Using 2022M01-25M08 data on implied preliminary benchmark private employment, a regression on first log differences yields a unit coefficient, and adjusted R2 of 0.56, SER = 0.00087. The resulting nowcast is shown below.
Figure 1: Implied preliminary benchmark revision private nonfarm payroll employment (bold black line), nowcast using ADP series (light blue line), and +/- 1 s.e. (gray lines), all in 000’s, s.a. Source: BLS, ADP via FRED, author’s calculations.
Point estimate for October employment is essentially the same as August (preliminary) reported employment.
Trump about defying the court order to distribute SNAP payments: “Our country has to remain very liquid because problems, catastrophes, wars — it could be anything. We have to remain liquid.”
More proof that Trump knows nothing about finance, business or the budget. He thinks he can just throw out the jargony word “liquid” and buffalo everyone.
We have to make a few things clear. First off, this standoff is not about a debt limit. There is no limit to the amount of money the Treasury can collect or print by auctioning bonds. So liquidity isn’t an issue. There’s plenty of money available.
This is an annual budget standoff. The shutdown only affects so-called discretionary budget programs that have to be explicitly funded by law each year or else shut down. The annual budget does not affect mandatory spending programs, which includes Social Security, Medicare and SNAP. That’s right, SNAP is a mandatory spending program that does not depend on an annual budget agreement.
That is why Social Security and Medicare payments are continuing right now. It is also why SNAP benefits are required by law to be spent right now — because it is a mandatory spending program not subject to a budget agreement. Trump has no legal authority to withhold mandatory spending.
When Trump says he doesn’t have the money for SNAP he is flat out lying. The money is there, just as it continues to be there for Social Security and Medicare.
What is not mandatory spending is the military budget. It has to be funded annually. And yet somehow Trump has found the funds to pay military salaries, which are discretionary, while claiming not to have funds for SNAP which is mandatory.
It’s nice to know that Trump is illegally withholding SNAP benefits for hungry children in the off chance he thinks he needs “liquidity” for wars in the many countries he has threatened.
Trump today: “Had a lot of meetings while in South Korea. It was a tremendous period of time. We took in at least two trillion dollars pouring into our country.”
Surely he meant to say “bazillion”.
He can’t even string three coherent sentences together — where are the calls for dementia.
By letting the shutdown continue, the republicans are increasingly owning the fact that they cannot govern. Republicans cannot pay government workers, they cannot provide snap benefits, they cannot keep airports operational. The message is clear, a choice has been made by republicans to keep failing at these government operations. They could easily reopen the government, if they wanted to. They have chosen not to do so. Republicans own the government shutdown and resulting failures. And are too proud to correct course.
In light of the support heritage foundation gives to antisemitic voices, its status as a nonprofit should be suspended. Furthermore, such organizations should be subject to an endowment tax going forward. Antisemitic institutions should not be given preferential treatment.
Only sort of off topic – Two PMIs:
ISM’s factory purchasing managers index for October fell to 48.7 from 49.1 in September. Meanwhile, the S&P factory PMI rose to 52.5 from 52.0. ISM fell and shows contraction. S&P rose and shows expansion. When data on the state of the economy are in short supply, this divergence is a little frustrating. Steel Industry News offers a clear and useful explanation:
https://steelindustry.news/pmi-vs-sp-pmi-why-manufacturing-surveys-diverge-and-what-it-means-for-steel-prices-and-industry-outlook/
The gist is that ISM survey skews toward larger firms, while S&P surveys a broader sample of firms by size. Since larger firms tend to have greater international exposure, they’re taking it on the chin right now dur to tariffs. As a result, orders at smaller, less import-reliant firms hit a 20-month high; looks like spill-over from firms having trouble with their supply chains.
Contrary to S&P’s healthy composite index, it’s confidence index slid and employment is treading water. S&P survey respondents aren’t thrilled with the economy, either.
Budget update – not yet:
Senate Republicans had offered a short-term budget extension with a pledge to deal with health insurance subsidies before the end of the year. Senate Democrats have decided that separating the budget deal from health insurance subsidies is too risky. Neither House Republicans nor the felon-in-chief can be relied upon to stick to their word, so health insurance subsidies have to be in the budget deal.
Lessons learned.
Secretary Hegseth: “We are not building for peacetime. We are pivoting the Pentagon and our industrial base to a wartime footing.”
Oops. There goes Trump’s Nobel Peace Prize.
Secretary Hegseth: “This is a 1939 moment.”
Well, I’ve got to agree with him there — with Trump as Hitler. I think it is exactly like 1939.
Remember that story at the beginning of the shutdown when the Department of Education hijacked furloughed employees email accounts and replaced their own out-of-office auto-replies with a partisan screed blaming the shutdown on Democrats. Well, a federal judge blasted the Department and ordered them to quit hacking employees email accounts, putting Republican political words in the mouths of employees without authorization.
Judge Cooper wrote: “Political officials are free to blame whomever they wish for the shutdown, but they cannot use rank-and-file civil servants as their unwilling spokespeople. The First Amendment stands in their way. The Department’s conduct therefore must cease.”
And “Heinrich Himmler” Miller had this to say in reply from the White House: “Radical leftist judges have created a fourth branch of government, the federal bureaucracy, which wields the power of the state but is elected by no one and accountable to no one.” No First Amendment for you.
And miller was elected by who?
Trump today gives Hungary an exemption on his Russian energy sanctions. That’s what Trump calls a win-win — for his two best buddies Orban and Putin.
Trump sues to stop SNAP payments.
Melenia Trump: “On second thought, don’t let them eat cake.”
Off topic – that other big economy:
https://archive.is/WVmLt#selection-1159.0-1159.64
Chinese exports were down 1% y/y in October, yhe first y/y decline in 5 months. The usual cautions apply – one month’s data isn’t enough to draw strong conclusions, could be a data problem or a calendar problem or a weather problem… Worth watching, though.
Imports were also tepid in October, more reason to worry about the health of the goods sector. Tariffs, tariff timing and efforts at tariff avoidance seem likely sources of distortion.
Way off topic – Iraq’s parliamentary election and threats to Iran:
Iraq holds parliamentary elections in three days. As noted in the link, PM al-Sudani has had the skill, the luck, or most likely both, to avoid the turmoil which has engulfed much of the neighborhood.
Elections happen. So what? Well, there are reports that the U.S. has warned al-Sudani to clamp down on Iran-backed militias active in Iraq in case of any new unpleasantness between the U.S. and Iran:
https://www.msn.com/en-in/news/world/iraq-s-al-abbasi-reveals-hegseth-warning-operations-are-coming-this-is-your-final-notice/ar-AA1PJtqy
Al-Sudani came to power in 2022 as a reaction against domestic turmoil, and Iraqis seem to have benefited. Now, we’re not only stirring up trouble for him, but may also be telling him to take sides.
Why am I quibbling? Of course we’re telling him to take sides. The U.S. has sometimes tried, and often failed, to be a source of calm in the Middle East. Just as often, we’ve be the cause of turmoil. The felon-in-chief’s administration has supported Israeli ethnic cleansing, assassinated nn Iranian general and bombed Iran, supported Saudi Arabian war crimes in Yemen, bombed Yemen on our own account, abandoned the oil-for-nukes deal with Iran. That’s all in the last few years.
Now, Secretary Drunkard is warning Iraq that we’re going to kick the hornet’s nest just as al-Sudani has calmed the nest down. And for good meaaure, we’ve warned him right before elections.