Momentum Lost? Private Income Corroborates Possibility Presented By Claims

Entering 2020, before overreactions to COVID and the shutdown they brought, private income derived from all sources had slowed to the lowest rate since 2010 (not counting 2013, that year skewed by tax changes which were implemented finishing up 2012). According to the latest annual revisions for it, last year, 2019, was a bit more recessionary than previously thought especially in the middle and toward the end at least where private income was concerned.

And since income’s the whole economic concern, the real big one, it points to just how much of a mistake it could turn out to have been overreacting to the one thing because of grossly underreacting to last year’s serious weakness. Though we’ll never know, 2019’s yield curve signal for a recession may not have been just a “scare.” (see above: gold, yields, early December inflection before coronavirus).

While that might help explain some consumer reluctance in 2020 post-COVID, I think it more relevant to how businesses were perceiving circumstances and therefore acting out those perceptions when imagining the weight and future of their own costs (hiring fewer and fewer new workers, contrary to the uncorroborated post-revision rebound indicated by the Establishment Survey).

In other words, before ever getting to this mess, there must have been a serious and widespread degree of apprehension.

And that might help explain this:

On the chart above, the line which really matters is the red one in the middle. While the orange perfectly describes the heavy disbursements from Uncle Sam’s heavy hand, and the green a slightly disappointing disproportional use of those disbursements, the red indicates that those jobless claims numbers are if not complete truth than close enough to it.

The Establishment Survey’s or Household Survey’s massive gains the last two months were, therefore, just as we thought and nothing more than reopening. There remains huge economic destruction currently being partially papered over by unemployment bonuses and helicopter bribes. The private economy is otherwise a total mess.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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