Core capital expenditures tumbled twice as much as initially expected in December, dropping 0.6% MoM – the biggest drop since September 2016.
The preliminary print for December was 0.3% drop but final came in at an ugly 0.6% drop (which dragged the headline durable goods print down from 2.9% to 2.8%)
However, on the bright side, Factory Orders grew for the 5th straight month (rising a better than expected 1.7% MoM in December)…
Which means an 8.4% YoY rise in new manufacturing orders.
Following The Conference Board’s better-than-expected higher print (driven by ‘hope’), UMich saw confidence drop to its lowest since September as current economic conditions slumped to weakest since the election.
While ‘hope’ rose modestly from 84.3 to 86.3, current economic conditions slumped to the lowest since Nov 2016…
Importantly, the motivating force behind purchase decisions has shifted from discounts on prices and interest rates to increased confidence in future job security and growth in wages as well as financial assets. This renewed sense of confidence was responsible for the recent declines in savings rates.
The tax cuts will increase discretionary spending once higher energy bills due to the unusually cold weather are paid. Monetary policy will need to tighten in the year ahead, but given consumers’ decade long experience with record low interest rates, only modest increases in interest rates will be sufficient to curb any excesses. Overall, the data signal an expected gain of 2.8% in real personal consumption expenditures during 2018.
Stock price increases and the passage of tax reforms were mentioned by all-time record numbers of consumers.
As a reminder, the yawning gap between exuberant confidence and desperately low savings rates has not ended well in the past…
This month marks the 200th anniversary of the birth of one of the greatest figures in American history: Frederick Douglass. Today Douglass is perhaps best remembered for his courageous and inspiring life story. He deserves to be remembered for much more than that, writes Senior Editor Damon Root.
At a time when the principles of the Constitution and Declaration of Independence were under assault, Douglass waved the banner of classical liberalism, championing inalienable rights for all, regardless of race or sex. At a time when socialism was on the rise, Douglass preached the virtues of free labor and self-ownership in a market-based economy. At a time when state governments were violating the rights of the recently emancipated, Douglass professed the central importance of “the ballot-box, the jury-box, and the cartridge-box” in the fight against Jim Crow.
Douglass, the former slave who secretly taught himself how to read, would teach the American people a thing or two about the true meaning of liberty.
In a report that repudiates the FBI’s argument that releasing the FISA memo would have “grave consequences” for national security, Washington Post reported Friday that White House Chief of Staff John Kelly believes the memo’s contents wouldn’t harm national security. In fact, he believes the House Intel Committee’s salacious claims about the document and its probable impact have been overblown.
However, Kelly also advised President Trump that releasing the document wouldn’t compromise national security (a credible endorsement, considering Kelly’s extensive resume in that area).
During the Jan. 18 call where two House conservatives – Rep. Jim Jordan and Freedom Caucus leader Rep. Mark Meadows – first raised the subject of declassifying the Nunes memo, Trump was unfamiliar with the topic and more focused on trying to stave off a government shutdown.
This would change however after Trump listened to Rep. Trey Goudy argue for the memo’s release on Fox News. Around that time, Trump became convinced that the memo should be released before he even read it after discussing the memo with friends, advisers and Republican lawmakers.
The president did not actually see the memo – written by House Intelligence Committee Chairman Devin Nunes (R-Calif.) and Nunes’s staff – until Wednesday afternoon, following the committee’s Monday vote to initiate its release, officials said. White House Chief of Staff John F. Kelly marched the document into the Oval Office so that he and Trump could briefly discuss it before the president’s meeting with regional reporters.
The president was then left alone to read the memo in its entirety.
A White House official said Kelly returned a few hours later and shared with the president his opinion: that releasing the memo would not risk national security but that the document was not as compelling as some of its advocates had promised Trump.
Still, even before viewing the document, the president recognized its potential utility, reportedly mused to senior aides that the memo might provide the cover he needs to fire Rosenstein, or make other changes at the DOJ…
According to WaPo, Kelly even met Monday afternoon with FBI Director Christopher Wray and Rosenstein and listened to their arguments against the release, saying the memo could expose classified information and was an “inaccurate depiction of the bureau’s investigative methods.” But Kelly remained unconvinced. Wray called Kelly later the night to make one final pitch, which Kelly rebuffed.
On Tuesday, five FBI officials, including at least one from counterintelligence, went to the White House to discuss their concerns with Kelly, a White House official said.
Director of National Intelligence Daniel Coats also met with Kelly at the White House this week to express his reservations, one U.S. official said.
But Kelly was not swayed.
Vice President Mike Pence is also reportedly on board with the memo’s release, with he and his team also pushing for its release. Pence hinted at his view in an interview Wednesday with Politico.
“I’ve always believed in the public’s right to know, and I stand by that principle,” Pence said. “But we’ll respect whatever decision the president makes concerning that memo.”
To be sure, the White House has recognized the potential for political pitfalls, ad has orchestrated the process so that Congress will have “full ownership” of the memo in the event that it is “a dud.” So the president’s advisers made a decision to create at least the perception of distance between the White House and the House Intelligence Committee, leaving the public cheerleading for the memo’s release largely to Republican lawmakers.
This way, Trump has managed to skew the risks of releasing the memo in his favor. If the memo gives him the cover to make the changes at DOJ – fantastic. But if it’s a dud, Nunes will take the brunt of the criticism. The White House said it would approve the release of the memo Friday, but final decision lies with Nunes and company…
Nicholas von Hoffman died yesterday. He was 88 years old and he wasn’t that famous anymore, but he used to be all over the media: He had a Washington Post column that was syndicated across the country, he recorded radio commentaries for the CBS show Spectrum, and he had a recurring gig doing point/counterpoint segments for 60 Minutes, speaking for the left while James Kilpatrick represented the right. He was fired from that last job after the night he compared Richard Nixon to a dead mouse on a kitchen floor. “The question,” he said of the president, “is who is going to pick it up by the tail and drop it in the trash. At this point it makes no difference whether he resigns, thereby depositing himself in a sanitary container, or whether Congress scoops him up in the dustpan of impeachment. But as an urgent national health measure, we’ve got to get that decomposing political corpse out of the White House.”
I’m trying to think of the last time von Hoffman had a big moment of public notoriety. It was probably in 2001, when Andrew Sullivan started handing out a sarcastic “Von Hoffman Award” for “stunningly wrong political, social and cultural predictions.” The columnist had earned the honor by writing skeptically about the then-young war in Afghanistan—he had said the U.S. was “fighting blind” and “distracted by gusts of wishful thinking.” What a nut, right? After a few years, an abashed Sullivan confessed that von Hoffman had had a point, and he renamed the prize for Dick Morris.
Von Hoffman got his start as an activist, not a journalist, and in the ’50s he was a lieutenant of sorts to the Chicago-based organizer Saul Alinsky. (My review of Radical, von Hoffman’s memoir of his Alinsky days, is here.) From there he drifted into reporting, filing lively dispatches for The Chicago Sun-Times and then The Washington Post. He wrote sympathetically about the counterculture and the civil rights movement, unsympathetically about Nixon and the Vietnam War; he developed a reputation as the Post‘s in-house New Leftist. And that he was, more or less. But like the more anarchistic New Left types—and like his old boss Alinsky—von Hoffman didn’t have much faith in big government.
By the early 1970s, when he had his newspaper column and his 60 Minutes job, that distrust sometimes led him to unexpected positions. Take the time he devoted a column to the notion that the John Birch Society offers a useful “corrective to our thinking.” (When they denounce Nixon or the Fed, he wrote, they start “talking about the uses of power, money and politics in ways we can learn from.”) He still kept the Birchers at arm’s length, naturally. But he didn’t add any caveats in 1971 when he wrote a piece praising the foreign policy views of the isolationist Ohio senator Robert Taft. After quoting extensively from a speech the late Republican had given two decades earlier, von Hoffman announced that Taft was “right on every question all the way from inflation to the terrible demoralization of troops.”
Von Hoffman also wrote several ’70s articles praising the ideas of Louis Kelso, an apostle of employee ownership. That might sound more like what you’d expect from a New Left writer—worker power!—except that both Kelso and von Hoffman presented the proposal not as an alternative to capitalism but as a more radical form of it. When Henry Fairlie read some of those dispatches, he threw up his hands and complained that von Hoffman “parades himself as a radical” but wants “to make everyone a capitalist.”
And then there was his column about the libertarian economist Murray Rothbard. Von Hoffman didn’t endorse the full ancap program, but he did embrace the most radical part of it. “One of Rothbard’s best, new ideas is to shut down the police departments of America,” he enthused. As he expounded on this notion, he started to sound like an anarchist Mike Royko: “As almost anybody who’s tried to call a cop knows, they are next to useless. About the only way you can get one is to tell the operator at headquarters a cop is being murdered. Then they’ll come. If you tell her that you’re the one being murdered, you’d best hope your killer is a slow sadist who’ll take three-quarters of an hour to polish you off.” If you didn’t have to pay taxes or bribes to the police, von Hoffman continued, you could spend that money on private guards or start your own citizens’ patrol; and if you couldn’t afford to do that, well, at least you’d have the cops off your back.
When Reasoninterviewed von Hoffman in 1976, he denied that he held any sort of well-developed political philosophy. (“Saul never made any attempts at internal consistency,” he said of Alinsky. “I followed that brilliant intellectual tradition.”) He certainly didn’t claim to be a libertarian: While he knew big business uses the regulatory agencies to create cartels, for example, he told Reason that he still thought regulation could be a check on corporate power. But he was happy to write the occasional kindly column about the Libertarian Party and to have the Cato Institute publish his articles in Inquiry and air his commentaries on its radio show Byline. Toward the end of his life, von Hoffman contributed gladly to both The Nation and The American Conservative. He was an eclectic skeptic; a journalist, not a philosopher. He liked libertarians because they seemed idealistic and anti-authoritarian. Libertarians liked him because he cast a jaundiced eye at anyone in power, and because he skewered those powerful people entertainingly.
And that brings us to my favorite von Hoffman book, Make-Believe Presidents, which roasts everyone from Herbert Hoover to the Kennedys. I recommend reading it in conjunction with Gene Healy’s The Cult of the Presidency. They’re an odd couple—Healy’s book, published in 2008, posits that the presidency is too powerful, while von Hoffman’s, published 30 years earlier, argues that presidents aren’t nearly as powerful as we think. But the books complement each other rather well. Make-Believe Presidents catalogs countless ways we’ve been abused by executive power: wars, repression, foolish regulatory schemes. It just doesn’t give the presidents enough respect to trust their assurances that they’re in charge. The “growth and elaboration of the mega-institution,” it argues, “pushed, drove, controlled, and guided presidents as much as it did lesser people.” Executive power was larger than the executive.
The two videos below show von Hoffman promoting Make-Believe Presidents on a Chicago TV show. (The end of the interview is missing, alas.) They’re fun to watch, and though it’s 40 years later they still sometimes feel resonant. Presidents “all come in the first day in the Oval Office, they look at this wonderful desk, they see all these buttons, they start hitting them,” von Hoffman says. “Nothing happens. And finally they look under the desk and they see all the wires have been cut.” Then he grins.
(For the full text of Make-Believe Presidents, go here. For Reason‘s review of the book, written by Karl Hess, go here. For Reason‘s review of another von Hoffman book, go here. For an hour’s worth of von Hoffman’s CBS radio commentaries, go here. For past editions of the Friday A/V Club, go here.)
Trump’s SOTU claim that black unemployment was at all time lows came perfectly timed, because if he had waited just 2 more days, the story would be very different.
According to the latest BLS data, while black unemployment in December was indeed the lowest on record, at 6.8%, something snapped in January and the unemployment rate for blacks snapped higher to 7.7%, the biggest monthly jump since November 2005, and the highest since April 2017!
That was one part of the racial divide. The other part is that while blacks clearly got the short end of the unemployment stick in January, whites were happy as the unemployment rate for White workers dropped to 3.5%, the lowest since January 2000, although we doubt that Trump will parade vocally with that particular statistic.
Watchdog group Judicial Watch released 42 pages of heavily redacted State Department documents obtained through the Freedom of Information Act (FOIA), which reveal that the Obama State Department provided Senator Ben Cardin (D-MD) a “dossier of classified information on Russia” in order to undermine President Trump, according to Judicial Watch President Tom Fitton.
“These documents show the Obama State Department under John Kerry gathered and sent its own dossier of classified information on Russia to Senator Ben Cardin, a political ally in the U.S. Senate, to undermine President Trump,” said Judicial Watch President Tom Fitton. “Judicial Watch will pursue information on who pulled this classified information, who authorized its release, and why was it evidently dumped just days before President Trump’s inauguration.”
The documents show Russian political interference in elections and politics in countries across Europe.
According to a March 2017 report in the Baltimore Sun: “Maryland Sen. Ben Cardin received classified information about Russia’s involvement in elections when the Obama administration was attempting to disseminate that material widely across the government in order to aid in future investigations, according to a report Wednesday … Obama officials were concerned, according to the report [inThe New York Times], that the Trump administration would cover up intelligence once power changed hands.” –Judicial Watch
In March 2017, Former Obama Deputy Assistant Secretary of Defense, Evelyn Farkas, made some stunning admissions during an interview with MSNBC’s Mika Brzezinski.
While discussing the mad scramble by the Obama administration to collect and preserve intelligence on alleged Russian election hacking before Obama left office, it appears that Farkas accidentally implicated the Obama White House in the surveillance of Trump’s campaign staff:
The Trump folks, if they found out how we knew what we knew about the Trump staff dealing with Russians, that they would try to compromise those sources and methods, meaning we would not longer have access to that intelligence. –Evelyn Farkas
Furthermore, Farkas effectively corroborated the March New York Times article which cited “Former American officials” as their anonymous source regarding efforts to leak this surveillance on the Trump team to Democrats across Washington DC.
I became very worried because not enough was coming out into the open and I knew that there was more. We have very good intelligence on Russia. So then I had talked to some of my former colleagues and I knew they were trying to also get information to the hill.
That’s why you have the leaking. –Evelyn Farkas
Farkas resigned from the Obama administration in September of 2015 – begging the question as to how she knew so much about what the previous administration and intelligence community was up to.
Trump Tower
A section of the documents obtained by Judicial Watch is titled “Pro-Kremlin NGOs and Think Tanks,” refers to “the Russian government funded Caucasus Research Network, which helped to spread anti-EU and NATO reports throughout the region. Also discussed is the Human Rights Accountability Global Initiative, which was founded by Natalia Veselnitskaya. The Initiative was reportedly “working to erode support for the Magnitsky Act (which imposes sanctions on … gross human rights violations). The organization screened an anti-Magnitsky film at Washington’s Newseum in June.”
Veselnitskaya infamously obtained a meeting with Donald Trump Jr. through associates of opposition research firm Fusion GPS, wherein she attempted to discuss the Magnitsky act before Trump Jr. shut down the meeting.
The Magnitsky Act attracted public attention earlier this year when it was reported Veselnitskaya obtained a meeting with Donald Trump Jr. with the purpose of seeking to undermine the act. It was reported that Russian President Vladimir Putin wanted to repeal the act at least in part because it targeted top Russian officials who had committed human rights violations and were the beneficiaries of a $230-million tax fraud that Magnitsky exposed. –Judicial Watch
With attention firmly fixated on today’s wage print earnings, economists – not to mention the Trump administration – were delighted to see a 2.9% spike in average hourly earnings, the biggest jump since June 2009, suggesting inflation is about to make a roaring comeback, and prompted the likes of Bill Gross to predict that the 10Y would hit 3.0% in the very near future.
Well, not so fast, because as a closer look at the data reveals, the only reason why average hourly earnings rose, is because the total weekly hours worked posted a relatively steep decline, dropping from 34.5 in December to 34.3 in January, a 2.9% drop from the 34.4 last January.
Meanwhile, average weekly earnings actually declined from December, dropping from $919.43 to $917.18 from December to January…
… which in turn meant no breakout in the average weekly earnings, which rose a far more modest 2.5%, and in fact declined from recent prints in the 2.9% and 3.0% range.
Finally, looking at the broadest segment of the labor force, the production and non-supervisory workers, average hourly earnings rose only 2.4%, suggesting that the bulk of hourly wage gains once again accrued to managers and supervisors.
So before dumping that 10Y or buying the dollar on the surge in “hourly” wages, maybe a question worth asking first is why did the average workweek decline by 2.9%, because if it had kept constantly, average hourly earnings would have barely increased, and the market’s reaction would be vastly different.
President Trump is tweeting angrily about the FBI and Justice Department again this morning, accusing their leadership of having “politicized the sacred investigative process.” Yesterday the White House said it would likely release a House intelligence memo Friday that showed the FBI’s bias in investigating allegations of collusion between the Trump campaign and Russia.
A federal judge has ruled that Florida’s system for deciding whether people with felony records can vote is unconstitutional. “In Florida, elected, partisan officials have extraordinary authority to grant or withhold the right to vote from hundreds of thousands of people without any constraints, guidelines, or standards,” wrote the judge.
Hundreds of people marched in New Orleans yesterday to protest the recent raids on and closure of French Quarter strip clubs, the second such demonstration this week.
The plot of this week’s Law & Order: SVU, in which a fictional Ann Coulter-like pundit is raped at a rally by either an Antifa protester or a spurned white supremacist, is causing conservative outrage.
This month marks the 200th anniversary of the birth of one of the greatest figures in American history: Frederick Douglass. Today Douglass is perhaps best remembered for his courageous and inspiring life story. He deserves to be remembered for much more than that, writes Senior Editor Damon Root.
Nicholas von Hoffman 
President Trump is tweeting angrily about the FBI and Justice Department again this morning, accusing their leadership 
