shadowstats special economic commentary, issue no. 1437 · (gdp). the consensus outlook appears be...

Copyright 2020 Shadow Government Statistics, Walter J. Williams, www.shadowstats.com 1

ShadowStats Special Economic Commentary, Issue No. 1437

Near-Term Collapse in Headline Economic Activity

May 17, 2020

____________

Worst U.S. Economic Activity Ever Reported

April Retail Sales Fell the Most in Its 73-Year Reporting History

Production and Manufacturing Tumbled the Most in Their 101-Year History

Increasing New Claims for Unemployment Insurance and Insured Unemployed

Confirm the Economy Fell Further in May, Albeit Likely at a Moderating Pace

Second-Quarter 2020 Real Annualized GDP Contraction of

About 50% (-50%) Will Surpass Anything Ever Seen

If There Are Meaningful Efforts to Reopen the Economy,

Third Quarter Activity Could Move Off Bottom in a

Nascent L- or Shallow U-Shaped Recovery

Benchmark Revisions to New Orders for Durable Goods Confirmed

Major Downside Revisions Loom for Pre-Pandemic GDP Reporting

U.S. Economy Already Was in Trouble Before the Pandemic,

Because of Intensifying Federal Reserve Policy Malfeasance and

Federal Government Fiscal Malpractice

____________

Shadow Government Statistics — Special Economic Commentary, Issue No. 1437 — May 17, 2020


____________________

Contents – Special Economic Commentary (Issue No. 1437)

Overview – April/May 2020 Difficult Times At Hand 4 Worst U.S. Economic Activity Ever Reported 4 Near-Term Economic Collapse Has Not Hit Bottom, Yet 4

New Claims for Unemployment Insurance – Watch for a Signal 6 Week-Ended May 9th Pace of Employment Deterioration Has Begun to Taper Off 6 Corrected Headline April 2020 U.3 Unemployment Was 19.5%, Consistent May 2020 Unemployment Should Be About 27.8% 6

Graph 1: Initial Claims for Unemployment Insurance Through Week-Ended May 9, 2020 ..................................................... 6

Table I: Headline, BLS-Corrected and ShadowStats Unemployment Estimates to May 2020 .................................................. 7

April 2020 Retail Sales 8 Retail Sales Plunge Worst in History of Current and Prior Series 8

Graph 2: Combined Full History - Real Retail Sales (1947 to April 2020) ............................................................................. 9

Graph 3: Combined Full History - Real Retail Sales, Year-to-Year Percent Change (1948 to April 2020) ............................. 9

Graph 4: Real Retail Sales (2000 to April 2020) ..................................................................................................................... 10

Graph 5: Real Retail Sales, Year-to-Year Percent Change (2000 to April 2020) .................................................................. 10

April 2020 Industrial Production and Its Major Components 11 Production and Manufacturing Monthly Declines Were Deepest in the 101-Year History of Both Series 11

Graph 6: Index of Industrial Production, Complete History ................................................................................................... 12

Graph 7: Index of Industrial Production, Year-to-Year Change, Complete History ............................................................... 12

Graph 8: Industrial Production, 2000 to April 2020 ............................................................................................................... 13

Graph 9: Industrial Production, Year-to-Year Percent Change, 2000 to April 2020 ............................................................. 13

Graph 10: Manufacturing, Complete History.......................................................................................................................... 14

Graph 11: Manufacturing, Year-to-Year Change, Complete History ..................................................................................... 14

Graph 12: Manufacturing, 2000 to April 2020........................................................................................................................ 15

Graph 13: Manufacturing, Year-to-Year Change, 2000 to April 2020 ................................................................................... 15

Graph 14: Mining, 2000 to April 2020 .................................................................................................................................... 16

Graph 15: Mining, Year-to-Year Change, 2000 to April 2020 ................................................................................................ 16

Graph 16: Utilities, 2000 to April 2020................................................................................................................................... 17

Graph 17: Utilities, Year-to-Year Change, 2000 to April 2020 .............................................................................................. 17



Benchmarking of New Orders for Durable Goods 18 Downside Benchmark Revisions to Retail and Sales and New Orders for Durable Goods Suggest July 30th Downside Benchmark Revisions to Pre-Pandemic GDP 18

Graph 18: 2020 Benchmark Revisions to Nominal New Orders for Durable Goods .............................................................. 19

Graph 19: 2020 Benchmark Revisions to Real New Orders for Durable Goods ................................................................... 19

Graph 20: Benchmarked Real New Orders for Durable Goods ............................................................................................. 20

Graph 21: Benchmarked Real New Orders for Durable Goods, Year-to-Year Percent Change ............................................ 20

Graph 22: Benchmarked Real New Orders (Ex-Commercial Aircraft) ................................................................................... 21

Graph 23: Benchmarked Real New Orders (Ex-Commercial Aircraft), Year-to-Year Percent Change ................................. 21

Alternate Recession Measurement 22 Manufacturing, Orders and Freight Activity 22

AGAINST ALTERNATE RECESSION MEASURES (Updated from Flash Commentary No. 1436) ....................................... 22

Graph 24: Capacity Utilization versus Recessions and Alternate Recession Measures (2000 to April 2020) ....................... 22

Graph 25: Cass Freight Index®, Monthly Level of Unadjusted Activity vs. 12-Month Trailing Average ............................... 23

Graph 26: Manufacturing, Monthly Level of Adjusted Activity vs. 12-Month Trailing Average ............................................. 23

Graph 27: Cass Freight Index®, Year-to-Year Percent Change and Alternate Recession Measures ..................................... 24

Graph 28: Manufacturing, Year-to-Year Percent Change and Alternate Recession Measures .............................................. 24

Graph 29: Real New Orders for Durable Goods, Monthly Level of Adjusted Activity vs. 12-Month Trailing Average .......... 25

Graph 30: Real Durable Goods Orders, Year-to-Year Percent Change and Alternate Recession Measures ......................... 25

Updated Financial Market Graphs to May 15, 2020 26 Physical Gold and Swiss Franc Continue to Protect U.S. Dollar Purchasing Power 26

Graph 31: February to May 2020 Financial Markets -- Scale: Feb. 12 = 100, Day of DJIA All-Time High Close ............... 26

Graph 32: Dow Jones Industrial Average versus Gold (Monthly Average) ............................................................................ 27

Graph 33: Total Return S&P 500® versus Gold (Month End) ............................................................................................... 27

Graph 34: Gold versus Swiss Franc ........................................................................................................................................ 28

Graph 35: Gold versus Silver .................................................................................................................................................. 28

____________________



Overview – April/May 2020 Difficult Times At Hand

Worst U.S. Economic Activity Ever Reported

Near-Term Economic Collapse Has Not Hit Bottom, Yet

April’s Worst-Ever Economic Reporting Is on Top of Pending Downside Benchmark Revisions to

Pre-Pandemic GDP. Headline April 2020 economic reporting of the last several days, and the April

employment and unemployment detail of a week ago, have shown the sharpest-ever hits to the domestic

economy. Friday (May 15) saw the steepest monthly declines in the 101-year reporting history of

Industrial Production and the 73-year reporting history of Retail Sales. In the context of other

developments, such is suggestive of an annualized real quarterly collapse of about 50% (-50%), the latest

ShadowStats estimate for the July 30th initial reporting of Second-Quarter 2020 Gross Domestic Product

(GDP). The Consensus Outlook appears be running around minus 30% (-30%), while the respective New

York and Atlanta Fed models show deepening annualized drops of 31.1% (-31.1%) and 42.8% (-42.8%),

based solely on the headline economic reporting through May 15th (wait until they process the residential

construction and sales in the week ahead).

Such follows a First-Quarter 2020 Real GDP annualized contraction, currently of 4.78% (-4.78%), and a

Fourth-Quarter 2019 annualized gain of 2.13%, with both 1q2020 and 4q2019 subject to likely downside

revisions in the July 30th GDP benchmarking, if not before, with the second estimate of First-Quarter

2020 GDP on May 28th.

Historic Hit to Second-Quarter 2020 Real GDP Could Be Followed by Some Low-Level Bottom

Bouncing, or Moving Off Bottom in Third- and Fourth-Quarter Activity. Assuming some meaningful

shift towards reopening the economy in the next several months, economic “recovery” likely will not be

as rapid as some would hope, due to the extraordinary damage already done by, and the disruptions from,

the massive, panicked shutdown. Initially, renewed “growth” might look like bottom bouncing, in a

protracted L-shaped or flattened U-shaped recovery, off a potential Second-Quarter 2020 trough.

Consumer Outlook Continues to Evolve, Likely Having Taken a Fundamental, Longer Term

Reassessment and Hit. Both the Consumer Confidence Survey®

(The Conference Board) and the

Consumer Sentiment Index (University of Michigan) have surveyed Consumer attitudes for decades,

Confidence since 1953, Sentiment since 1970. Both series hit their historic highs in 2000, but then they

were pummeled by the 9-11 Terrorist attacks in 2001. Neither series recovered those 2000 peaks. Yet,

both series were on good upswings into February 2020. In the wake of the Coronavirus Pandemic,

however, April 2020 numbers collapsed back to 2014 levels (the 2014 Mini-Recession), taking a steeper

plunge than followed 9-11. The early Sentiment estimate for May 2020 indicated some bottom-bouncing.

There appears to have been a fundamental shift in Consumer attitudes and outlook, post 9-11, with 2000-

peak historical reporting never having recovered. In like manner, the current Coronavirus Pandemic well



may set an upside limit to Consumer optimism, attitudes and behavior for some time to come, as people

and businesses struggle to return to “normal” functioning. With fundamental shifts likely having taken

place in personal attitudes and business assessments/outlooks, a new “normal” likely will evolve as well,

at both a lower level of the Consumer outlook and Consumer economic activity.

Noted Previously, the Economy Was Weakening into the Pandemic, but the Pandemic Constraints

Now Have Been Driving the Economic Collapse; Those Constraints Still Need to Be Removed

Before “Recovery” Can Begin. No amount of Government Spending or Federal Reserve

Accommodation and Money Creation will turn this economic collapse around, although the authorities

well could trigger some form of Hyperinflationary Great Depression in the process, to be explored in

pending ShadowStats Special Commentary, Issue No. 1438 - Risk of Hyperinflationary Collapse,

planned for the week ahead, likely May 20th. Nonetheless, restoration of stable social, economic and

employment circumstances depends on the control and containment of the massive issues arising from the

handling of the Coronavirus Pandemic shutdown of society and the economy, particularly disruptions to

and destruction of small businesses that drive and enable so many key elements of society.

Allowing for early initiatives to re-open the economy, irrespective of evolving Pandemic conditions, my

assessment of realistic chances for the economy to begin turning around, to move meaningfully off

bottom, remain limited before early 2021. Such assumes, again that the economic plunge in current

Second-Quarter 2020 activity will lead the economy into some type of bottoming during Third- and

Fourth-Quarter 2020. I continue to invite and will publish comments from readers who are willing to

share their insights as to how the system is progressing towards bottoming or recovering, or are willing to

offer constructive suggestions to addressing the current systemic issues.

For the Benefit of Subscribers, Updated Circumstances Are Highlighted in the Daily Update. With

rapidly shifting headlines, reporting details, intervening events, unusual developments and schedule

changes—all are covered regularly in the Daily Update section on the ShadowStats Home Page.

For recent economic and the latest (updated) market and systemic assessments, see Special Commentary,

Issue No. 1429 (FOMC Panic), Special Commentary, Issue No. 1430 (Systemic Solvency), Flash

Commentary, Issue No. 1433 (Retail Sales Benchmarking), Flash Commentary No. 1434 (1q2000

GDP), Flash Commentary No. 1435 (April Unemployment), Flash Commentary No. 1436 (Cass Freight

Index®)

.

Today’s Economic Commentary, Issue No. 1437 updates and previews key areas going into the

Hyperinflation Issue, including the an initial cut in likely Second-Quarter 2020 Gross Domestic Product,

unfolding Unemployment circumstances and an updated plot of key financial measures.

Please call me any time, with questions on current circumstances, or if you just would like to talk, at

(707) 763-5786. Leave a message if your call goes to Voicemail. I shall be back to you.

Your questions and comments always are welcomed. Again, please contact:

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

http://www.shadowstats.com/http://www.shadowstats.com/article/cssc1429.pdfhttp://www.shadowstats.com/article/cssc1429.pdfhttp://www.shadowstats.com/article/cssc1430.pdfhttp://www.shadowstats.com/article/csfu1433.pdfhttp://www.shadowstats.com/article/csfu1433.pdfhttp://www.shadowstats.com/article/csfu1434.pdfhttp://www.shadowstats.com/article/csfu1435.pdfhttp://www.shadowstats.com/article/cflash1436.pdfmailto:[email protected]



New Claims for Unemployment Insurance – Watch for a Signal

Week-Ended May 9th Pace of Employment Deterioration Has Begun to Taper Off

Corrected Headline April 2020 U.3 Unemployment Was 19.5%;

Consistent May 2020 Unemployment Should Be About 27.8%

Latest New Claims for Unemployment Insurance Were Consistent with May 2020 U.3

Unemployment of About 28%, Which Would Be the Highest Level in Modern History. The latest

weekly reporting (week-ended May 9th) of New Claims for Unemployment Insurance slowed to a 3.0

million jump, with an aggregate surge of 36.5 million new claims since the mid-March 2020 Pandemic-

driven reporting explosion. The latest weekly detail suggested a headline May 2020 U.3 unemployment

rate of 27.8% (see Table I).

New Claims and Unemployment—Watch for a Signal. So long as the weekly count of Initial Claims for

Unemployment Insurance stays above 500,000, and the seasonally adjusted Insured Unemployment

continues to gain, seasonally adjusted economic activity should have continued contracting in the week.

Graph 1: Initial Claims for Unemployment Insurance Through Week-Ended May 9, 2020

Reflected in Table I, the latest detail remained consistent with a May U.3 of about 27.8%, versus the

BLS-corrected April U.3 of 19.5% (headline 14.7%). What will be reported depends on whether the BLS

really wants to publish the higher, “corrected” number where all the unemployed are counted as

“unemployed” as opposed to “employed” (see Flash Commentary No. 1435).

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Initial Claims for Unemployment Thousands of Claims, Weekly to May 9, 2020

Seasonally Adjusted [ShadowStats, U.S. Department of Labor]

http://www.shadowstats.com/article/csfu1435.pdf



The Department of Labor reported May 14th, that the week-ended May 9th New Claims for

Unemployment Insurance surge continued at a slowing pace, up by 2.981 million in the week, versus an

upwardly revised gain of 3.176 [previously 3.169] million the week before, up by 1274% against 217,000

in the year-ago week. Allowing an early glimpse of the May 2020 unemployment detail, headline detail

would suggest a headline U.3 rate of 27.8% in May 2020.

Although the pace of surge in New Claims is slowing, a new round of secondary furloughs appears to be

on the rise. Insured Unemployment continues to increase weekly, with the May 9th week count the

“highest in history,” topping the Great Recession Peak. So long as both the “New Claims” and “Insured

Unemployed” are increasing week-to-week, the headline economy is contracting, in theory, and vice

versa.

Table I: Headline, BLS-Corrected and ShadowStats Unemployment Estimates to May 2020

Headline May 2020 U.3 Unemployment (Corrected for Any Ongoing Bureau of Labor Statistics

Surveying/Misclassification Errors) Should Top Anything Seen in Modern History. Due for release on

Friday, June 5th, May U.3 of 27.8% (see Table I) would set a new post-World War II record. The

previous post-War high was 10.8% during the 1981. The peak annual Great Depression unemployment

rate is estimated at 25% in 1933.

[April 2020 Retail Sales coverage begins on the next page.]

Measure Feb '20 Mar '20 Apr '20 May '20

Estimate

Headline U.3 3.5% 4.4% 14.7% --

Corrected/Estimate 3.5% 5.3% 19.5% 27.8%

Headline U.6 7.0% 8.7% 22.8% --


Headline ShadowStats 21.1% 22.9% 35.4% --


Sources: Bureau of Labor Statistics, Department of Labor, ShadowStats.com

Headline Unemployment Rate vs. BLS "Corrected" or

Based on New Claims for Unemployment Insurance

Based on BLS - "Corrected Estimate" to April 2020

Month

ShadowStats Estimates of May 2020 Unemployment are



April 2020 Retail Sales

Retail Sales Plunge Worst in History of Current and Prior Series

Unprecedented in 73-Years of Reporting, April 2020 Real Retail Sales Plunged 15.78% (-15.78%)

in the Month, by 21.90% (-21.90%) Year-to-Year, Following Minimally Revised Monthly and

Annual Declines in March Activity of 7.92% (-7.92%) and 7.09% (-7.09%). As reported May 15th

by the Census Bureau, and as adjusted by the CPI-U (Saint Louis Fed), inflation-adjusted Real Retail

Sales activity was boosted minimally in April and March by monthly declines in the headline CPI-U,

while the real annual declines were somewhat worse net of minimally positive annual CPI. Before

inflation adjustment, in nominal terms Retail Sales plunged by 16.45% (-16.45%) in the month, by

21.61% (-21.61%) year-to-year, following monthly and annual declines in March activity of 8.31%

(-8.31%) and 5.68% (-5.68%).

The real series headlined and plotted here is the nominal Retail Series surveyed by the Census Bureau and

deflated by the CPI-U, as published by Saint Louis Federal Reserve. Seen in Graphs 2 and 3, neither of

the two historical Retail Sales series, dating back to 1947, has seen either monthly or year-to-year

contractions close to the magnitude of the headline April 2020 declines.

Details of the 2020 negative annual benchmark revisions to the Retail Sales series were published in

Flash Commentary, Issue No. 1433. In tandem with the later detailing here of the just-published

benchmarking of New Orders for Durable Goods (see Page 18), evidence continues to mount of pending

downside revisions to the GDP in its July 30th annual benchmarking.

Deepening Recession and Depression. With an early one-month trend (April), Second-Quarter 2020

Real Retail Sales is on track for its third consecutive quarterly decline, consistent with the evolving

Coronavirus Pandemic Depression overwriting what already had been an unfolding recession.

Annualized Fourth-Quarter 2019 (Holiday Shopping Season) real growth contracted at an annualized

quarterly pace of 0.73% (-0.73%), followed by a revised annualized contraction of 9.71% (-9.71%) in

First-Quarter 2020, with Second-Quarter 2020 on early track for an annualized real quarterly contraction

of 60.04% (-60.04%).

[Graphs 2 to 5 begin on the next page]




Graph 2: Combined Full History - Real Retail Sales (1947 to April 2020)

Graph 3: Combined Full History - Real Retail Sales, Year-to-Year Percent Change (1948 to April 2020)

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Real Retail Sales (Deflated by the CPI-U) 1947 to April 2020, Seasonally-Adjusted [ShadowStats, St. Louis Fed]

Official Recession

Old Series (1947 to Date)

Current Series (1992 to Date)

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Real Retail Sales Year-to-Year Percent Change 1948 to April 2020, Seasonally-Adjusted [ShadowStats, St. Louis Fed]

Official Recession

Old Series (1948 to 2001)

Current Series (1993 to Date)



Graph 4: Real Retail Sales (2000 to April 2020)

Graph 5: Real Retail Sales, Year-to-Year Percent Change (2000 to April 2020)

[Coverage of Industrial Production begins on the next page]

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Real Retail Sales Level (Deflated by CPI-U) To April 2020, Seasonally-Adjusted [ShadowStats, Census, BLS]

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Real Retail Sales, Year-to-Year Percent Change To April 2020, Seasonally-Adjusted [ShadowStats, Census, BLS]



April 2020 Industrial Production and Its Major Components

Production and Manufacturing Monthly Declines

Were Deepest in the 101-Year History of Both Series

April 2020 Industrial Production and Manufacturing Saw Record Monthly Plunges, With Capacity

Utilization Setting a New Historic Low. Showing heavy impact from the Coronavirus-Pandemic

Shutdown, April Industrial Production and Manufacturing both took their biggest one-month hits in the

101-year history of the series, while Capacity Utilization plunged to a new historic (67-Year) low.

Reported May 15th, by Federal Reserve Board, April Industrial Production declined by 11.25% (-11.25%)

in the month, by 15.04% (-15.04%) year-to-year, following respective monthly and annual declines of

4.51% (-4.51%) and 4.88% (-4.88%) in March. Manufacturing declined by 13.70% (-13.70%) in the

month, by 18.01% (-18.01%) year-to-year, following declines of 5.50% (-5.50%) and 5.82% (-5.82%) in

March. Mining declined by 6.15% (-6.15%) in the month, by 7.50% (-7.50%) year-to-year, following a

March monthly decline of 1.11% (-1.11%) and annual gain of 1.09%. Utilities sank both monthly and

annually, respectively by 0.92% (-0.92) and 3.82% (-3.82%) in April and by 1.89% (-1.89%) and 6.17%

(-6.17%) in March. Previously, the headline March declines had been the deepest since the Post World

War II production shutdown.

Deepening Recession and Depression. With an early one-month trend (April), Second-Quarter 2020

Industrial Production is on track for its third consecutive quarterly decline, consistent with the evolving

Coronavirus Pandemic Depression overwriting what already had been an unfolding recession.

Annualized Fourth-Quarter 2019 real growth contracted at an annualized quarterly pace of 0.69%

(-0.69%), followed by a revised annualized contraction of 2.02% (-2.02%) in First-Quarter 2020, with

Second-Quarter 2020 on early track for an annualized real quarterly contraction of 45.11% (-45.11%).

This should become increasingly obvious following the pending annual benchmark revisions to the

aggregate Industrial Production and Manufacturing series, now planned for “the second half of 2020.”

One could hope that the Production benchmarking indeed will precede (be incorporated into) the July

30th benchmarking of the Gross Domestic Product series.




Graph 6: Index of Industrial Production, Complete History

Graph 7: Index of Industrial Production, Year-to-Year Change, Complete History

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Index of Industrial Production (2012 = 100)

100-Plus Years of Industrial Production Jan 1919 to Apr 2020 Seasonally-Adjusted [ShadowStats, Federal Reserve Board]

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Industrial Production (Year-to-Year Percent Change) January 1920 to April 2020, Seasonally-Adjusted [ShadowStats, FRB]



Graph 8: Industrial Production, 2000 to April 2020

Graph 9: Industrial Production, Year-to-Year Percent Change, 2000 to April 2020

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Index of Industrial Production (2012 = 100)

Level to April 2020, Seasonally-Adjusted [ShadowStats, FRB]

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Industrial Production (Year-to-Year Percent Change) To April 2020, Seasonally-Adjusted [ShadowStats, FRB]



Graph 10: Manufacturing, Complete History

Graph 11: Manufacturing, Year-to-Year Change, Complete History

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Industrial Production - Manufacturing Sector (2012 = 100)

100-Plus Years, January 1919 to April 2020 Seasonally-Adjusted [ShadowStats, Federal Reserve Board]

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Manufacturing Sector (Year-to-Year Percent Change) January 1920 to April 2020, Seasonally-Adjusted [ShadowStats, FRB]



Graph 12: Manufacturing, 2000 to April 2020

Graph 13: Manufacturing, Year-to-Year Change, 2000 to April 2020

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Industrial Production - Manufacturing (SIC) (2012 = 100) Level to April 2020, Seasonally-Adjusted [ShadowStats, FRB]

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Industrial Production - Manufacturing (Yr-to-Yr Percent Change) To April 2020, Seasonally-Adjusted [ShadowStats, FRB]



Graph 14: Mining, 2000 to April 2020

Graph 15: Mining, Year-to-Year Change, 2000 to April 2020

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Industrial Production - Mining (Including Oil & Gas) To April 2020, (2012 = 100) Seasonally-Adjusted [ShadowStats, FRB]

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Production - Mining (Year-to-Year Percent Change) To April 2020, Seasonally-Adjusted [ShadowStats, FRB]



Graph 16: Utilities, 2000 to April 2020

Graph 17: Utilities, Year-to-Year Change, 2000 to April 2020

[Durable Goods Benchmarking begins on the next page]

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Industrial Production - Utilities (2012 = 100) Level to April 2020, Seasonally-Adjusted [ShadowStats, FRB]

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12%

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

Year-

to-Y

ear

Perc

en

t C

ha

ng

e

Production - Utilities (Year-to-Year Percent Change) To April 2020, Seasonally-Adjusted [ShadowStats, FRB]



Benchmarking of New Orders for Durable Goods

Downside Benchmark Revisions to Retail and Sales and New Orders for Durable Goods

Suggest July 30th Downside Benchmark Revisions to Pre-Pandemic GDP

Benchmarked Durable Goods Showed Real New Orders Since 2017 to Have Been Lower by

Roughly 2% to 3% Than Previously Reported. In combination with recent annual downside revisions

to Retail Sales (see Flash Commentary, Issue No. 1433), and what now most certainly will be downside

annual revisions to Industrial Production, headline GDP coming into the Pandemic shutdown was not in

sustainable-moderate or booming economic growth as advertised variously by the Federal Reserve and

Wall Street. Accordingly, pre-Pandemic GDP should face downside revisions of the last year or two,

come its July 30th benchmarking.

Reflected in Graphs 18 and 19, annual growth revised lower b 0.9% (-0.9%) in 2016, by 1.3% (-1.3%) in

2017, by 2.0% (-2.0%) in 2018, by 2.3% (-2.3%) in 2019 and by 1.8% (-1.8%) in the first three months of

2020. Traditionally, the pending Industrial Production benchmarking (sometime after June, presumably

before the July 30th GDP benchmarking) tends to parallel the Durable Goods revisions. Graphs 20 to 23

show the regular monthly graphs of activity, albeit at the benchmarked levels.





Graph 18: 2020 Benchmark Revisions to Nominal New Orders for Durable Goods

Graph 19: 2020 Benchmark Revisions to Real New Orders for Durable Goods

210

220

230

240

250

260

2012 2013 2014 2015 2016 2017 2018 2019 2020

Bil

lio

ns

of

Cu

rren

t D

oll

ars

Revisions to New Orders for Durable Goods Smoothed with a Six-Month Moving Average

To March 2020, Seasonally-Adjusted [ShadowStats, Census, BLS]

Prior Reporting through March 2020

2020 Benchmark Revisions

200

205

210

215

220

225

230

2012 2013 2014 2015 2016 2017 2018 2019 2020

Bil

lio

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of

Co

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tan

t 2009 D

oll

ars

Revisions to Real New Orders for Durable Goods Smoothed with a Six-Month Moving Average

Billions of $2009, Deflated by PPI Durable Manufactured Goods


Prior Reporting through March 2020

2020 Benchmark Revisions



Graph 20: Benchmarked Real New Orders for Durable Goods

Graph 21: Benchmarked Real New Orders for Durable Goods, Year-to-Year Percent Change

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

140

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280

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

Bil

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ars

Benchmarked Real New Orders for Durable Goods Billions of Constant $2009, Deflated by PPI Durable Manufactured Goods


One-Month Reported

Six-Month Moving Average

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

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

Year-

to-Y

ear

Perc

en

t C

ha

ng

e

Real New Orders for Durable Goods Year-to-Year Percent Change, Deflated by PPI Durable Manufactured Goods




Graph 22: Benchmarked Real New Orders (Ex-Commercial Aircraft)

Graph 23: Benchmarked Real New Orders (Ex-Commercial Aircraft), Year-to-Year Percent Change

[Alternate Recession Measures begin on the next page]

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

140

150

160

170

180

190

200

210

220

230

240

250

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

Bil

lio

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of

Co

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tan

t 2009 D

oll

ars

Real New Orders for Durable Goods (Ex-Commercial Aircraft) Billions of Constant $2009, Deflated by PPI Durable Manufactured Goods


One-Month Reported

Six-Month Moving Average

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

-40%

-30%

-20%

-10%

0%

10%

20%

30%

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

Year-

to-Y

ear

Perc

en

t C

ha

ng

e

Real New Orders for Durable Goods (Ex-Commercial Aircraft) Year-to-Year Percent Change, Deflated by PPI Durable Manufactured Goods

Monthly to March 2020, Seasonally-Adjusted [ShadowStats, Census, BLS]



Alternate Recession Measurement

Manufacturing, Orders and Freight Activity

AGAINST ALTERNATE RECESSION MEASURES (Updated from Flash Commentary No. 1436)

Discussed and plotted in Flash Commentary No. 1436, but renumbered here Graphs 25 and 26 plot the

level of the Cass Freight Index®, along with its 12-month trailing or moving average, against formal

recessions since 2000, as well as against prospective or “missed” recessions as discussed in Flash Update

No. 22, and as seen against updated Graph 24 of April 2020 Industrial Production Capacity Utilization,

traditionally used to time formal recessions.

Consider as well the parallels seen between Graph 25 plotting the level of the Cass Freight Index®, along

with its 12-month trailing or moving average, against formal recessions, as well as against prospective or

“missed” recessions as discussed, with Graph 26 of April Manufacturing and Graph 29 of Real Durable

Goods Orders. Similar parallels can be seen Graph 27, Graph 28 and Graph 30, reflecting annual

growth rates. The Durable Goods are missing April data, which should match the other series, when

released and as will be otherwise updated when published.

Graph 24: Capacity Utilization versus Recessions and Alternate Recession Measures (2000 to April 2020)


0

1

2

3

4

5

6

7

8

9

10

64%

68%

72%

76%

80%

84%

88%

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

Perc

en

t o

f T

ota

l U

.S. In

du

str

ial C

ap

acit

y U

tili

zed

Capacity Utilization: Total U.S. Industry to April 2020 With An Alternate Recession Definition

Percent of Capacity, Seasonally-Adjusted [ShadowStats, FRB]

Headline and Alternate Definition Recessions

Capacity Utilization

http://www.shadowstats.com/article/cflash1436.pdfhttp://www.shadowstats.com/article/cflash1436.pdfhttp://www.shadowstats.com/article/cflash22.pdfhttp://www.shadowstats.com/article/cflash22.pdf



Graph 25: Cass Freight Index®, Monthly Level of Unadjusted Activity vs. 12-Month Trailing Average

Graph 26: Manufacturing, Monthly Level of Adjusted Activity vs. 12-Month Trailing Average

0

1

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4

5

6

7

8

9

10

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75

80

85

90

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100

105

110

115

120

125

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

Ind

ex L

evel,

Jan

ua

ry 2

000 =

100

Cass Freight Index® (Jan 2000 = 100) To April 2020, Not Seasonally Adjusted

[ShadowStats, Cass Information Systems, Inc.]

Alternate Definition - Prospective Recession

Monthly Level, Not Seasonally Adjusted

12-Month Trailing Average

0

1

2

3

4

5

6

7

8

9

10

86

90

94

98

102

106

110

114

118

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

Ind

ex L

evel,

Jan

ua

ry 2

000 =

100

Production - Manufacturing (SIC) Index Reset to January 2000 = 100, Monthly and 12-Month Moving Average

To April 2020, Seasonally Adjusted [ShadowStats, FRB]

Alternate Definition and ProspectiveRecessionMonthly Manufacturing Index Level



Graph 27: Cass Freight Index®, Year-to-Year Percent Change and Alternate Recession Measures

Graph 28: Manufacturing, Year-to-Year Percent Change and Alternate Recession Measures

0

1

2

3

4

5

6

7

8

9

10

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

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

Year-

to-Y

ear

Ch

an

ge

Cass Freight Index® (Year-to-Year Percent Change) Monthly to April 2020, Not Seasonally Adjusted [ShadowStats, Cass Information Systems, Inc.]

0

1

2

3

4

5

6

7

8

9

10

-20%

-16%

-12%

-8%

-4%

0%

4%

8%

12%

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

Year-

to-Y

ear

Perc

en

t C

ha

ng

e

Industrial Production - Manufacturing (Yr-to-Yr Percent Change) To April 2020, Seasonally-Adjusted [ShadowStats, FRB]



Real New Orders for Durable Goods here have been published only through March 2020. The April 2020

year-to-year change likely will be sharply negative, as seen with the previous indicators

Graph 29: Real New Orders for Durable Goods, Monthly Level of Adjusted Activity vs. 12-Month Trailing Average

Graph 30: Real Durable Goods Orders, Year-to-Year Percent Change and Alternate Recession Measures

[Updated Financial Market Graphs 31 to 35 begin on the next page]

0

0.1

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0.6

0.7

0.8

0.9

1

140

150

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170

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230

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

Bil

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oll

ars

Real Durable Goods Orders (Ex-Commercial Aircraft) Billions of Constant $2009, Deflated by PPI Durable Manufactured Goods

To December 2019, Seasonally-Adjusted [ShadowStats, Census, BLS]

Official and Alternative Recession Definitions

Monthly Level, Seasonally-Adjusted

12-Month Trailing Average

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

-40%

-30%

-20%

-10%

0%

10%

20%

30%

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

Year-

to-Y

ear

Perc

en

t C

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Real New Orders for Durable Goods (Ex-Commercial Aircraft) Year-to-Year Percent Change, Deflated by PPI Durable Manufactured Goods

Monthly to March 2020, Seasonally-Adjusted [ShadowStats, Census, BLS]



Updated Financial Market Graphs to May 15, 2020

Physical Gold and Swiss Franc Continue to Protect U.S. Dollar Purchasing Power

Graph 31: February to May 2020 Financial Markets -- Scale: Feb. 12 = 100, Day of DJIA All-Time High Close

55

60

65

70

75

80

85

90

95

100

105

110

115

Ind

exe

d V

alu

e F

eb

ruar

y 1

2 =

10

0 (

DJI

A P

eak

)

February 2020 to May 2020 Financial Markets Dow Jones Industrial Average vs. Gold and Swiss Franc All Indexed to February 12 = 100 (the DJIA Peak Level)

Gold

Swiss Franc

DJIA



Graph 32: Dow Jones Industrial Average versus Gold (Monthly Average)

Graph 33: Total Return S&P 500® versus Gold (Month End)

0

10

0

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100

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550

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650

2000200120022003200420052006200720082009201020112012201320142015201620172018201920202021

Ind

exed

to

Jan

ua

ry 2

000 =

100

Monthly Average Nominal London P.M. Gold Fix Versus the Dow Jones Industrial Average

Monthly Average Jan 2000 to Apr 2020, Indexed to Jan 2000 = 100 Gold Price, Dow Jones Industrial Average Close May 15, 2020

[ShadowStats, St. Louis Fed, S&P Dow Jones Indice

Formal Recessions

Monthly Average London PM Gold Fix

Last New York Gold Close

Monthly Average DJIA Daily Close

Last DJIA Close

0

10

0

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100

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550

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650

2000200120022003200420052006200720082009201020112012201320142015201620172018201920202021

Ind

exed

to

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ua

ry 2

000 =

100

Month-End Nominal London P.M. Gold Fix versus the Total Return S&P 500® Index (Reinvested Dividends) Month-End January 2000 to April 2020, Indexed to Jan 2000 = 100

Gold Price, S&P Total Return NY Close May 15, 2020 [ShadowStats, St. Louis Fed, S&P Dow Jone

Formal Recessions

Month-End London PM Gold Fix

Last New York Gold Close

Month-End S&P 500 Total Return Index

Last S&P 500 Total Return Close



Graph 34: Gold versus Swiss Franc

Graph 35: Gold versus Silver

###

0.22

0.35

0.47

0.60

0.72

0.85

0.97

1.10

1.22

1.35

0

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400

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800

1000

1200

1400

1600

1800

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

U.S

. D

ollars

per

Sw

iss F

ran

c

Go

ld P

rice -

Do

llars

per

Tro

y O

un

ce

Gold versus Swiss Franc (CHF) in U.S. Dollars Monthly Average Price or Exchange Rate to April 2020

Latest Points - May 15, 2020 [ShadowStats, Kitco, FRB, WSJ]

Gold - Monthly Average

Gold - Latest

Swiss Franc - USD/CHF - Monthly Average

CHF - Latest

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2200

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1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

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Silver

Pri

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U.S

. D

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per

Tro

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ce

Gold versus Silver Price Levels Monthly Average Price in U.S. Dollars per Troy Ounce to April 2020

Latest Points - May 15, 2020 [ShadowStats, Kitco, Stooq]

Silver - Monthly Average

Silver - Latest

Gold - Monthly Average

Gold - Latest

shadowstats special economic commentary, issue no. 1437 · (gdp). the consensus outlook appears be...

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