,000 Full Time Employment Down 6,000 in March

In March, the economy continued to add a high percentage of government and social assistance jobs. Part time employment rose by 691,000 as full time employment fell by 6,000.

Nonfarm payrolls and employment levels from the BLS, chart by Mish.

…click on the above link to read the rest of the article…

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