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Flash Commentary No, 1460b Subscription required June 20th, 2021
• Fundamentals Could Not Be Stronger for Gold and Silver, nor Weaker for the U.S. Dollar and Stocks, Despite Fed or Market Nonsense to the Contrary • There Is No V-Shaped Recovery • Battered, Non-Recovered May 2021 Payrolls and Unemployment Confirmed a Still-Ravaged Economy on Par With the Great Depression • Severely Negative Annual Revisions to Industrial Production Mean the Economy Was in Recession Well Before the Pandemic Hit • Business-Cycle Conditions Are Collapsing Rapidly, Amidst an Extreme Acceleration in Inflation • 2021 Social Security Cost of Living Adjustment (COLA) Could Spike to a 40-Year High, Based on Potential Third-Quarter 2021 CPI-W • Bureau of Labor Statistics Reveals It Cannot Measure the CPI Properly, At Present • FOMC Has Trouble Forecasting Inflation One Quarter Ahead, Let Alone Two Years Ahead • Despite Talk of “Tightening” in 2022 or 2023, FOMC Is “Easing” Anew in Its Latest Actions  More ...
Flash Commentary No. 1460a May 31st, 2021
• Benchmarked Industrial Production Revised Sharply Lower; Both Manufacturing and Mining Were Hit Hard • New Numbers Indicate the Economy Was in a Deepening Recession, Well Before the Pandemic Shutdown and Collapse • 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 • 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 • Manufacturing Sector Has Never Recovered Pre-Great Recession Peak Levels • April 2020 Pandemic/Economic Trough Revised Lower by 5.1% (-5.1%) • Economic Recovery Is Not as Close as Hyped by the Consensus Outlook • Negative Implications Here for the July 29th GDP Benchmarking • Chances Are Reduced for Moderating Extreme Monetary and Fiscal Policies • Evolving Circumstances 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  More ...
Benchmark Commentary No. 1459 April 21st, 2021
• Intractable and Deteriorating Conditions Still Signal No Imminent Economic Recovery, Irrespective of Some Bounces in March Activity Against Weather-Driven February Collapses • Monthly Annual and Post-Pandemic Payroll Declines Have Stabilized Around Minus Six-to-Seven Percent for the Last Eight Month, Weakest Showing Since 1946 • Annual-Change Gyrations Are Just Beginning for Economic, Inflation, Money Supply and Financial Return Numbers, as the Pandemic-Driven Collapse Passes It First Anniversary • Beyond Year One, Multi-Year, Crisis-Driven Collapses Need to Be Assessed Against Pre-Crisis Levels, or Stacked Two-Year Change, As Well As Year-to-Year Change • The Federal Reserve Overhauled Its Money Supply Reporting, Redefining Traditional M1 from 34.8% to 93.4% of a Not-Redefined Total M2 • This Masked Accelerating Flight-to-Liquidity in Traditional M1 from Non-M1 Components of M2 • ShadowStats Defined "Basic M1" -- Combined Currency and Demand Deposits -- Still Reflects the Extraordinary Liquidity Flight to, and Surge in the Narrower Money Supply • Expanded Federal Reserve Accommodation Remains Likely Well Into 2023, Given the Increasingly Negative Outlook for Imminent U.S. Economic Recovery • Fed Chair Powell Noted That Surging Money Supply No Longer Boosts the Economy • That Is Because the Current Collapse Is Pandemic, Not Business-Cycle Driven; Surging Money Growth in a Non-Business-Cycle Collapse Can Trigger Hyperinflation • Surging Monetary Base, Reserves and Currency Indicate Intensifying Systemic Problems • 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  More ...
Flash Commentary No. 1458 February 24th, 2021
• 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 • 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 • While the January 2021 Cass Freight Index® Gained Year-to-Year for the Fourth Straight Month, It Also Contracted by 1.6% (-1.6%) from Two Years Ago • Despite Happy Headline Gains in January 2021 Real Retail Sales, Production and Construction, the Underlying Payroll Employment Numbers Tell the Opposite Story • First-Quarter 2021 GDP Remains at Risk of Relapsing into Quarterly Contraction • January 2021 Producer Price Index Monthly Inflation Hit a Record, 10-Year High • U.S. Dollar Collapse Accelerates • Holding Physical Precious Metals Remains the Best Hedge Against Developing Inflation and Financial-Market Turmoil  More ...
Flash Commentary No. 1457 February 16th, 2021
• 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% • In the Latest Four Months, Pandemic-Driven Unemployment Has Leveled Off Around 12%, Worst Since Before World War II, Other than for the Pandemic • 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 • January 2021 Annual Growth in Money Supply M1 and M2 Surged to Respective Record Highs of 69.7% and 25.8%, Despite Some Downside Benchmark Revisions • Near Record Growth of Currency in Circulation Foreshadows Inflation Risk • Nonetheless, January 2021 CPI-U Annual Inflation Hit a Soft, Ten-Month High of 1.4%, Boosted by Gasoline Prices, but Constrained by Mixed Food and Core Inflation • Stock Indices Are At or Near All-Time Highs, Coming into the First Anniversary of the Pre-Pandemic Stock-Market Peaks and Subsequent Crashes • Near-Term Financial-Market Turmoil Likely Is Far from Over, Given Renewed Deterioration in Economic Conditions  More ...
Flash Commentary No. 1456 February 1st, 2021
• Fourth-Quarter 2020 Annualized Real GDP Growth of 4.0% Was as Expected, Slowing from the Record 33.4% Third-Quarter Pandemic Rebound • Full-Year 2020 Annual GDP Decline of 3.5% (-3.5%) Was the Deepest Since the 1946 Post-World War II Economic Reset • Current U.S. Economy Remains Far from a Full Recovery • First-Quarter 2021 GDP Increasingly Is Set for a Relapsing Quarterly Contraction • Deepening Deficits in Fourth-Quarter and Annual 2020 Real Net-Exports (GDP) and the Related Real Merchandise Trade Deficit Were the Worst Ever in Modern U.S. Reporting • Real Annual Growth in New Orders for Durable Goods Turned Negative, Amidst Renewed Slowing in Commercial Aircraft Orders • Full-Year 2020 Existing- and New-Home Sales Were Highest Since 2006 • Yet, Fourth-Quarter 2020 New-Home Sales Contracted, as Did Real Retail Sales, Suggestive of Consumers Facing Intensifying Pandemic and Liquidity Issues • Financial Market Turmoil Is Just Beginning  More ...
Economic Commentary, Issue No. 1455 January 28th, 2021
• Key Monthly Economic Numbers Turned Negative Anew in Fourth-Quarter 2020 • 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%) • An Increasing Number of Unemployed People Were Misclassified as Employed; Corrected December Unemployment Would Have Jumped, Instead of Holding at 6.7% • December 2020 Real Retail Sales Declined for the Third Straight Month, and Fourth-Quarter 2020 Activity Relapsed into Quarterly Contraction • December 2020 Cass Freight Index® Jumped Year-to-Year by 6.7%, but Its Two-Year Change Was Down 1.8% (-1.8%) from December 2018, Due to FOMC Tightening Contracting Intervening 2019 Activity • Momentum of Fourth-Quarter Data Suggests a First-Quarter 2021 GDP Contraction, As the Pandemic and Political Tumult Take on Negative New Dimensions • Federal Reserve Chairman Powell: "We Are a Long Way from Full Recovery" • Latest Weekly Money Supply M1 Jumped an Unprecedented 72.3% Year-to-Year • Severe, U.S. Dollar-Debasing Inflationary Pressures from Existing, Extreme Monetary and Fiscal Policies Are About to Get Much Worse • Risk of Hyperinflationary Economic Collapse Has Accelerated With Democrats Taking Control of Both the White House and Congress • Holding Physical Precious Metals Remains the Best Hedge Against Coming Inflation and Market Turmoil  More ...
Economic Commentary No. 1454 December 29th, 2020
• Deepening Economic Woes and Soaring Inflation Ahead • Underlying Economic and Labor Numbers through November Indicate Contracting or Flattening Fourth-Quarter 2020 GDP, Well Shy of Economic Recovery • On Top of Downside Revisions, Declining November Real Retail Sales Showed Renewed Economic Deterioration • November New-Home Sales Collapsed by a Meaningful 11.1% (-11.1%) in the Month, On Top of Major Downside Revisions to Sales in Each of the Prior Three Months • November Industrial Production and Its Dominant Manufacturing Sector Showed Deepening Year-to-Year Declines, While the Mining Sector Showed a Narrowed Annual Plunge, Thanks to Rising Oil Prices • Federal Reserve Sees Continuing Need for Inflation-Boosting Monetary Stimulus, With No Economic Recovery Expected Before 2023 • Continuing Massive Expansions of Federal Government Deficit Spending and Federal Reserve Monetary Stimulus Promise Massive Inflation • Liquidity-Strapped Consumers Move to Cash, Spiking Traditional Money Supply M1 • Minimizing Reporting of Such, the Fed Just Redefined Money Supply M1; Given Newly Defined M1-Like Liquidity Characteristics for M2 Savings Deposits, Savings Have Been Shifted Retroactively from M2 to into M1, Effective as of May 2020 • Redefined November Money Supply M1 Just Jumped from 31.7% to 92.7% of Total M2; November 2020 Year-to-Year Growth in the Traditional Money Supply M1 Soared to a Record 53.2%, the Redefined New Series Reflects a Record 348.4% Jump • Weakening U.S. Dollar, Rebounding Gold and Oil Prices Foreshadow Rising Inflation  More ...
Economic Commentary No. 1453 December 14th, 2020
• Four Million Unemployed People Are Missing from the Headline Labor Force • Pandemic-Disrupted U.3 Unemployment Effectively Was 9.0% in November 2020, Not the Headlined 6.7% • November Unemployment and Payrolls Confirmed Stalled, L-Shaped, Non-Recovering Economic Activity • For the Second Straight Month, Payrolls Declined Year-to-Year by 6.0% (-6.0%) • Theoretically Equivalent Third-Quarter 2020 GDP (Product) and GDI (Income) Rebounded by Varying Annualized Quarterly Gains of 33.1% and 25.5%, Still Holding Far Shy of Economic Recovery • Unprecedented in 40-Plus Years of Weekly Monetary Reporting: Money Supply M1 Jumped by 14.1% in the Last Two Weeks, in a Post-Election / COVID-19 Flight to Cash, From M2 to M1 • Year-to-Year Gain in Monthly November M1 Jumped to a Record 53.2% from the Prior Record of 42.3% in October, Surged to 65.6% in Week-Ended November 30th • The U.S. Dollar Is at Its Lowest Level Against the Swiss Franc Since January 2015, Down by 10.0% (-10.0%) Year-to-Year A Weak Dollar Is Highly Inflationary for the United States and Bullish for Gold • Collapsed Oil Prices Still Suppressed November CPI and PPI Annual Inflation; Yet, Oil Prices Suddenly Are Surging Anew • Holding Physical Gold Protects the Purchasing Power of Dollar Assets, Irrespective of Any Near-Term Volatility in, or Manipulation of, Gold Prices  More ...
Flash Commentary No. 1452 November 23rd, 2020
• October 2020 Cass Freight Index® Turned Positive Year-to-Year, Gaining 2.4% Against an Unusually Sharp, Unseasonable Decline the Year Before • 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 • Where Pandemic Forced the Shutdown of the U.S. Economy in March 2020, FOMC Rate Hikes Already Had Strangled Business Activity • October Industrial Production Continued in L-Shaped Recovery, With Annual Change Flattening Out in Negative Territory • Annual Boom of 5.7% in October Real Retail Sales Was Not Credible; Related Retail Employment and Consumer Goods Production Continued in Annual Decline, Despite the Gain in Freight Activity • On Top of an Upside Revision, Housing Starts Gained 4.9% in the Month; This Was Not Statistically Significant at the 90% Confidence Interval • On Top of a Downside Revision, October Building Permits Monthly Change Flattened Out at a Statistically Significant 0.0%  More ...

DAILY UPDATE - September 17th to 20th (See the POSTING SCHEDULE AND NOTE TO SUBSCRIBERS / Keep Scrolling Down for SHADOWSTATS BACKGROUND, ECONOMY - LATEST NUMBERS [Updated], BUSINESS CYCLE [Updated], SYSTEMIC RISK, MONETARY DATA [Updated] and Other Sections) • ECONOMY – August 2021 Nominal Retail Sales Monthly Gain of 0.7% Was in Context of a 0.6% (-0.6%) Downside Revision to July Activity; Real Retail Sales Held on Track for a Quarterly Contraction • First Time in Five Years, the 2020 Poverty Rate Jumped and Real Median Household Income Plunged, with Surveying Disrupted and Distorted by the Pandemic-Driven Collapse • August 2021 Industrial Production Minimally Recovered Pre-Pandemic February 2020 Activity by 0.3%, but It Already Was Collapsing into the Pandemic in February 2020; Still Down Today by 2.5% (-2.5%) from its August 2018 Peak • How Can the Economy Be Minimally Recovered With Headline Annual Payroll Growth Weaker Than at the Troughs of the Last Seven Recessions, the 2007 Great Recession Excepted? • After Two Months of Decline, the August 2021 Cass Freight Index® Showed Some Seasonally Adjusted Rebound, With Trucks Taking Up Some Slack from Railroads, but Still at a Four-Month Low; Never Having Recovered its 2018 Peak Activity • INFLATION – August 2021 Consumer Price Index Annual Inflation Notched Lower to 5.25% from 5.37% [See the ALTERNATE DATA Tab], While the August Producer Price Index Hit an Historic High of 8.27% [see LATEST NUMBERS and BUSINESS CYCLE] • MONETARY BASE – No Suggestion of Tapering Here, With Early Indications of a Continuing Monetary Base Surge in September 2021; August 2021 Numbers Showed Ongoing Explosive Growth at the Cycle High • MONEY SUPPLY – July 2021 “Basic M1” Soared to an Historic-High 91.7% Above Its Pre-Pandemic Peak, Up from the Prior-Record 87.6% in June [See the ALTERNATE DATA Tab] • July FOMC Policies Were Unchanged [See the SYSTEMIC RISK and MONETARY DATA] • COMBINED IMPACT: Reflecting the Surge in Money, Inflation Has Exploded, While Business Activity Has Begun to Pull Back Anew, at an Intensifying Pace

ECONOMIC HEADLINES • Continuing Downtrend in Real Retail Sales Is Consistent With the Contracting Retail Trade Employment and Flat Leisure and Hospitality Jobs • U.S. Real Median Household Income Fell by 2.9% (-2.9%) in 2020, With the Official Poverty Rate Jumping by 1.0% to 11.4% • August 2021 Manufacturing and Mining Held Down Respectively by 2.2% (-2.2%) and 8.0% (-8.0%) from Recovering August 2018 Peak Activity in Industrial Production; Where Manufacturing has Regained Levels Seen at the February 2020 Pre-Pandemic Peak, Mining Has Not. • August 2020 Cass Freight Index® Gained an Adjusted 5.0% in the Month, Still Shy by 2.6% (-2.6%) of Its Recent May 2021 Peak • August CPI Inflation Notched Lower to 5.3%, from Its 5.4% 13-Year Peak in June and July, with the August ShadowStats Alternate Backing off a Notch from Its 41-Year Peak of 13.4% in July (Headline and Alternate CPI Details Are Posted on the ALTERNATE DATA Tab) • August PPI-FD Monthly Annual Inflation Set Its Fifth Consecutive Series High • Faltering August 2021 Labor Conditions Continued to Reflect an Economy That Remains Far Shy of Recovery; Full Recovery in Payrolls Remains Unlikely Before Late-2022/ Early-2023 • Initial Estimate of the July 2021 Real Merchandise Trade Deficit Suggested an Early Trend for the Current Record Trade Deficit to Hold for a Third Consecutive Quarter • Confirming Weakening Trends in Housing Starts and Home Sales, July 2021 Real Construction Spending Was in Early Trend for a Third-Quarter 2021 Quarterly Contraction, Following a 2q2021 Decline and Booming Growth in Both 1q2021 and 4q2020 • Minimally Revised Second-Quarter 2021 GDP Inflation Held at a 40-Year High • July New Orders Declined in the Month, Both Before and After Adjustment for Surging Inflation • July Home Sales Bounced Minimally, With New-Home Sales in Continuing Quarterly Contraction, Down for the Year and Down Against Its Pre-Pandemic Peak • July Single-Unit Housing Starts and Building Permits Respectively Declined Month-to-Month by 4.5% (-4.5%) and 1.7% (-1.7%), With Still-Positive Growth Against Pre-Pandemic Troughs Slowing Rapidly [Again, expanded detail follows in the LATEST NUMBERS Section]

FEDERAL RESERVE HEADLINES • No Change in Policy Out of the July FOMC • Chairman Powell: Higher Inflation Should Be Transient; U.S. Economy Is Showing Strong Growth, with Possible Risk from New Corona Virus Complications • All Major Monetary Measures Hit Historic Levels and Record or Cycle-High Growth in latest July or August Reporting [SYSTEMIC RISK Section]

G E N E R A L .. H E A D L I N E S .. -- Pandemic-Driven U.S. Economic Collapse Continues to Harden in a Protracted “L”-Shaped Non-Recovery

-- Key Economic Series Show Not Only That the Pandemic-Driven Economic Collapse Has Been Worse Than Headlined, But Also That the Still-Unfolding Recovery Has Been Much Weaker Than Indicated

-- Severe Systemic Structural Damage from the Shutdown Is Forestalling Meaningful Economic Rebound into 2023 or Beyond, Irrespective of the Advances in Coronavirus Vaccinations

-- Panicked, Unlimited Federal Reserve Money Creation and Federal Government Deficit Spending Continue and Likely Will Expand, Fueling Accelerating, Major Domestic Inflation

-- With Fundamental Dollar Debasement Intensifying, Holding Physical Gold and Silver Protects the Purchasing Power of One’s Assets, Irrespective of Any Near-Term Central Bank or Other Machinations to the Contrary.

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 .. N U M B E R S [See pending No. 1460c for expanded coverage and graphs of the various economic and inflation series] .. RETAIL SALES – Nominal Monthly Gain of 0.7% in August 2021 Retail Sales Was on Top of a 0.6% (-0.6%) Downside Revision to July Sales; Net of Inflation and Revisions, August Real Retail Sales Declined by 0.1% (-0.1%) in the Month (September 16th, Census Bureau). With two months reported, Third-Quarter 2021 Real Retail Sales continued on early track for an annualized quarterly contraction of 10.5% (-10.5%), following an annualized surge of 18.8% in Second-Quarter 2021. Such is consistent with recent headline reporting of declining July and August payrolls in Retail Trade and flat August payrolls in the Leisure and Hospitality sector.

Boosted by a continuing surge in CPI Inflation, August 2021 Nominal Retail Sales gained a headline 0.71% in month, having declined by a revised 1.77% (-1.77%) [previously down by 1.12% (-1.12%) in July, with a revised gain of 0.85% [previously 0.74%] in June. ShadowStats standardly removes growth due to inflation from the headline Nominal Retail Sales series, reporting it in Real or Inflation-Adjusted terms, deflated by the seasonally-adjusted CPI-U as otherwise calculated by the St. Louis Fed. Net of inflation, headline August Real Retail Sales gained 0.43% in the month, following revised declines of 2.24% (-2.24%) [previously 1.59% (-1.59%)] in July and 0.05% (-0.05%) [previously 0.16% (-0.16%)] in June. Year-to-year changes in Real Sales, against year-ago Pandemic disrupted activity, were 47.3% in April, 22.0% in May, 12.8% in June and 9.4% in July and August. Against the Pre-Pandemic Peak activity of February 2020, the gain in Real Retail Sales has slowed from 16.0% in April 2021, to 13.7% in May, 13.6% in June and 11.1% in July and August. Major factors at work in the August headlines were a continuing decline in Auto Sales and a one-month rebound for Nonstore Retailers.

(September 15) INDUSTRIAL PRODUCTION – Up 0.43% month-to-month, and 5.95% year-to-year, August 2021 Industrial Production just minimally regained the level of its headline activity of February 2020 -- the broad economy’s formal Pre-Pandemic-Recession Peak -- by 0.27%. That said, Production in February 2020 had been collapsing for the 18 months coming into the Pandemic, since August 2018, and it still remains shy of recovering that August 2018 peak activity by 2.47% (-2.47%), three years later. (Federal Reserve Board – FRB). Considering the major production components, August 2021 Manufacturing growth slowed to 0.16% in the month from 1.60% in July, with the annual gain slowing to 5.90% year-to-year, from 7.39% in July 2021, having recovered its February 2020 level last month. August 2021 Manufacturing now is up by 1.02% from February 2020. Nonetheless, Manufacturing remained shy by 2.24% (-2.24%) of ever recovering its peak level of activity in August 2018.

Declining by 0.63% (-0.63%) in the month, and with year-to-year growth slowing to 10.27%, from 11.67% in July, August 2021 Mining remained shy by 9.40% (-9.40%) of ever regaining its level of February 2020, and held shy by 8.03% (-8.03%) of its level at the time of the August 2018 aggregate Industrial Production peak. Where the Mining Sector, as a separate production component (heavily affected by oil production), peaked in December 2018, and then hit a further all-time high in September 2019, August 2021 activity was down respectively by 10.56% (-10.56%) and 11.72% (-11.72%) from recovering those levels. Separately, the remaining Utilities Sector tends to be randomly volatile, subject to variable weather more than anything else. It gained 3.26% in the month, having declined by 4.00% (-4.00%) in July. The Production numbers discussed here are in context of a previously “not recognized” economic contraction revealed in the Federal Reserve’s extraordinary, May 28, 2021 multi-year major benchmark revisions to the Industrial Production series, discussed previously in No. 1460a, with further detail following in pending No. 1460c.

(September 14) ANNUAL SURVEY OF INCOME AND POVERTY – Measuring the Pandemic’s Toll on Household Income - In Context of Extreme, Pandemic-Driven Disruptions to Economic Activity and Coincident Census Bureau Surveying Quality, the 2020 Poverty Rate Surged and Real Median Household Income Plunged (Census). The Census Bureau’s annual survey of “Income and Poverty in the United States: 2020” was published September 14th, with full recognition by Census Bureau that its surveying quality in both March 2020 and 2021 was disrupted and skewed heavily by the vagaries of the Pandemic’s disruptions. That said, Census went through extensive modeling, using prior, established Household characteristics to adjust the 2020 surveying for skewed reporting.

Inflation-adjusted 2020 Real Median Household Income of $67,521 [in 2020 dollars] dropped by a statistically significant 2.9% (-2.9%) from 2019, the first decline since 2017, the first statistically significant decline since 2011. In that context, the total number of people with earnings in 2020 versus 2019 dropped by about three million. At the same time, the number of people employed full-time, year round dropped by about 13.7 (-13.7) million.

The number of people Living in Poverty in the United States in 2020 was estimated at 37.3 million, up by about 3.3 million or 9.7% from 2019. The official Poverty Rate in 2020 was 11.4%, up from 10.5% in 2019. As noted by the Census Bureau, “This is the first increase in poverty after five consecutive annual declines.” As an aside, the Census Bureau uses the lowest possible inflation rates (CPI-U Research Series) for deflating economic activity in its annual report. That means the resulting, inflation-adjusted detail here shows significantly overstated (overly positive) economic and income numbers). ShadowStats will publish a separate and extended analysis in a later Commentary.

(September 14) CPI INFLATION - The August 2021 Annual CPI-U gained a softer than expected 5.3% month-to-month, minimally backing off its 13-year high annual inflation rate of 5.4% in both June and July, otherwise at a 13-year high annual inflation rate, similarly with the “Core” CPI-U at 4.00%, otherwise still at a 30-year high, June and July excepted. (Bureau of Labor Statistics - BLS). The August 2021 Consumer Price Index (CPI-U) gained 0.25% in the month, following a 0.47% gain June. Consensus expectations were for a 0.4% monthly gain, but the headline detail was hit with collapsing prices for Used Cars and Trucks, Motor Vehicle Insurance and Airline Fares. Once again, the BLS confirmed that its procedures remained well shy of regular inflation sampling (in effect since March 16, 2020), due to COVID disruptions, with implications that the full scope of rising prices is being missed in the headline numbers.

Of continuing note to those on Social Security, and to those estimating Federal Government outlays, going forward, the latest annual Cost of Living Adjustment (COLA) for Social Security, based on year-to-year Third-Quarter 2020 CPI-W (all Urban Wage Earners) was 1.3%. The annual CPI-W continued to spike into June 2021 at 6.12%, versus 5.65% in May. Coming into the base Third-Quarter 2021 COLA calculation period, the annual readings for the CPI-W in July and August, the first two months of the quarter were at 6.00% and 5.83%. If the 2021 COLA should top the 5.8% of 2008, it would be at a 39-year high, against a high of 7.4% in 1982.

Year-to-Year August 2021 ShadowStats Alternate CPI Annual Inflation (1980 Base) declined to 13.2% from 13.4% in June and July, which then also matched the prior 13.4% peak in July 2008, otherwise against a 13.4% peak in June 1980. That earlier reading predates the ShadowStats series, when the headline CPI still was reported on a reasonably consistent basis. The current monthly annual rates are up from 13.0% in May 2021, 12.1% in April, 10.4% in March 2021, 9.4% in February 2021 and against 9.1% in January 2021. The ShadowStats Alternate CPI-U estimate restates current headline inflation so as to reverse the government’s inflation-reducing gimmicks of the last four decades, which were designed specifically to reduce/ understate annual Cost of Living Adjustments. Related graphs and methodology are available to all on the updated ALTERNATE DATA tab above. Subscriber-only data downloads and an Inflation Calculator also are available there.

(September 13) CASS FREIGHT INDEX® - The seasonally adjusted August 2021 Cass Freight Index® gained 5.0% in the month having dropped by an aggregate 7.2% in the last two months [down by 3.1% (-3.1%) in July and by 4.2% (-4.2%) in June] ( - See detail at and scroll down). Cass noted there in its Press Release that “The recovery after a skid in June and July amid further slowdowns in rail volumes suggests trucking is picking up slack from the railroads ...” That said, while the August unadjusted Index gained 12.3% year-to-year, down from 15.6% in July, July was up by 7.7% against its Pre-Pandemic Peak (up by 2.6% in July). Yet, as will be detailed in pending No. 1460c, the August 2021 Index remained shy by 5.6% (-5.6%) of ever recovering its 2018 economic peak [narrowed from 9.9% (-9.9%) in July], which also marked the historic peak in Industrial Production, highlighted in the recent annual benchmarking of that series. The heretofore unrecognized, FOMC-triggered 2018 economic downturn/ slowdown was ongoing into the onset of the March 2020 Pandemic Shutdown. -- ShadowStats regularly follows and analyzes the Cass Freight 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.

(September 10, Updated September 14) PPI INFLATION – Monthly year-to-year Producer Price Inflation hit a fifth consecutive all-time high in August 2021 (BLS). The modern-series August 2021 Final-Demand Producer Price Index (PPI-FD) [the series was started in November 2009] jumped 0.71% in the month, by a record 8.27% year-to-year, with Final-Demand Goods up by 0.95% in the month and by a record 12.57% year-to-year, and with Final-Demand Services up by 0.71% month-to-month, a record 6.40% year-to-year. Those all-time record annual inflation rates were the fifth consecutive such monthly readings for all three series. In the side reporting of the old-series Finished Goods Inflation, annual growth hit a 40-year high of 10.3% (highest since June 1981). Where the headline July 2021 CPI-U held at a 13-year year-to-year high of 5.4% [5.37%], that was just shy by 0.2%-to-0.3% of setting a 40-year high [5.61%], which it easily could challenge in its August reporting on Tuesday, September 14th, irrespective of a current, relatively soft consensus outlook [Updated-that did not happen, see the earlier September 14 CPI paragraph].

(September 3) LABOR NUMBERS [Also see the discussion in the later BUSINESS CYCLE Section] - Much weaker than expected, August 2021 Payrolls showed a continuing monthly jobs loss in Retail Sales, a monthly contraction in Construction payrolls and zero growth in Leisure & Hospitality jobs (BLS). Confirming an intensifying economic stall and lack of full recovery in U.S. Economic Activity, August 2021 Payroll Employment held shy of recovering its Pre-Pandemic and Recession-Depression Peak by 3.50% (-3.50%), narrowed from a revised 3.65% (-3.65%) [previously 3.74% (-3.74%)] in July 2021, and a revised 4.34% (-4.34%) [previously 4.43% (-4.43%)] in June 2021. Except for the 2007 Great Recession, that magnitude of shortfall in recovering Pre-Recession Peak Activity is deeper than the troughs seen in the last seven recessions, back to 1957. Payroll Employment remains one of the most fundamental and basic measures of broad economic activity, and the current measures of related jobs activity suggest that the broad U.S. economy is far from recovering healthy pre-Pandemic labor conditions. The 3.50% (-3.50%) shortfall is against the set level of Payroll Employment at the February 2020 Pre-Pandemic Peak, yet Payrolls normally increase by about 200,000 jobs per month. Those people who have not been hired are still out there needing work, which leads to an estimated 5.5% (-5.5%) shortfall in recovering a normal level of jobs and economic activity, which still is not likely before late-2022 or early-2023.

The headline August 2021 U.3 Unemployment Rate dropped to 5.19%, from 5.39% in July, yet, at the same time, the potential number of “Unemployed Misclassified as ‘Employed’” in that same Household Survey continued to surge, rising to 464,000 in August. After 18 months of Pandemic surveying the BLS still cannot count the number of Unemployed. The BLS acknowledges continuing misclassification of some “unemployed” persons as “employed,” in the Household Survey. The count of the understated unemployed had an “upside limit” of 464,000 persons in August 2021, up from 420,000 persons in July and 336,000 in June, against 478,000 in May 2021, 558,000 in April 2021 and 636,000 persons in March 2021. The difference would be potential headline rates for U.3 of 5.5% in August and 5.7% in July, instead of respective actual headlines of 5.19% in August and 5.39% in July. Fully adjusted for COVID-19 disruptions, based on BLS side-surveys of Pandemic impact, and with roughly 6.3 million people still missing from the headline U.S. labor force, actual headline U.3 unemployment should be around 10%, the highest unemployment rate since before World War II. Broader August 2021 headline U.6 unemployment declined to 8.85%, from 9.23% in July, reflecting the underlying decline in U.3, and a continuing decline in short-term discouraged workers, reflecting some hiring as well as an increasing, continued migration of short-term discouraged workers to the nether world of the long-term discouraged workers (those no longer counted by the BLS, subsequent to the allotted one year of permissible discouragement). The long-term “discouraged” otherwise still are accounted for in the ShadowStats Ongoing Unemployment Estimate.

Including the long-term discouraged/ displaced workers, the August 2021 ShadowStats Alternate Unemployment Rate held at 25.4%, same as in July, down from 25.8% June 2021 and against 26.0% in May 2021 and 25.5% in April 2021. The August 2021 ShadowStats Alternate Unemployment Rate held even on top of the lower U.6, again, reflecting the continuing shift from short-term discouraged (in U.6) to long-term discouraged workers (in the ShadowStats Alternate). The latest Unemployment Rates are posted on the ALTERNATE DATA tab (above).

(September 2) TRADE DEFICIT – The U.S. Real Merchandise Trade Deficit Is on Track for Its Continuing Record Shortfall Holding in Place for a Third Straight Quarter (Census, Bureau of Economic Analysis - BEA). The nominal Balance of Payments Deficit in Goods and Services narrowed sharply in revisions to the January to June 2021 numbers, due solely to upside revisions in the heavily gimmicked and maldefined Surpluses in the Services Sector. The Deficits in the Goods Sector deepened minimally in revisions in the same period. The July 2021 nominal Goods and Services deficit was $70.1 billion, somewhat deeper than the average monthly deficit of $69.1 billion seen in the first six months.

That said, the Real Merchandise Trade went through its six-month revisions last month, and given a narrowing revision to the June 2021 Deficit in today’s reporting, both the First- and Second-Quarter 2021 Real Merchandise Trade Deficits are tied at an historic record annualized deficit of $1,220.9 billion. The headline July 2021 Real Merchandise Trade Deficit narrowed to an annualized pace of $1,201.6 billion, but that was well within range of settling in around that record level of the first two quarters, given the volatility of regular month-to-month reporting and revisions to this series. For comparison purposes, the Fourth-Quarter 2020 Deficit was a then-record $1,141.2 billion, with a 2020 record annual average of $1,043.5 billion, up from the Pre-Pandemic 2019 then-record annual average of $995.2 billion.

(September 1) CONSTRUCTION SPENDING – Net of surging Construction Inflation, July 2021 Real Construction Spending was on early track for a second, consecutive, quarter-to-quarter decline for activity in Third-Quarter 2021 (Census). After two quarters of strong growth, Second-Quarter 2021 Real Construction Spending declined at a revised annualized pace of 9.4% (-9.4%) [initially 11.2% (-11.2%)], on early track for an annualized drop of 7.7% (-7.7%) in Third-Quarter 2021, patterns that appear to be following Home Sales (see the August 24th paragraph) and New Residential Construction (see the August 18th paragraph).

July 2021 Construction Spending gained a nominal 0.3% month-to-month, on top of upside revisions to May and June, with June unchanged at 0.0% [previously a 0.1% gain], and May up by 0.7% [previously down by 0.2% (-0.2%)] –- all negative in inflation-adjusted real terms. Net of surging Construction Inflation July 2021 Real Construction Spending declined by 1.1% (-1.1%) month-to-month, gained 1.7% year-to-year and held shy by 5.1% (-5.1%) of regaining its February 2020 Pre-Pandemic Peak. That was against June Real Construction Spending declining by 1.3% (-1.3%) month-to-month, gaining 1.7% year-to-year and holding shy by 4.0% (-4.0%) of recovering its Pre-Pandemic Peak.

(August 26) GROSS DOMESTIC PRODUCT – Net of 40-year high GDP Inflation, annualized Real Second-Quarter 2021 GDP Growth revised Higher to 6.56% [previously 6.50%], with the initial estimates of 2q2021 Gross Domestic Income (theoretical GDP equivalent) and Gross National Product up respectively at annualized growth rates of 1.58% (GDI) and 6.62% (GNP) BEA. Each of the headline GDP, GDI and GNP regained its Fourth-Quarter 2020 Pre-Pandemic Peak in Second-Quarter 2021, but the ShadowStats Alternate GDP, adjusted for the understatement of headline GDP inflation [see the ALTERNATE DATA (GDP) Tab above] held shy by 2.22% (-2.22%) of recovering its Pre-Pandemic Peak, more in line with headline Payroll Employment activity [see the BUSINESS CYCLE section]. Even so, the headline GDP Implicit Price Deflator was at a revised 40-year high annualized inflation rate of 6.22% [previously 6.11%] with a 32-year high rate of 4.03% year-to-year inflation. The divergence in the annualized GDP (6.6%) and GDI (1.6%) quarterly real growth rates is tied to the timing and handling of the government stimulus checks, which feed directly into the GDI measure.

(August 25) DURABLE GOODS ORDERS – Real New Orders for Durable Goods declined for the second month amidst surging inflation and slowing orders (Census). In context of a sharp downside revision to surging Commercial Aircraft orders in June and a 48.9% (-48.9%) drop in July, and a strong upside revision to June Motor Vehicle orders and a July gain of 5.9%, nominal New Orders for Durable Goods declined by 0.1% (-0.1%) in July 2021, having gained an unrevised 0.8% month-to-month in June. Net of surging inflation Total Real New Orders declined month-to-month by 0.9% (-0.9%) in July and by 0.5% (-0.5%) in June, having gained 2.1% in May. Net of Inflation and the irregularly volatile Commercial Aircraft Orders, headline July 2021 New Orders gained 2.0% in the month having declined by a revised 0.5% (-0.5%) in June. Real Orders ex-Commercial Aircraft were up year-to-you by 2.8% in July, down from an upwardly revised 8.6% in June, given year-ago Pandemic disruptions. Against their February 2020 Pre-Pandemic Peak levels, those July 2021 and June Orders were up respectively by 3.1% and 2.0%.

(August 24) HOME SALES – July 2021 Homes Sales gained in the month, but with New-Home Sales (NHS) on early track for its fourth-consecutive quarterly decline in Third-Quarter 2021, while Existing-Home Sales (EHS) were on early track for a positive Third-Quarter 2021, after contractions in 1q2021 and 2q2021 (NHS - August 24th Census, EHS - August 23rd National Association of Realtors® - NAR®). Coming off record-strong levels of sales activity in late 2020, both New-Home Sales (Census) and Existing-Home Sales (NAR®) activity pulled back in the first half of 2021.

July 2021 New-Home Sales (Census) activity gained 1.0% in the Month, amidst its usual lack of statistical significance yet it continued in a broad pattern of collapsing activity After respective annualized quarterly contractions of 53.8% (-53.8%) in 2q2021, 12.1% (-12.1%)in 1q2021, and 18.2% (-18.2%) in 4q2020, Third-Quarter 2021 New-Home Sales started with 1.0% monthly gain in July [setting an early trend for a 3q2021 annualized contraction of 15.8% (-15.8%)]. That headline July 2021 1.0% monthly gain to a one-month high, was in context of a monthly year-to-year decline of 27.2% (-27.2%) and a 3.0% (-3.0%) drop below its February 2020 Pre-Pandemic Peak.

More-Stable and Positive Reporting of July 2021 Existing-Home Sales (NAR®) reconfirmed a second consecutive quarterly contraction for Second-Quarter 2021, but with July activity bouncing by 2.0% to a four-month high. July 2021 Existing-Home Sales gained 2.0% in the month, following a revised 1.6% [previously 1.4%] gain in June, and an unrevised decline of 1.2% (-1.2%) in May. July activity was by up 1.5% year-to-year, slowing from 23.1% in June, against Pandemic-driven volatility of a year ago. Against the February 2020 Pre-Pandemic Peak, July 2021 gained 5.1%, up from 3.0% in June. With Third-Quarter 2021 activity in an early positive trend, 2q2021 activity contracted at a revised annualized pace of 7.3% (-7.3%) [previously 7.5% (-7.5%)], following a contraction of 5.3% (-5.3%) in 1q2021 and a gain of 9.1% in 4q2020.

(August 18) NEW RESIDENTIAL CONSTRUCTION - July 2021 Housing Starts declined by 7.0% (-7.0%) and Building Permits gained 2.6% in the month, with both series on early track for second consecutive quarterly contractions in Third-Quarter 2021 activity (Census). In context of July 2021 headline monthly details and prior-period revisions, 2q2021 New Residential Construction - Building Permits and Housing Starts - showed revised respective annualized quarterly declines of 23.9% (-23.9%) [previously 23.7% (-23.7%) and 3.2% (-3.2%) [previously 7.6% (-7.6%)]. Given initial July reporting, the early 3q2021 trend is for annualized contractions of 8.1% (-8.1%) for Permits and 12.5% (-12.5%) for Starts. Despite the regular nonsense-reporting volatility in the New Residential Construction series, these quarterly contractions broadly are in line with slowing growth in Construction Employment, which slowed sharply to annualized growth of 0.9% in 2q2021 and is on early track for an annualized contraction of 5.2% (-5.2%) in 3q2021.

That said, the 7.0% (-7.0%) monthly decline in July Housing Starts was shy of being statistically meaningful, and followed a downwardly revised 3.5% [previously 6.3%] monthly gain in June. Year-to-year, the 2.5% gain in July 2021 Housing Starts was not statistically significant, particularly as measured against the ongoing, extreme volatility in Pandemic-driven activity of one-year ago. In terms of a consistent benchmark, the July 2021 Housing Starts activity was down by 3.5% (-3.5%) from its February 2020 Pre-Pandemic Peak. Building Permits are a non-indicator, at present, given data issues that surfaced in April’s benchmarking, where a large number of Building Permits ended up lapsed or expired due to COVID-19 disruptions.

B U S I N E S S .. C Y C L E -- [See pending No. 1460c for expanded coverage] RECESSION-DEPRESSION TIMING – The 2020 Economic Downturn Remains Far from Recovery. The 2020 Pandemic-Driven Recession has been timed by the defining National Bureau of Economic Research (NBER), from Peak-to-Trough, as from February 2020 to April 2020 [2 months, the shortest on record] and from Fourth-Quarter 2019 to Second-Quarter 2020 [2 quarters]. That said, an economic downturn traditionally has been known as a “Depression,” which has two components the “Recession” and the “Recovery.” After the economic terror of the Great Depression, economic downturns took on the more-euphemistic “Recession” title. The NBER called an end to the 2020 Recession on July 19th, again, just the first leg of the Depression. Recessions are measured only from Peak-to-Trough, while Recoveries are measured from Trough-to-Regaining-the-Pre-Recession-Peak (timing not formally called by the NBER), which is far from being at hand despite strength in some major numbers such as the GDP. Thereafter, an “Expansion” is in place until the next formal “Peak,” which, the NBER does time.

[Updated September 17th for September Consumer Sentiment] Despite significant recovery, the August 2021 Payroll Employment current shortfall against its February 2020 Pre-Pandemic/ Recession Peak remained weaker than the payroll troughs of the last seven Recessions, back to 1957, other than for the Great Recession. Reviewed in pending No. 1460c, Payroll Employment is one of the higher-quality economic statistics published by the U.S. government, and while it has recovered meaningfully from its April 2020 bottom, August 2021 activity still was shy by 3.50% (-3.50%) of recovering its Pre-Recession (Pre-Pandemic) Peak. Putting that in perspective, other than for the Great Recession, such still was deeper than all the troughs of activity in the last seven Recessions back to 1957. If the economy is slowing anew, as indicated by mounting headline reporting, those labor numbers present a continuing, major economic issue for the FOMC and the Federal Government. Some anecdotal evidence suggests that activity has slowed or is slowing, with early signs of a double-dip downturn. Consider reports of flattening activity in areas like Florida, which had been booming recently, to quarterly contractions in Construction, to the University of Michigan’s August Consumer Sentiment Index collapsing to a new Pandemic trough with the subsequent early-September 2021 Sentiment holding at that trough.

Economic, FOMC, financial-market, political and social circumstances all continue to evolve along with the Pandemic and unfolding political circumstances. COVID-19 vaccines and improved treatment have helped boost the economy, which, again remains far from full recovery, yet new Pandemic issues appear to be unfolding. Full economic recovery is not likely until 2023 or after. Many segments and regions of the U.S. economy, and individual, personal circumstances have suffered severe structural damage from the shutdown, areas that likely will take years to recover fully. Accordingly, ongoing massive Fiscal and Monetary Stimuli will be needed and likely will expand well into 2023, per both the current FOMC outlook and the ongoing ShadowStats assessment, irrespective of hints of FOMC “Tapering” being floated at present.

S Y S T E M I C .. R I S K -- [See MONEY SUPPLY and MONETARY BASE Sections for the August 24th Benchmarked Money Supply Details, the September 3rd publication here of the Preliminary August 2021 Monetary Base, and the September 17th look at early-September through the 15th] The July 2021 FOMC Held Existing Policies in Place, as Expected (July 28th, Federal Reserve Board’s Federal Open Market Committee [FOMC] Statement and Federal Reserve Chairman Jerome S. Powell’s Press Conference). At his Press Conference, and in context of unchanged Monetary Policy, Chairman Powell discussed the “... prospect that inflation could turn out to be higher and more persistent than we expect.” He went on to explain that should the FOMC become convinced of such a circumstance, it would take appropriate monetary action to bring that inflation issue under control. The formal economic, inflation and interest rate forecasts, which roiled the markets after the June meeting, are quarterly and will not be updated until the September 21st/22nd FOMC Meeting.

The July 28th Federal Reserve Press Release repeated, as usual, its reconfirmation that: “The Committee [FOMC] seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation having run persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved.”

(August 24) MONEY SUPPLY – In Context of Ongoing Benchmark Revisions, July 2021 Money Supply Annual Growth Continued to Explode, With All the Major Money and Monetary Measures at New Peak Levels of Activity and at Historic or Cycle-High Levels of Growth [No Signs of Tapering] (Federal Reserve Board – FRB, ShadowStats). The regular Historic Money Supply Tables and Graphs through July 2021 have been posted on ALTERNATE DATA TAB, linked above, fully updated for the August 24th continuing Benchmark Revisions of the Money Supply, back to 1996. Where the Pandemic hit the U.S. economy and financial system hard in March and April 2020, the Federal Reserve responded with massive expansion of the Money Supply -- Systemic Liquidity. Accordingly, comparative year-to-year change in the various March 2021 to July 2021 Money Supply measures against the heavily spiked year-ago activity tend to be depressed, against what otherwise would be the change versus the February 2020 Pre-Pandemic Trough, effectively the “Base Circumstance,” before the emergency liquidity surge. Background definitions and related detailed discussion, historical data and graphs for each of the Money Supply Series were covered in Benchmark Commentary No. 1459, with updated details pending in No. 1460c The Fed’s release of the August 2021 Money Supply details is scheduled for September 28th.

Here is how the July 2021 Money Supply numbers shaped up. ShadowStats “Basic M1” (Currency plus Demand Deposits [83% of the “old” pre-May 2020 M1]) surged by an historic 91.7% in July 2021, against the February 2020 Pre-Pandemic Trough, up from a revised 87.6% [previously 87.8%] gain in June 2021 [in contrast, Pandemic-distorted year-to-year change rose to 56.7% in July 2021, versus a revised 55.9% [previously 56.1%] in June 2021]. In like manner for the broader Money Supply measures, July 2021 activity versus the February 2020 Pre-Pandemic trough for the newly redefined headline M1 (now including Savings Deposits, at about 92% of M2,) was up by a new “consistent-reporting” record annual growth of 39.2% versus 38.0% in June. Separately, M2 was up by a record 32.7%% in July, versus 31.7% in June, against the Pre-Pandemic Trough, while the ShadowStats Ongoing-M3 Estimate was up by a record 26.7% in July 2021, versus 26.1% in June 2021. The flight of cash to relatively greater liquidity continues.

[Updated September 17 for early September indications] MONETARY BASE – Early numbers in September 2021 show a continuing Monetary Base Surge, where the ShadowStats “Preliminary” Estimate of the August 2021 Monetary Base showed that it gained a Cycle-High 83.0% against Its February 2020 Pre-Pandemic Trough, Up from the prior high of 77.5% in July 2021. (FRB, ShadowStats). The “Preliminary” August Estimate was imputed from weekly data available through the week-ended September 1st. ShadowStats “Preliminary” July Estimate based on the weekly data was 77.3%, prior to the Fed’s monthly release of 77.5%, some weeks later. The Monetary Base broadly moves on a parallel basis with the Money Supply, but the Monetary Base now will not hit the record annual growth levels of the 2007-2008 Banking System Collapse, which at the time exploded Reserve Balances (up 5,000 percent year-to-year, but which never reversed in parallel in a post-Crisis movement). Nonetheless, those current patterns of change in the aggregate Monetary Base reflected parallel changes in the Reserve Balances at Federal Reserve Banks component surging from 138.0% in July 2021 to a new Cycle-High of 149.4% in August 2021. The Currency in Circulation component has continued hitting successive, historic all-time high dollar levels and record-high growth rates against the Pre-Pandemic Trough, at 21.7% in August 2021, up from 21.6% in July 2021. Just-released weekly reporting by the Fed through September 15th, shows continuing expansion of the Monetary Base. Further detail and graphs follow in No. 1460c.

Systemic Turmoil is just beginning, with both the Fed and U.S. Government driving uncontrolled U.S. dollar creation, between unconstrained Money Supply growth and uncontained Deficit Spending. Again, continued extraordinary Monetary and Fiscal Stimulus will be needed at least into 2022, quite likely into 2023, irrespective of the nature of the COVID-19 vaccines. Indeed, likely leading into accelerating inflation, Hyperinflation, both extreme Monetary and Fiscal stimuli are underway. Discussions on the inflation threat and re-accelerating money growth are found in Special Hyperinflation Commentary, Issue No. 1438, subsequent missives including particularly No. 1451, No. 1454, No. 1460b and pending No. 1460c.

(April 6) U.S. GOVERNMENT FINANCIALS - U.S. Government 2020 Financial Statements. -- The deepening deficit net worth of the U.S. Government’s financial condition hit a record shortfall – negative net worth – of $113.8 trillion in fiscal year 2020 (year-ended September 30), widening from a $103.4 trillion negative net worth in 2019. That 2020 shortfall reflected an operating deficit “Net Position” or operating negative net worth of $26.8 trillion in 2020, widening from a Net Position deficit of $23.0 trillion in 2019, plus deepening unfunded Social Security and Medicare net liabilities (Closed Group) of $87.0 trillion in 2020, versus $80.4 trillion in 2019. As did her predecessors, Treasury Secretary Janet L. Yellen described the current “Fiscal Path” as “Unsustainable,” with the government’s current Debt-to-GDP ratio at 100% in 2020, predicted to go to 623% before the end of the Century. Those indications are overly optimistic in the extreme. Allowing for the “Unfunded” Liabilities, the Debt-to GDP ratio was 531% in fiscal 2020. The 2020 Financial Report is available here: -- ShadowsStats will provide extended analysis in a pending Benchmark Commentary.

SHADOWSTATS ALERT: In context of the still-evolving Coronavirus Pandemic and related economic 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, irrespective of recent relative weakness in gold prices and related Central Bank or other market machinations, the ShadowStats broad outlook in the weeks and months ahead remains for: (1) A continuing and renewed 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, (3) Mounting renewed selling pressure on the U.S. dollar, against the Swiss Franc and other stronger currencies, and (4) Despite recent extreme Stock Market volatility and current record or near-record high levels in the popular U.S. stock-market indices, high risk of major instabilities and heavy stock-market selling continues, 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 being gamed by the FOMC.

.. P O S T I N G .. S C H E D U L E .. (September 17) Economic Commentary No. 1460c is in final production and will post over the weekend, possibly Monday morning. A particularly important and extensive missive, it covers all the latest headline reporting of and revisions to Inflation, Money Supply, Employment, Production, Retail Sales, Construction, GDP and recast Recession-Depression graphs, all in context of an updated Review of, and Outlook for the still evolving U.S. Economic Downturn and Business Cycle. It also reviews ongoing and pending FOMC actions, and an outlook for rapidly intensifying Inflation, including the latest CPI, PPI, GDP Deflator and Alternate Inflation Measures. The reporting schedule remains fluid, with actual postings advised to Subscribers by a coincident e-mail, along with appropriate links.

PENDING ECONOMIC NUMBERS AND EVENTS: The Census Bureau will publish August 2021 New Residential Construction on Tuesday, September 21st (at 8:30 a.m. ET). The September 22nd FOMC Meeting Statement follows on September 22nd (at 2:00 p.m. ET), with Chairman Powell’s Press Conference a half hour later. ShadowStats coverage here will follow late-day for both developments.

ARCHIVES - VIEWING EARLIER COMMENTARIES. ShadowStats postings of May 2021 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 (above) provides the latest headline data and exclusive ShadowStats Alternate Estimates and related Graphs of Inflation, GDP, Unemployment, Money Supply and the ShadowStats Financial-Weighted U.S. Dollar. Data downloads and the Inflation Calculator are subscriber only.

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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