bullet edition number 15 · the past week’s unfolding activity, reviewing economic releases,...

Copyright 2019 Shadow Government Statistics, Walter J. Williams, www.shadowstats.com 1

Bullet Edition Number 15

FOMC Preview, November Labor and October Trade Details

December 8, 2019

____________

There Is No Sustainable, Moderate U.S. Economic Growth in Play,

Irrespective of Federal Reserve Pronouncements

FOMC Needs to Cut Rates to Boost the Economy and Help Consumers,

But It Likely Will Not Do So at Its December 10th to 11th Meeting

The FOMC Likely Will Continue to Meet Any Unexpected Funding Needs of

Its Parent Banking System, In Order to Maintain Systemic and Market Liquidity

Record Low Headline Unemployment Continued Amidst

Levels of Labor-Market Stress Consistent With a Major Recession

Annual Payroll Growth Should Drop to Its Post-Great Recession Low, Along

With the Benchmark Revisions Indicated for Headline January 2020 Payrolls

Improved October Trade Deficit Was an Artefact of the General Motors Strike,

Which Otherwise Put a Dent in Recent GDP Activity

November 2019 Money Supply M3 Annual Growth

Jumped to 8.5%, Highest Since February 2009

____________

Shadow Government Statistics — Bullet Edition No. 15 — December 8, 2019


_________________________________________________________________________________

Updated ShadowStats Commentaries and Scheduling (Effective Immediately - Published previously in Special Commentary No. 985)

More-Frequent Publication and Making the Various ShadowStats Commentaries More Concise

Updated Timing, Re-Tasking and Scope of the Various ShadowStats Commentaries:

Daily Updates, Bullet Editions, Flash Updates, Special Commentaries & Watches

The Daily Update (Unrevised) posts daily, as needed, on the ShadowStats home page:

www.ShadowStats.com, right-hand column, providing initial coverage of all major U.S.

economic reporting, within two-to-three hours of headline publication, as well as coverage of

unusual financial-market or political developments.

Bullet Edition (Revised) publishes each weekend, providing ShadowStats primary coverage of

the past week’s unfolding activity, reviewing economic releases, financial-market, systemic and

political developments. [Next planned release: Bullet Edition No. 16 (December 15th) covering

November CPI, PPI and Retail Sales.]

Flash Update (Revised) interspersed with Bullet Editions is limited in scope, highlighting near-

term events or developments—usually same- or next-day—with the economy, financial markets,

politics, the Federal Reserve or with other news of significance that should be reviewed in

advance of the Weekend Bullet Edition. [Next release planned: Flash Update No. 16 (December

11th, covering the December FOMC Meeting.]

Special Commentaries (Revised) should publish every quarter or so, providing a more-

comprehensive overview of general, broad economic and financial conditions and trends, such as

seen in the just-published Special Commentary No. 985.

Hyperinflation and Consumer Liquidity Watches (Revised) will supplement irregularly the

weekly Bullet Edition, covering evolving market and consumer circumstances, otherwise with

occasional specific data covered directly in the weekly Bullet Editions.

Economic Surveys of the General Public are conducted irregularly and are open to both

subscribers and nonsubscribers.

Telephone Consulting is included as part of our regular service. If you have a question or

otherwise would like to talk, please call John Williams at (707) 763-5786.

All Current and Earlier ShadowStats Commentaries (back to 2004) are available in the Archives (click

on All Commentaries, then List Commentaries) in the left-hand column of the ShadowStats Home Page.

Your comments and suggestions are invited. Always happy to discuss what is happening.

Best Wishes — John Williams (707) 763-5786, [email protected]

_________________________________________________________________________________

http://www.shadowstats.com/article/c985s.pdf

http://www.shadowstats.com/


http://www.shadowstats.com/commentaries?ym=-1&show=List+Commentaries


mailto:[email protected]



Contents – Bullet Edition No. 15

Overview 4 FOMC and the U.S. Economy 4

Economic Activity – Latest Numbers and General Outlook 6 November Employment and Unemployment, Payrolls 6 Household Employment and Unemployment Survey 6 Current Labor-Market Stress: Common to Recession, Not to Record-Low Unemployment 6

Graph 1: Comparative Headline November 2019 Unemployment Rates: U.3, U.6 and ShadowStats Alternate ..................... 6

Graph 2: Civilian Employment-Population Ratio, January 1994 to November 2019 ............................................................ 8

Graph 3: ShadowStats-Alternate Unemployment Rate, Inverted Scale, January 1994 to November 2019 .............................. 8

Graph 4: Headline Participation Rate, January 1994 to November 2019 ............................................................................. 9

Graph 5: Headline U.3 Unemployment Rate, Inverted Scale, January 1994 to November 2019 ............................................ 9

Nonfarm Payroll Employment Buffeted by GM Strike .. 10

Graph 6: Nonfarm Payroll Employment, Monthly 1939 to Date ......................................................................................... 11

Graph 7: Nonfarm Payroll Employment, 2000 to Date ...................................................................................................... 11

Graph 8: Year-to-Year Change, Payroll Employment, Monthly, 1940 to Date .................................................................... 12

Graph 9a: Year-to-Year Change, 2000 to Date ................................................................................................................. 12

Graph 9b: Year-to-Year Change, 2000 to Date, Reflecting Implied Annual Benchmarking ................................................. 13

Graph 10: Retail Sales Payroll Employment, January 2000 to November 2019 ................................................................. 14

Graph 11: Retail Sales Payroll Employment Year-to-Year Change, January 2000 to November 2019 ................................ 14

Graph 12: Construction Payroll Employment, January 2000 to November 2019 ............................................................... 15

Graph 13: Construction Payroll Employment Year-to-Year Change, January 2000 to November 2019 .............................. 15

Graph 14: Manufacturing Payroll Employment, January 2000 to November 2019 ............................................................ 16

Graph 15: Manufacturing Payroll Employment Year-to-Year Change, January 2000 to November 2019............................ 16

Skewed by GM Strike, 4q2019 Trade Deficit Likely Narrowed, 1q2019 Should Widen 17

Graph 16a: Real Trade Deficit, 1q1994 to Early 4q2019 (Reflecting Only GM-Strike Disrupted October Level) ............... 17

Graph 16b: Real Merchandise Trade Deficit, 1q1994 to Full 4q2019 (Estimated Impact from End of GM Strike) ............. 18

Graph 17: Net Exports of Goods and Services (GDP Accounting) 1q1994 to Third Quarter 3q2019 ................................. 18

Consumer Needs and Finances 19

Graph 18: Real Average Weekly Earnings – Production and Nonsupervisory Employees ................................................... 19

Graph 19: Real Consumer Credit Outstanding (Ex-Federally Held Student Loans)............................................................ 20

Graph 20: Total Real Credit Market Debt Outstanding, Household Sector ........................................................................ 20

Federal Reserve Activity 21

Graph 21: Nominal Annual Growth, Money Supply M1, M2, M3 – Official and ShadowStats Continuation ........................ 21

Graph 22: St. Louis Fed Adjusted Monetary Base – Bi-Weekly, Level, 2000 to Date ......................................................... 22

Graph 23: St. Louis Fed Adjusted Monetary Base – Bi-Weekly, Year-to-Year Change, 2000 to Date ................................. 22



Overview

FOMC and the U.S. Economy

FOMC POLICY – Despite Unexpected, Continuing and Deepening Weakness in Key Economic

Indicators, the FOMC Likely Will Keep Rates Unchanged at Its December Meeting. Business

indicators ranging from Freight Activity (see Special Commentary No. 985), to Consumer Liquidity

conditions (see Consumer Needs and Finances page 19, Graphs 18 to 20), show dire need for economic

stimulus. Yet, contrary to the needs of the economy and the consumer, the FOMC likely will tout bloated

headline reporting of November labor conditions as a rationale for not easing anew at its December 10th

to 11th meeting.

The October FOMC cut targeted Federal Funds Rate by the expected quarter point, to a range of 1.50% to

1.75%, with Balance Sheet expansion continuing into Mid-2020. The economy was just perfect, then, per

the Fed, with ―sustained, moderate expansion,‖ except for then crashing Industrial Production and

collapsing Freight Activity, which only have deteriorated, along with the intensifying need for increased

systemic liquidity.

Despite the Fed’s October 30th Spiel of perfect economic balance, it really needs to ease anew at this

December Meeting; it should not wait until January 28th to 29th 2020. The FOMC fantasy economy and

stable liquidity remain anything but balanced and stable (see Flash Update Nos. 13, 14 and 15, As

discussed in Special Commentary No. 985, it was FOMC actions and inactions and lack of appropriate

Federal Reserve oversight, that led to the banking collapse of 2007/8 and the broad non-expansion of

economic activity for nearly a decade, as well as triggering the currently unfolding recession, through its

overly aggressive tightening since late 2017.

Nonetheless, as expectations continue to build for a Fourth-Quarter 2019 GDP contraction, easing

pressures are not going to go away quickly. Pressures indeed should mount rapidly on the Fed for an

early, continued and expanded accommodation (as at the January Meeting), unless common sense takes

better hold of the December Meeting. Such remains contrary to the desires of some on the FOMC Board,

who would prefer to push interest rates higher, once again, in aid to an increasingly troubled banking

system. Even so, the FOMC appears to have set up something that may become akin to perpetual

Quantitative Easing (QE).

Quantitative Easing in Continual Expansion. Along those lines, the December FOMC likely will

continue to expand its ―unofficial‖ renewed QE, which followed the October FOMC, in order to assure

needed liquidity and stability in the overnight markets, for the benefit of liquidity in the banking system,

which owns the Federal Reserve, and for stability of the financial-markets. See Graphs 22 to 23 in the

Federal Reserve Activity section on page 21 and, more broadly, the discussion on the Federal Reserve in

Special Commentary No. 983-B.


http://www.shadowstats.com/article/cflash13.pdf




http://www.shadowstats.com/article/c983b.pdf



ShadowStats Broad General Outlook Has Not Changed. ShadowStats’ Recession Forecast remains in

place, with U.S. Economic activity in a deepening downturn, as detailed in the recently published Special

Commentary No. 985. Complicated and intensified by deteriorating domestic political circumstances;

watch for a likely accelerating flight from the U.S. Dollar and Stocks into Gold.

With U.S. stocks indices at or near all-time highs, consider that gold has outperformed equities since the

stock-market highs of a year ago (see Flash Update No. 14). Beyond intensified near-term financial-

market risks from negative economic, liquidity and political issues, the ShadowStats broad outlook in the

weeks and months ahead remains for:

A rapidly intensifying U.S. economic downturn, reflected in

Mounting selling pressure on the U.S. dollar, against currencies such as the Swiss Franc,

Continued flight to safety in precious metals, with upside pressures on gold and silver prices, and

Increasingly high risk of extraordinarily heavy stock-market selling.

See details in Flash Update No. 14.

____________________

[Economic Activity – Latest Numbers and General Outlook begins on the next page.]







Economic Activity – Latest Numbers and General Outlook

November Employment and Unemployment, Payrolls

Household Employment and Unemployment Survey

Current Labor-Market Stress: Common to Recession, Not to Record-Low Unemployment

Historic-Low Unemployment Remains at Odds With Labor-Market Stresses and Deteriorating,

Underlying Economic Conditions. Historically low U.3 unemployment is consistent with an economic

boom, yet high levels of employment stress and a headline ShadowStats Alternate Unemployment

Measure of 20.9% signal an Economy that never fully recovered from the Great Recession.

Graph 1: Comparative Headline November 2019 Unemployment Rates: U.3, U.6 and ShadowStats Alternate

November 2019 U.3 Unemployment eased negligibly to 3.53%, from 3.56% in October (no Auto Strike

distortions), against its historic low 3.52% in September. Rounded to the headline first decimal point,

November U.3 eased to 3.5%, from 3.6% in October and against 3.5% in September. In contrast, extreme

levels of labor–market stress continued [an unchanged Employment-Population Ratio of 61.0%, and a

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0%

5%

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20%

25%

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

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U.S. Unemployment Rates Headline (U.3 and U.6) versus ShadowStats Alternate

1994 to November 2019, Seasonally-Adjusted [ShadowStats, Bureau of Labor Statistics]

Official Recession

U.3 Unemployment Rate

U.6 Unemployment Rate

ShadowStats Unemployment Rate



rounded decline of 0.1% (-0.1%) in the Participation Rate to 63.2%], both consistent with an ongoing

recession. They also were more consistent with the ShadowStats 20.9% Alternate Unemployment Rate

than the historically low headline U.3 headline 3.5% unemployment.

Reflecting a monthly decline for those working part-time for economic reasons and an increase in

marginally attached workers (a decline in headline discouraged workers), broader November 2019 U.6

Unemployment declined to 6.87%, from 6.96% in October, versus 6.91% in September. Riding on top of

U.6, the November ShadowStats Alternate Unemployment Estimate, including long-term displaced and

discouraged workers, not counted by the Bureau of Labor Statistics (BLS), declined to 20.9%, from

21.0% in October, versus 20.9% in September. Graph 1 plots those three series since the 1994-

redefinition of the numbers .

The major issue with the current, historically low U.3 headline unemployment rate remains that it still

runs counter to Labor-Market Stress measures, such as the Employment-Population Ratio (Graph 2) and

Participation Rate (Graph 5), which continue to hold at levels consistent with a recession. Under normal

economic circumstances, the high levels of employment stress seen at present, usually would be

consistent with high levels of unemployment and recession, not at record low unemployment, as seen in

the comparative inverted-scale Graph 5 of the headline U.3 unemployment rate, versus Graph 3 of the

inverted-scale, high-level ―recessionary‖ ShadowStats Alternate unemployment measure.

[Further detail and background on the circumstance is found on the Alternate Data Tab (Unemployment

Link) of www.ShadowStats.com, with an up-to-date data table and link there to ShadowStats’ Public

Comment on Unemployment.]

[Graphs to 2 to 5 begin on the next page.]




Graph 2: Civilian Employment-Population Ratio, January 1994 to November 2019

Graph 3: ShadowStats-Alternate Unemployment Rate, Inverted Scale, January 1994 to November 2019

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58%

59%

60%

61%

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65%1

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Civilian Employment-Population Ratio To November 2019, Seasonally-Adjusted [ShadowStats, BLS]

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1010%

11%

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ShadowStats-Alternate Unemployment Rate (Inverted Scale) Long-Term Discouraged/Displaced Workers Included (BLS Excluded Since 1994)

To November 2019, Seasonally-Adjusted [ShadowStats, BLS]



Graph 4: Headline Participation Rate, January 1994 to November 2019

Graph 5: Headline U.3 Unemployment Rate, Inverted Scale, January 1994 to November 2019

0

1

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3

4

5

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7

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9

10

62.0%

62.5%

63.0%

63.5%

64.0%

64.5%

65.0%

65.5%

66.0%

66.5%

67.0%

67.5%1

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Participation Rate [Labor Force as a Percent of Population] To November 2019, Seasonally-Adjusted [ShadowStats, BLS]

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9

103.0%

4.0%

5.0%

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10.0%

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U.3 Unemployment Rate (Inverted Scale) To November 2019, Seasonally-Adjusted [ShadowStats, BLS]



Nonfarm Payroll Employment Buffeted by GM Strike

Major Pending Downside Benchmark Revisions to Payroll Reporting Will Not Hit the Headline

Monthly Details Until the Formal January 2020 Revisions, Published on February 7, 2020. Flash

Update No. 5 of August 21st detailed the preliminary 2019 payroll downside benchmarking of 501,000

(-501,000) jobs, primarily in the Retail Sales and related Leisure and Hospitality sectors, which had the

effect of eliminating 20% of the headline growth in payrolls of the prior year. None of these revisions has

been incorporated into headline data, yet.

Separately, a closer-term headline disruption was seen with the headline monthly payroll employment

growth in October and November 2019 tied to the effects of the automobile manufacturing strike at

General Motors. The strike also affected the monthly headline trade deficit, as will be discussed shortly.

The Bureau of Labor Statistics estimated the strike cost manufacturing 42,000 jobs in October, adding

41,000 in November. Headline detail, reflecting the strike’s impact on employment levels and year-to-

year change in payrolls is plotted as reported, in accompanying Graphs 6 to 9 and Graphs 14 and 15.

Annual Payroll Growth of 1.5% Seen in November 2019 Has Been Stagnant for Seven Months,

Holding Well Off the Three-Year Peak Growth of 2.0% in January 2019. Adjusted for the GM strike,

annual growth was at levels last seen coming out of the Great Recession. With major negative benchmark

revisions pending, annual growth clearly should show the weakest annual growth levels of the post-Great

Recession era, hardly sustainable moderate growth (as suggested and reflected in Graph 9b).

The heavily gimmicked current Payroll Employment reporting still does reflect the impact of a

preliminary negative benchmarking of 501,000 (-501,000) jobs, which will be incorporated into the

formal benchmark revisions published with the headline January detail in February 2019. The existing

headline annual growth in Payrolls has been stagnant at 1.5% since May 2019, well off its recent three-

year peak growth of 2.0% in January 2019.

Beyond the pending plunge in annual payroll growth, the tenth straight month of annual decline in Retail

Trade employment (see Graphs 10 and 11), down year-to-year by 0.2% (-0.2%) in November 2019,

should be of some concern to the markets, for the first reading on the Holiday Shopping Season.

Separately, Graphs 12 through 15 of Construction and Manufacturing should not have the hawks on the

FOMC salivating.

[Graphs to 6 to 15 begin on the next page.]





Graph 6: Nonfarm Payroll Employment, Monthly 1939 to Date

Graph 7: Nonfarm Payroll Employment, 2000 to Date

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Nonfarm Payrolls Seasonally-Adjusted Jobs 1939 to November 2019 [ShadowStats, BLS]

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Nonfarm Payroll Employment Seasonally-Adjusted Levels to November 2019 [ShadowStats, BLS]



Graph 8: Year-to-Year Change, Payroll Employment, Monthly, 1940 to Date

Graph 9a: Year-to-Year Change, 2000 to Date

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Nonfarm Payrolls Year-to-Year Percent Change 1940 to November 2019, Not Seasonally Adjusted [ShadowStats, BLS]

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-6%

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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Nonfarm Payrolls Year-to-Year Percent Change 2000 to November 2019, Not Seasonally Adjusted [ShadowStats, BLS]



Again, consider Graph 9b, with an approximation as to what current headline year-to-year change in

Nonfarm Payrolls should look like after the February 7, 2020 benchmarking. Retail Sales (and related

Leisure and Hospitality) should be heavily impacted, major series that never were benchmarked

adequately in the last year, as discussed in the recently published Special Commentary No. 985.

Graph 9b: Year-to-Year Change, 2000 to Date, Reflecting Implied Annual Benchmarking

Look at these graphs of the latest headline levels of, and year-to-year growth in Payroll Employment in

the major sectors of Retail Sales, Construction and Manufacturing (Graphs 10 to 15). Do these reflect

―Sustainable Moderate Growth‖ as touted by the Federal Reserve?

[Graphs 10 to 15 begin on the next page.]

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Nonfarm Payrolls Year-to-Year Percent Change Indicated Partial 2019 Benchmarking

2000 to November 2019, Not Seasonally Adjusted [ShadowStats, BLS]

Official Recession

Current Headline Detail

Implied Benchmarking




Graph 10: Retail Sales Payroll Employment, January 2000 to November 2019

Graph 11: Retail Sales Payroll Employment Year-to-Year Change, January 2000 to November 2019

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Retail Trade Payroll Employment to November 2019 Millions of Jobs, Seasonally-Adjusted [ShadowStats, BLS]

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Retail Trade Payroll Employment Year-to-Year Percent Change to November 2019 Not Seasonally Adjusted [ShadowStats, Census Bureau]



Graph 12: Construction Payroll Employment, January 2000 to November 2019

Graph 13: Construction Payroll Employment Year-to-Year Change, January 2000 to November 2019

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Construction Payroll Employment to November 2019 Seasonally-Adjusted [ShadowStats, BLS]

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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Construction Payroll Employment Year-to-Year Percent Change to November 2019 Not Seasonally Adjusted [ShadowStats, Census Bureau]



Graph 14: Manufacturing Payroll Employment, January 2000 to November 2019

Graph 15: Manufacturing Payroll Employment Year-to-Year Change, January 2000 to November 2019

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Manufacturing Payroll Employment to November 2019 Seasonally-Adjusted [ShadowStats, BLS]

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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Manufacturing Payroll Employment Year-to-Year Percent Change to November 2019

Seasonally Adjusted [ShadowStats, Census Bureau]



Skewed by GM Strike, 4q2019 Trade Deficit Likely Narrowed, 1q2019 Should Widen

October 2019 Trade Deficit Narrowed by $4.2 Billion, Encompassing Impact of the General Motors

Strike. Reported by the Census Bureau and Bureau of Economic Analysis on December 5th, the sharp

narrowing of the October Trade Deficit to $47.2 billion, from a revised $51.1 (previously $52.5) billion in

September largely reflected reduced imports due to the GM strike, which also contributed to the $2.4

billion narrowing of September deficit. While a narrowed deficit boosts GDP, the full impact of the GM

strike still will be a net negative for the GDP (see discussion of Industrial Production impact in Special

Commentary No. 985). Separately, where the monthly trade deficits narrowed in revision back to April,

the relative Third-Quarter 2019 versus Second-Quarter 2019 deficit narrowed only minimally, with

minimal positive-revision implications for the third-estimate of Third-Quarter 2019 quarterly GDP

growth.

Where ShadowStats usually annualizes the first month of a new quarter’s trade deficit for purposes of

estimating impact on the quarterly trade deficit, major disruptions from the GM strike are taken into

account here.

Graph 16a reflects the annualized estimate of the GM-disrupted narrowing of the October trade deficit,

but offsetting changes can be projected for the full quarter, as reflected in Graph 16b, which should align

more accurately with the Fourth-Quarter 2019 GDP estimate of Net Exports.

Graph 16a: Real Trade Deficit, 1q1994 to Early 4q2019 (Reflecting Only GM-Strike Disrupted October Level)

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Real U.S. Merchandise Trade Deficit (Census Basis) Quarterly Deficit at Annual Rate, 1994 to Early 4q2019 (GM Impacted Oct)

Seasonally-Adjusted [ShadowStats, Census]





Graph 16b: Real Merchandise Trade Deficit, 1q1994 to Full 4q2019 (Estimated Impact from End of GM Strike)

Graph 17: Net Exports of Goods and Services (GDP Accounting) 1q1994 to Third Quarter 3q2019

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Real U.S. Merchandise Trade Deficit (Census Basis)

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U.S. Net Exports of Goods and Services (GDP Accounting) Quarterly Deficit at Annual Rate (1q1994 to Second Estimate 3q2019)

Benchmark-Revised, Seasonally-Adjusted [ShadowStats, BEA]



Consumer Needs and Finances

Consumers Drive the Economy, but They Need Income and Credit Growth to Expand Activity.

Graph 18 plots headline real average weekly earnings back to 1965, as published by the Bureau of Labor

Statistics. While headline U.3 unemployment purportedly is at a headline 50-year low, headline real

average weekly earnings remain below where they were in the late 1970s. You do not want to look at it,

net of adjustments for inflation reporting gimmicks over the same period (ShadowStats-Alternate

Inflation adjustment, orange line).

Graph 18: Real Average Weekly Earnings – Production and Nonsupervisory Employees

With any luck, headline inflation-adjusted consumer credit can make up any difference in real income

shortfall. Yet, as broadly measured by the Federal Reserve, the inflation-adjusted level of Consumer

Credit never has recovered its pre-Great Recession high, still shy minimally by 10% (-10%). Is there

something here the FOMC could do to help the consumer? Nothing further is needed with ―sustainable,

moderate economic growth.‖

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Real Average Weekly Earnings - Production and Nonsupervisory Employees

Deflated by CPI-W versus ShadowStats-Alternate (1990-Base) 1965 to October 2019, Seasonally-Adjusted [ShadowStats, BLS]

Official Recession

Real Earnings Adjusted for Headline CPI-W

Adjusted for ShadowStats-Alternate CPI-W



Graph 19: Real Consumer Credit Outstanding (Ex-Federally Held Student Loans)

Smoothed 12-month moving average to October 2019 remains shy by 12.0% (-12.0%) of regaining its June 2008 peak.

The later peak here, versus Graph 20, is due to using a 12-month smoothed moving average.

Graph 20: Total Real Credit Market Debt Outstanding, Household Sector

Second-Quarter 2019 remains shy by 10.0% (-10.0%) of regaining its Third-Quarter 2007 peak.

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Ex-Federally Held Student Loans (Deflated by CPI-U) Unadjusted by Month and Smoothed with a 12-Month Trailing Average To October 2019, Not Seasonally Adjusted [ShadowStats, FRB, BLS]

Recessions

Ex-Federally Held Student Loans

12-Month Trailing Average

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To 2q2019, Seasonally-Adjusted [ShadowStats, FRB Flow-of-Funds, BLS]



Federal Reserve Activity

The Fed Has Been Pumping Some Cash Into the System. On the plus-side of FOMC activity,

November 2019 Money Supply M3 annual growth jumped to 8.5%, its highest level since February 2009,

with the narrower M1 and M2 measures both topping seven percent.

Graph 21: Nominal Annual Growth, Money Supply M1, M2, M3 – Official and ShadowStats Continuation

After dumping its systemic bailout assets in recent years, in the context of its new non-Quantitative

Easing QE, the Fed has been buying assets, albeit minimally, as can be seen in accompanying Graphs 22

and 23, of the level and annual change in the St. Louis Fed’s measure of the Adjusted Monetary Base.

Positive movement in both areas should have some positive economic impact in the year ahead.

[Graphs 22 and 24 follow on the next page.]



Graph 22: St. Louis Fed Adjusted Monetary Base – Bi-Weekly, Level, 2000 to Date

Graph 23: St. Louis Fed Adjusted Monetary Base – Bi-Weekly, Year-to-Year Change, 2000 to Date

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Seasonally-Adjusted [ShadowStats, St. Louis Fed]

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