DAILY UPDATE (September 29th to 30th) - Next Publication: Economic Commentary, Issue No. 1450 will post late September 30th or October 1st, reviewing the latest economic and Federal Reserve circumstances (See Updated ShadowStats Postings – Commentaries). - Pending Data: Wednesday, September 30th, Third Estimate of Second-Quarter 2020 GDP. • G E N E R A L .. H E A D L I N E S .. - Pandemic-Driven U.S. Economic Collapse Continues in a Hardening, Protracted “L”-Shaped Recovery - Panicked, Unlimited Federal Reserve Money Creation and Federal Government Deficit Spending Continues and Has Begun to Trigger Major Domestic Inflation - With Fundamental Dollar Debasement Intensifying, Holding Physical Gold and Silver Protects the Purchasing Power of One’s Assets 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 .. August 2020 New Orders for Durable Goods Hit Again by Canceled Commercial Aircraft Orders (September 25th, Census Bureau). In context of small upside revisions to July and June activity, the monthly gain in nominal August 2020 New Orders fell to 0.4% from an upwardly revised 11.7% in July. Those same numbers ex-Commercial Aircraft were a monthly decline of 0.9% (-0.9%) in August, versus a monthly gain of 9.1% in July. Pandemic-driven net new order cancellations of $41.1 billion since March [an added $2.8 billion in August, albeit smaller than the $6.0 billion cancelled in July] for Commercial Aircraft have savaged aggregate orders. Net of inflation, total real New Orders gained 0.2% in August, down 6.5% (-6.5%) year-to-year. Ex-Commercial Aircraft, inflation-adjusted, real August New Orders declined by 1.1% (-1.1%) in the month, down 2.0% (-2.0%) year-to-year. See expanded detail in pending No. 1450. (September 24) Both Unadjusted Weekly New Claims for Unemployment Insurance (Week Ended Sep 19) and Insured Unemployment (Week Ended Sep 12) Rose Minimally Year-to-Year, Signaling a Stalled Labor Market Recovery (Department of Labor - DOL). Unadjusted year-to-year change in New Claims for Unemployment Insurance has stagnated around 360% to 370% in the last seven weeks, with annual change in Insured Unemployment stagnating around 760% to 780%. This remains consistent with an evolving “L”-shaped economic recovery. See No. 1448 and pending No. 1450 for full background. (September 24, 22) August 2020 New- and Existing-Home Sales Both Rose in the Month, Hitting Post-Great Recession Highs, Yet Still Shy of Ever Recovering Their Pre-Great Recession Peaks (New-Home Sales - NHS - Census / Existing-Home Sales - EHS - National Association of Realtors [NAR] at https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales). In context of continued extreme gyrations and massive revisions, the August 2020 New-Home Sales (Census) monthly gain of 4.8% [12.2% net of revisions], was on top an upwardly revised cumulative July 2020 gain of 69.3% [previously 58.1%] versus the April 2020 Pandemic-driven trough. The monthly gain was not close to being statistically significant, as usual, although its 43.2% annual increase was. Having just hit its post-Great Recession high, NHS still holds shy by 35.1% (-35.1%) of ever recovering its pre-Great Recession peak. August 2020 Existing-Home Sales (NAR) gained 2.4% in the month, on top of an unrevised 24.7% jump in July, with August up by 10.5% year-to-year. August activity was up by 38.6% from its April 2020 Pandemic trough. (September 21) August 2020 Cass Freight Index® Annual Contraction Turned Less Negative, Counter to Faltering Annual Growth in August Manufacturing and Retail Sales (September 21st, CassInfo.com, see detail at https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/august-2020). The year-to-year annual decline of 7.6% (-7.6%) in the August 2020 Cass Freight Index® still remained deep in Pandemic-driven recession territory, continuing its monthly narrowing versus the July 2020 decline of 13.1% (-13.1%), its 17.8% (-17.8%) drop in June, and its near-record annual plunge of 23.6% (-23.6%) in May, which held shy of the April 2009 Great Recession trough record plunge of 25.0% (-25.0%). Nonetheless, the Cass Index’s consecutive monthly year-to-year declines and the still-deepening month-to-month declines in the 12-month trailing average held in place for the 21st straight month, which date back to the pre-Pandemic heady days of December 2018. Those year-to-year and 12-month-moving-average metrics neutralize seasonality in this unadjusted series. ShadowStats regularly follows and analyzes the Cass 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 17) August 2020 New Residential Construction Declined for the Month, on Top of Downside Revisions to July Activity, With Collapsing Multi-Unit Permits and Starts More than Offsetting Surging Single-Unit Permits and Starts (Census Bureau). In context of regular extreme volatility in the monthly headline details and prior-period revisions, August Building Permits and Housing Starts respectively showed statistically meaningful monthly declines of 0.9% (-0.9%) and 5.1% (-5.1%), against downwardly revised levels of July activity. Such were the first month-to month declines in the post-Pandemic recovery period. That said, Single-Unit Permits and Starts respectively jumped by 6.0% and 4.1% month-to-month, but Multiple-Unit Permits and Starts plunged respectively by 14.2% (-14.2%) and 22.7% (-22.7%), turning both the aggregate Permits and Starts negative for the month. August 2020 Permits and Starts held shy of ever recovering their pre-Great Recession peak levels of activity, respectively by 35.0% (-35.0%) and 37.7% (-37.7%). (September 16) August 2020 Real Retail Sales Declined by 0.08% (-0.08%), Net of Revisions and Inflation, Well Below Expectations (Census). Before inflation adjustment, the nominal monthly gain in August Retail Sales of 0.56% (0.29% net of revisions) was on top of a downwardly revised July gain of 0.87% [previously 1.24%]. Net of CPI-U inflation (St. Louis Fed), Real Retail Sales gained 0.18% in the month [declined by 0.08% (-0.08%) net of revisions], versus a downwardly revised monthly gain of 0.28% [previously 0.65%] in July. Real year-to-year growth slowed to 1.23% in August 2020, from a downwardly revised 1.40% [previously 1.69%] in July. While headline real Retail Sales activity still recovered pre-Pandemic levels of activity in June 2020 -- running counter to a collapse in related payrolls and freight activity -- levels of activity in July and August effectively have been flat, running roughly parallel with the developing “L”-shaped recoveries in economic series of better-quality reporting. Expanded coverage follows in No. 1450. (September 15) Income and Poverty Report Distortions – Census Bureau Suggests Serious Data Flaws and Surveying Distortions With Its Just-Published 2019 Annual Income and Poverty Survey (Census). Both the headline 2019 annual real Median Household Income increase of 6.8%, an all-time high, and the 1.3 percentage point drop in the 2019 Poverty Rate -– all happy news, if true -- were not credible and appear to be flawed, with income growth likely overstated heavily, as indicated by the Census Bureau, subsequent to the Study’s release. Details follow in in No. 1450. (September 15) Pace of Annual Decline in August 2020 Industrial Production Deepened to 7.7% (-7.7%), from 7.4% (-7.4%) in July 2020 (Federal Reserve Board – FRB). Recovery from the Pandemic-driven economic collapse took a step backwards in August, with a deepening annual contraction in aggregate production. Such was in the context of slowing growth in monthly activity, on top of downside revisions to March through May and upside revisions to June and July (reflected in both Manufacturing and Mining). Month-to-month growth in total Production slowed to 0.36% in August from 3.53% in July, with Manufacturing slowing to 0.98% from 3.87%, and with Mining declining by 2.50% (-2.50%, having gained 1.43% in July. Year-to-year, August Manufacturing declined 6.91% (-6.91%) versus a drop of 7.26% (-7.25%) in July, with Mining down by 17.94% (-17.94%) in August, versus 13.89% (-13.89%) in July. Further detail follows in No. 1450. (September 10/11) August 2020 M1 Money Supply Growth Hit a Record High 40.0% Year-to-Year Growth Rate, Amidst Continued Extreme Systemic Liquefaction by the Fed and Related, Mounting Domestic Inflation Pressures [UPDATED – See UPDATED SYSTEMIC RISK SECTION for latest developments] (FRB; ShadowStats Ongoing M3 Estimate). In advance of the September 2020 FOMC, massive money supply expansion by the Fed and a general market shift to holding more-liquid assets, seasonally adjusted monthly annual growth in the most liquid M1 Money Supply category rose to an unprecedented 40.0% in August 2020, from its prior record annual gain of 38.1% in July. While August M2 increased month-to-month, its annual change stagnated at its record high 23.3%, while the ShadowStats Ongoing M3 estimate showed a small monthly decline, with annual growth slowing for a second month, to 24.5%, down from 25.7% in July and a record 26.6% in June. Where annual growth in the Monetary Base led M3 lower, the Monetary Base annual growth is on the rise, once again. Related graphs and methodology are available to all on the ALTERNATE DATA tab above, also accessible by clicking on the mini-graph below, along with subscriber-only data downloads. See extended detail in No. 1448, No. 1449 and in pending No. 1450. (September 11) Mounting Inflation Pressures -- Other Than for July’s 0.62% “Core” Inflation, the August 2020 Consumer Price Index “Core” Inflation of 0.39% Was the Highest Reading in 25 Years. (Bureau of Labor Statistics). As negative inflation impact from the oil-price war continues to dissipate, monthly headline CPI-U continued to come in stronger than expected in August 2020, up 0.4% (0.37%) [0.3% expected], versus 0.6% (0.59%) [0.3% expected] in July, up year-to-year by 1.31% in August versus 0.99% in July. Net of food and energy prices, monthly “Core” inflation continued spiking to levels not seen in decades. Year-to-year headline “Core” CPI-U should top the FOMC’s former upper limit of 2.5% in the next month or two; hence, the recent change in “targeting,” see also No. 1449. August 2020 ShadowStats Alternate CPI (1980 Base) Rose to 9.0% Year-to-Year, versus 8.6% in July, 8.3% in June and 7.7% in May. The ShadowStats estimate restates current headline inflation so as to reverse the government’s inflation-reducing gimmicks of recent decades. Related graphs and methodology are available to all on the ALTERNATE DATA tab above. Subscriber-only data downloads and an Inflation Calculator also are available there. Extended detail is in No. 1448. (September 10) August 2020 Producer Price Index Annual “Core” Inflation Hit an 11-Month High of 0.8% (BLS). As negative inflation impact from the oil-price war dissipates, year-to-year declines in the Total and the Goods-based PPI have narrowed. Where the more-meaningful PPI Final Demand Goods series declined by 1.64% (-1.64%) year-to-year in August [narrowed from 1.98% (-1.98%) in July], August “Core” inflation, net of declines in both Food and Energy, jumped by 0.77% year-to-year [up from 0.51% in July], its highest level since 0.86% in September 2019. Incorporating the mal-defined Services-based series, the total August PPI-FD gained 0.34% in the month [up 0.60% in July], and declined 0.17% (-0.17%) year-to-year [down 0.42% (-0.42%) in July]; see extended detail in No. 1448. (September 4) August 2020 Payrolls Continued to Show an Unfolding “L”-Shaped Economic Recovery, With the Headline Unemployment Rate Understated for the Sixth Straight Month (BLS). Meaningful quality and credibility issues continue to plague the “improving” headline labor numbers. The August 19th preliminary annual downside benchmark revision of 173,000 (-173,000) to March 2020 payrolls (see No. 1446) will not be adjusted into headline monthly reporting until February 2021. While August Payrolls gained month-to-month for the fourth month, the monthly slowing in annual decline is taking on the form of an “L”-shaped recovery. Year-to-year payrolls declined into an initial April 2020 trough of 13.4% (-13.4%), narrowing to 11.7% (-11.7%) in May, but have begun to flatten out at 8.7% (-8.7%), 7.7% (-7.7%), and 7.0% (-7.0%) in June through August. Similar patterns in industry payrolls ranging from Retail Sales and Construction to Manufacturing suggest a slowing pace of economic recovery. The BLS acknowledged that continued misclassification of “unemployed” persons as “employed” persons in the Household Survey might have reduced a potential headline July U.3 unemployment rate of 9.1% to the headline 8.4%. Whatever the difference, official headline unemployment was understated meaningfully for the sixth straight month, due to survey “misclassifications.” Headline U.3 unemployment dropped to 8.42% in August, from 10.22% in July, headline August U.6 declined to 14.24% from 16.53%, with the headline August ShadowStats Alternate Measure, on top of U.6, at 28.0%, down from 30.0%, as graphed and detailed on the ALTERNATE DATA tab, linked above. See No. 1447. (August 27) Record Collapse in Second-Quarter 2020 GDP Eased Minimally in Revision, With Even-Weaker Initial GDI and GNP Reporting (Bureau of Economic Analysis - BEA). Annualized Second-Quarter 2020 Real Gross Domestic Product (GDP) -- broadest measure of the U.S. economy –- showed a revised collapse of 31.70% (-31.70%) [previously 32.90% (-32.90%], with a revised annual drop of 9.14% (-9.14%) [previously 9.54% (-9.54%)]. Broader Gross National Product (GNP) [GDP net of the trade deficit in factor income (interest and dividends)] showed respective quarterly and annual declines of 34.48% (-34.48%) and 9.19% (-9.19%). Gross Domestic Income (GDI) [the income-side equivalent to the product-side GDP] showed declines of 33.09% (-33.09%) and 9.21% (-9.21%). Extended detail and discussion in No. 1446. • S Y S T E M I C .. R I S K - [UPDATED] Ongoing Outlook: Economic and Systemic Risks Intensify, Moving Towards a Hyperinflationary Economic Collapse. Economic, FOMC, financial-market, political and social circumstances continue to evolve along with the Pandemic, but the broad outlook has not changed. The September FOMC and Chairman Jerome Powell reconfirmed that extraordinarily expansive and accommodative money policies, and the Fed Funds targeted rate of 0.00% to 0.25%, would continue for the duration of the Pandemic-driven economic collapse, with an added “new” policy of formally debasing the U.S. dollar further, by pushing headline “Core” PCE inflation above what had been its formal 2.0% target (see No. 1449). Reported subsequent to the FOMC Meeting, adjusted annual growth in the most-recent weekly M1 and M2 (week-ended September 14), hit respective record highs of 41.2% and 24.7%. Separately, unadjusted year-to-year growth in Currency in Circulation spiked to 15.2% and 15.1% (September 16 and 23), the highest levels since Alan Greenspan’s extraordinary Y2K precautions (see pending No. 1450). That said, systemic turmoil is just beginning, with the Fed and U.S. Government driving uncontrolled U.S. dollar creation, with recent monthly annual Money Supply growth soaring to successive record highs (see the ALTERNATE DATA TAB). See extended discussion in Special Hyperinflation Commentary, Issue No. 1438 and subsequent issues through No. 1449, with the latest on the inflation threat and re-accelerating money growth in No. 1450. SHADOWSTATS ALERT: In context of the evolving Coronavirus Pandemic and related or exacerbating 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, the ShadowStats broad outlook in the weeks and months ahead continues for: (1) A continuing, rapidly 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 selling pressure on the U.S. dollar, against the Swiss Franc, and (4) Despite recent extreme Stock Market volatility, continuing high risk of major instabilities and heavy stock-market selling, 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 gamed by the FOMC. • P O S T I N G .. S C H E D U L E S .. SHADOWSTATS CONCURRENT ANALYSES OF NEW DATA: Third estimate of Second-Quarter 2020 GDP will be posted by the Bureau of Economic Analysis, Wednesday, September 30th at 8:30 am ET. ShadowStats analysis should follow by noon ET. SHADOWSTATS COMMENTARIES [UPDATED]: (Please note that we have seriously rekindling California wildfire and heavy-smoke disruptions.) Subject to Change – Economic Commentary No. 1450 will post late September 30th or October 1st, covering the latest economic details (including GDP revision) and Federal Reserve developments (including re-accelerating Money Supply growth and FOMC targeting above “core” inflation). Commentary postings are advised to Subscribers by e-mail, along with appropriate links. Details will follow here. • ARCHIVES - VIEWING EARLIER COMMENTARIES. ShadowStats postings of June 2020 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 provides the latest headline data, exclusive ShadowStats Alternate Estimates and related Graphs of Inflation, GDP, Unemployment, Money Supply, and the ShadowStats Financial-Weighted U.S. Dollar. Data downloads are subscriber only. Best Wishes -- John Williams Have you ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences? The problem lies in biased and often-manipulated government reporting. Primers on Government Economic Reports What you've suspected but were afraid to ask. The story behind unemployment, the Federal Deficit, CPI, GDP. Alternate Data Special Reports Public Comment on Inflation Measurement & the Chained CPI-U Public Commentary on Unemployment Update 2016 • Update 2015 • Hyperinflation 2014 • 2014 Second Installment • Deficit Reality Others: Consumer Liquidity, Depression, Money Supply. Specialized Economic Consulting Services include customized forecasts and analyses of the general economy, presentations and consultations in-house for clients. Contact us to discuss your needs. John Williams'

"Shadow Government Statistics"

johnwilliams@shadowstats.com

Tel: (707) 763-5786



John Williams

PO Box 2538

Petaluma CA, 94953-2538 Tel: (707) 763-5786John WilliamsPO Box 2538Petaluma CA, 94953-2538 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 ShadowStats.com (Shadow Government Statistics) in 2004. The newsletter is published as part of my economic consulting services. — John Williams