ShadowStats Flash Economic Commentary, Issue No. 1456

Copyright 2021 Shadow Government Statistics, Walter J. Williams, www.shadowstats.com 1

ShadowStats Flash Economic Commentary, Issue No. 1456

Gross Domestic Product, New Orders for Durable Goods, Home Sales

January 31, 2021

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Fourth-Quarter 2020 Annualized Real GDP Growth of 4.0% Was as Expected,

Slowing from the Record 33.4% Third-Quarter Pandemic Rebound

Full-Year 2020 Annual GDP Decline of 3.5% (-3.5%) Was the Deepest

Since the 1946 Post-World War II Economic Reset

Current U.S. Economy Remains Far from a Full Recovery

First-Quarter 2021 GDP Increasingly Is Set for a Relapsing Quarterly Contraction

Deepening Deficits in Fourth-Quarter and Annual 2020 Real Net-Exports (GDP) and the

Related Real Merchandise Trade Deficit Were the Worst Ever in Modern U.S. Reporting

Real Annual Growth in New Orders for Durable Goods Turned Negative,

Amidst Renewed Slowing in Commercial Aircraft Orders

Full-Year 2020 Existing- and New-Home Sales Were Highest Since 2006

Yet, Fourth-Quarter 2020 New-Home Sales Contracted, as Did Real Retail Sales,

Suggestive of Consumers Facing Intensifying Pandemic and Liquidity Issues

Financial Market Turmoil Is Just Beginning

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Shadow Government Statistics — Flash Economic Commentary, Issue No. 1456 — January 31, 2021


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Contents – Flash Economic Commentary (Issue No. 1456)

Note to Subscribers 4 ShadowStats Broad Outlook for the Economy, Inflation and the Markets 5

OVERVIEW 6

Real First-Quarter 2021 GDP Remains on Track for a Relapsed Quarterly Downturn;

... Deepening Record Trade Deficits Are One Problem 6 Weakening Consumer Fundamentals and Activity, Seen in Employment, Real Retail Sales and

... Personal Consumption Are Others 6 Holdings of Physical Gold and Silver Help Investors to Preserve the

... Purchasing Power of Their U.S. Dollar Assets Against Dollar-Debasing Inflation 6

Section 1 – Fourth-Quarter 2020 and Annual Gross Domestic Product 7

Table I: Headline GDP Growth Components, First-Quarter 2019 to “Initial”-Estimate, Fourth-Quarter 2020 ..................... 8

Table II: Headline GDP Growth Components, Full-Year 2018 to Initial Estimate of Full-Year 2020 ..................................... 9

Graph 1: Annual Real Gross Domestic Product – GDP (1929 to 2020) ................................................................................. 10

Graph 2: Annual Percent Change from Prior Year. Real Gross Domestic Product – GDP (1930 to 2020)........................... 10

Graph 3: Real Gross Domestic Product – GDP (1947 to First-Estimate Fourth-Quarter 2020) ........................................... 11

Graph 4: Real Gross Domestic Product, Yr-to-Yr Change (1948 to First-Estimate Fourth-Quarter 2020) .......................... 11

Graph 5: Real Gross Domestic Product – GDP (2000 to First-Estimate of Fourth-Quarter 2020) ....................................... 12

Graph 6: Real Gross Domestic Product, Yr-to-Yr Change (2000 to First-Estimate Fourth-Quarter 2020) ........................... 12

Graph 7: Real Gross Domestic Product – GDP (1q2019 to 4q2020) ..................................................................................... 13

Graph 8: Payroll Employment (January 2019 to December 2020) ........................................................................................ 13

Graph 9: Real Gross Domestic Product, Year-to-Year Change (1q2019 to 4q2020) ............................................................. 14

Graph 10: Payroll Employment, Year-to-Year Change (January 2019 to December 2020) .................................................. 14

Graph 11: Unemployment Rate (Jan 2019 to Dec 2020) – Headline vs. Corrected U.3, Inverted Scale ................................ 15

ShadowStats Corrected-Inflation Real GDP 15

Graph 12: ShadowStats Corrected-Inflation Real GDP (2000 to First-Estimate Fourth-Quarter 2020) ............................... 16

Graph 13: ShadowStats Corrected-Inflation Real GDP, Yr-to-Yr (2000 to First-Quarter 2020) ........................................... 16

Section 2 – Record Shortfalls in Real Quarterly and Annual Deficits in Net Exports and the

... Merchandise Trade Balance 17

Graph 14: U.S. Real Merchandise Trade Deficit (First-Quarter 1994 to Early-Fourth-Quarter 2020) ................................ 18

Graph 15: Real U.S. Net Exports (First-Quarter 1994 to Fourth-Quarter 2020 – GDP Accounting) ................................... 18

Graph 16: Annualized Quarterly Real U.S. Net Exports, Full History (1q1947 to 4q2020) .................................................. 19

Graph 17: Annual Real U.S. Net Exports, Full History (1929 to 2020) ................................................................................. 19



Section 3 – New Orders for Durable Goods – December 2020 20

Real Year-to-Year Growth in New Orders Resumed a Decline 20 Two-Year Decline Continued, as Also Seen With Production and Freight Activity 20

Graph 18: Real New Orders for Durable Goods (2000-2020) ............................................................................................... 21

Graph 19: Real New Orders for Durable Goods, Ex-Commercial Aircraft (2000-2020) ...................................................... 21

Graph 20: Real New Orders for Durable Goods, Year-to-Year Percent Change, (2000-2020) ............................................ 22

Graph 21: Real New Orders for Durable Goods, Ex-Commercial Aircraft (2000 to 2020) .................................................. 22

Graph 22: Real New Orders for Durable Goods Versus Alternate Business Cycles .............................................................. 23

Graph 23: The Cass Freight Index® ....................................................................................................................................... 23

Section 4 – Existing- and New-Homes Sales – December 2020 24

Graph 24: New Home Sales (2000 to 2020) ........................................................................................................................... 25

Graph 25: New-Home Sales, Year-to-Year Change (2000 to 2020) ....................................................................................... 25

Section 5 - Financial Market Graphs Updated Through Month-End Trading on January 29, 2021 26

Irrespective of Massive Economic Stimulus, Major Dollar Debasement Will Continue 26 Holding Physical Gold, Silver and the Swiss Franc Protects U.S. Dollar Purchasing Power 26 Collapsing Economic Activity Usually Is Not Long-Term Bullish for Equity Markets 26

Graph 26: February 3, 2020 to January 29, 2021 Daily Financial Markets (Dow Jones Industrial Average) ...................... 26

Off Peak, DJIA and S&P 500—Remain Inconsistent With Horrific Economic Conditions 27

Graph 27: February 3, 2020 to January 29, 2021 Daily Financial Markets (S&P 500) ........................................................ 27

Graph 28: Dow Jones Industrial Average versus Gold (Monthly Average and Latest) .......................................................... 28

Graph 29: Total Return S&P 500® versus Gold (Month-End and Latest) ............................................................................. 28

Graph 30: U.S. Financial- vs. Trade-Weighted U.S. Dollar ................................................................................................... 29

Graph 31: U.S. Financial- vs. Trade-Weighted U.S. Dollar, Year-to-Year Change ............................................................... 29

Graph 32: Gold versus Swiss Franc ........................................................................................................................................ 30

Graph 33: Gold versus Silver .................................................................................................................................................. 30

Graph 34: Gold versus Oil ...................................................................................................................................................... 31

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Note to Subscribers

Evolving Circumstances and ShadowStats Commentaries. Observations in recent Commentaries, as to deteriorating economic, Pandemic and political circumstances broadly remain in play, continuing to evolve negatively, despite the transition to a new Administration in Washington and advances in COVID-19 vaccines and treatments. The long-planned Special Benchmark Commentary should post late in the week of February 8th. It will provide a broad review of the economy, inflation and the financial markets, with an updated ShadowStats Outlook for 2021 and beyond. Specifically covered will be the continuing movement towards a U.S. hyperinflation and economic collapse, along with an updated assessment of the evolving political and Pandemic circumstances as they affect the economy and the markets. Today’s Flash Economic Commentary, Issue No. 1456 reviews initial Fourth-Quarter 2020 GDP reporting, December 2020 New Orders for Durable Goods and December Existing- and New-Home Sales, and it updates the financial-market graphs for full-month and month-end January 2021. While the broad ShadowStats Outlook continues to evolve, again, it has not changed dramatically. The general themes and elements of the outlook for the U.S. economy, inflation and financial markets, including Federal Reserve Monetary and Federal Government Fiscal Policies, still foreshadow rapidly escalating risk of a Hyperinflationary Depression. The Pandemic already has inflicted lingering, massive structural damage on the United States’ economy and on the lives and psyche of its people. Renewed, intensifying economic damage from Pandemic appears likely in at least the next quarter or two. Although one can hope that circumstances will begin to stabilize, as vaccines and treatments begin to tame the Pandemic, continuing major, expansive Federal Reserve Monetary Policies already are in place, and further, expansive new Federal Government Fiscal Policies already are promised, and likely will be needed and will continue well into 2022 and beyond. Increasing risk of a hyperinflationary economic collapse by the end of 2021, early 2022 remain uncomfortably high. – WJW

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Background ShadowStats Features: New circumstances, breaking economic news and ShadowStats

Schedule Changes are highlighted, as they happen, in the Daily Update Section of the ShadowStats Home

Page. Covered are rapidly shifting headlines, reporting details, intervening events, unusual developments

in the markets, with the FOMC or the economy, and ShadowStats scheduling. Initial assessments are

reviewed there usually within a couple hours of the official posting of a given news development.

General background to the current ShadowStats Outlook includes key economic, market and systemic

assessments of the last year, including 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), Special Economic Commentary, Issue

No. 1437 (Economic Update), Special Hyperinflation Commentary, Issue No. 1438 (Risks of a

Hyperinflationary Economic Collapse), Flash Commentary No. 1439 (Distorted May Labor Conditions,

NBER Recession Call, FOMC Outlook), Economic Commentary, Issue No. 1441 (Economic Update).

http://www.shadowstats.com/



http://www.shadowstats.com/article/cssc1429.pdf



http://www.shadowstats.com/article/csfu1433.pdf

http://www.shadowstats.com/article/csfu1434.pdf

http://www.shadowstats.com/article/csbe1437.pdf



http://www.shadowstats.com/article/csbf1439.pdf




Consider as well, Special Economic Commentary, Issue No. 1444, which examined Systemic, Economic

and Financial-system disruptions, particularly as reflected in the price of Gold. Flash Commentary,

Issue No. 1445 reviewed the GDP annual benchmarking and an updated outlook for Gold and Silver

following the August 11th sell-off. Special Economic Commentary, Issue No. 1446 assessed current and

prospective economic and inflation conditions, with initial ShadowStats GDP forecasts for the balance of

2020. Flash Commentary, Issue No. 1447 reviewed and updated ongoing statistical shenanigans with the

New Claims for Unemployment Insurance for the week ended August 29th, and assessed economic

implications of the August 2020 Payrolls and Unemployment and Employment reporting, along with the

July 2020 Merchandise Trade Deficit. Flash Commentary, Issue No. 1448 reviewed the New Claims for

Unemployment, August 2020 CPI- and PPI-Inflation and the Money Supply. Flash Commentary, Issue

No. 1449 reviewed developments from the September 2020 FOMC Meeting, with Flash Commentary,

Issue No. 1450 covering the Third-Quarter 2020 GDP and related unfolding economic circumstances.

Flash Commentary, Issue No. 1451 updated the November FOMC, along with Flash Commentary,

Issue No. 1452, Economic Commentary, Issue No. 1453, Issue No. 1454 and Issue No. 1455 updating

the latest economic and inflation numbers, FOMC actions and evolving U.S. political and Pandemic

circumstances.

ShadowStats Broad Outlook for the Economy, Inflation and the Markets

In context of the changes to the U.S. Government and the evolving COVID-19 crisis, the ShadowStats

broad outlook in the weeks and months ahead remains for:

A continuing and potentially hyperinflationary U.S. economic collapse, with significant bottom

bouncing and an unfolding, troubled and protracted “L”-shaped non-recovery, reflected in

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

prices, likely headed for new record high levels, irrespective of any temporary market

interventions, machinations or corrections to the contrary,

Continued mounting selling pressure on the U.S. dollar, against the Swiss Franc and as more

broadly measured by the ShadowStats Financial-Weighted Dollar (FWD) and the Federal

Reserve’s Trade-Weighted Advanced-Foreign-Economies (AFE) Dollar.

Despite recent extreme Stock Market volatility and current record or near-record high levels in the

popular U.S. stock-market indices, ongoing high risk of major instabilities and a pending massive

liquidation of U.S. equities,

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”), and/or as otherwise gamed by the FOMC.

Your questions and comments always are welcomed. Please call or e-mail me any time. Leave a

message if your call goes to Voicemail. I shall be back to you.

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

____________________

http://www.shadowstats.com/article/csec1444.pdf










http://www.shadowstats.com/article/cflc1451.pdf



http://www.shadowstats.com/article/ced1453.pdf

http://www.shadowstats.com/article/cec1454.pdf

http://www.shadowstats.com/article/c1455.pdf

mailto:[email protected]



OVERVIEW

Real First-Quarter 2021 GDP Remains on Track for a Relapsed Quarterly Downturn;

Deepening, Record Trade Deficits Are One Problem

Weakening Consumer Fundamentals and Activity, Seen in Employment,

Real Retail Sales and Personal Consumption Are Others

Holdings of Physical Gold and Silver Help Investors to Preserve the

Purchasing Power of Their U.S. Dollar Assets Against Dollar-Debasing Inflation

Economic Outlook Continues to Darken into Early 2021. Subsequent to ShadowStats Economic

Commentary, Issue No. 1455, dated January 27th, which covered the bulk of January 2020 economic

releases, today’s Flash Commentary provides some update from late-month economic releases,

particularly, the initial estimate of Fourth-Quarter 2020 GDP and its Merchandise Trade Deficit woes,

December 2020 New Orders for Durable Goods and Existing- and New-Home Sales. The GDP came in

as expected, with continuing record deterioration in the Trade Balance, some retrenchment in Durable

Goods Orders and Fourth-Quarter 2020 New-Home Sales. The consumer remains constrained by

liquidity, employment and related Pandemic issues. Today’s coverage:

Section 1 – Fourth-Quarter 2020 and Annual Gross Domestic Product, beginning on page 7: GDP was

as expected, but also it still appears to be set for a potential quarterly contraction in First-Quarter 2021.

Section 2 – Record Shortfalls in Real Quarterly and Annual Deficits in Net Export and Merchandise

Trade, beginning on page 17: New graphs show the deepening, now record U.S. Real Trade Deficit and

the deepening record deficit in the GDP Net Export Accounts, going back to 1929.

Section 3 – New Orders for Durable Goods—December 2020, beginning on page 20: Inflation-adjusted

(real) orders turned down anew, year-to-year, with a continuing two-year decline paralleling the Cass

Freight Index® and Industrial Production, as discussed in prior Issue No. 1455.

Section 4 – Existing- and New-Home Sales – December 2020, beginning on page 24: Both series had

strong years, but New-Home Sales contracted quarter-to-quarter in Fourth-Quarter 2020.

Section 5 –Financial Market Graphs Updated Through Month-End Trading on January 29, 2021,

beginning on page 26: Currency markets show a deepening decline in the level and annual downturn in

the U.S. dollar, particularly against the Swiss Franc, the Euro and the Australian Dollar. The weakening

U.S. dollar and rising oil price suggest rising inflation in the United States, which tends to be bullish for

the precious metals. Despite both the S&P 500 and the Dow Jones Industrial Average having just pulled

back from their historic highs, the price of Gold and Swiss Franc have continued to outperform those

stock-market measures since their February 2020 Pandemic-driven crashes from then record-high levels.

Combine the negative dollar, with soaring oil prices and with Federal Reserve monetary and U.S.

Government fiscal malfeasance, and the broad outlook for the price of gold could not be much stronger.

[Section 1 – Fourth-Quarter 2020 and Annual Gross Domestic Product begins on the next page.]






Section 1 – Fourth-Quarter 2020 and Annual Gross Domestic Product

Initial Fourth-Quarter 2020 Annualized Real GDP Growth of 4.0% Was Consensus; Full-Year

Contraction of 3.5% (-3.5%) Was Deepest Since the 1946 Reset to the Post-World War II Economy.

Reported January 28th by the Bureau of Economic Analysis (BEA), headline Fourth-Quarter 2020 real

(inflation-adjusted) annualized quarterly growth in the U.S. Gross Domestic Product (GDP) came in at

4.01%, still well shy of full recovery from the Pandemic Collapse, following a Third-Quarter 2020

annualized 33.44% gain, and respective Second-Quarter and First-Quarter 2020 annualized plunges of

31.38% (-31.38%) and 4.96% (-4.96%). For the full year of 2020, real GDP dropped by 3.50% (-3.50%)

against 2019, which in turn had gained 2.16% from 2018. Suffering from a Pandemic-driven systemic

and economic collapse, the 2020 annual decline in real GDP was the deepest since 1946, when U.S.

economic activity dropped by 11.16% (-11.16%) in its post-World War II reset.

Real Deficit in Net Exports / Merchandise Trade Deficit Continues to Savage the GDP. A meaningful

hit to the 2020 GDP reporting came from the worst-ever real Merchandise Trade Deficit and the related

deficit in the GDP “Net Exports” component, which reflects the deficit in the dominant Merchandise or

“Goods” component, and an imputed surplus in the nebulous “Services” component of Net Exports. The

trade-balance components are graphed and reviewed in Section 2, beginning on page 17.

Fourth Quarter 2020 GDP Details Are Updated in the Following Tables and Graphs. A break out of

headline inflation-adjusted GDP activity, reflecting growth contributions and key metrics by economic

sector is detailed on a quarterly basis in Table I, on an annual basis in Table II, beginning on page 8.

Beginning on page 10, plots of the historical annual and quarterly inflation-adjusted real GDP levels and

year-to-year change begin with the complete of annual numbers (1929 to date) in Graphs 1 and 2, and the

complete history of quarterly the quarterly numbers (1947 to date) in Graphs 3 and 4, with a narrower

horizon of 2000 to date in Graphs 5 and 6.

Graphs 7 to 11, beginning on page 13, plot the headline GDP since First-Quarter 2019, versus related

Labor Market metrics, as discussed versus related industry-specific labor numbers and monthly activity,

such as with Retail sales, previously in Issue No. 1455, generally suggestive of a deepening economic

downturn in into First-Quarter 2021.

Coverage of the ShadowStats Corrected-Inflation Real Gross Domestic Product begins on page 15, with

Graphs 12 and 13 following on page 16.

[Tables I and II and the regular GDP Graphs 1 to 13 begin on the next page.]




Table I: Headline GDP Growth Components, First-Quarter 2019 to “Initial”-Estimate, Fourth-Quarter 2020

First- Second- Third- Fourth- First- Second- Third Fourth

GDP COMPONENT GROWTH Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter

CONTRIBUTION BY SECTOR 2019 2019 2019 2019 2020 2020 2020 2020

Estimate Final Final Final Final Final Final Final Initial

ECONOMIC SECTOR

Personal Consumption

- Goods 0.52% 1.57% 0.87% 0.12% 0.03% -2.06% 9.55% -0.10%

-- Motor Vehicles -0.31% 0.26% 0.01% 0.08% -0.78% 0.05% 1.64% 0.10%

- Services 0.73% 0.90% 0.96% 0.96% -4.78% -21.95% 15.89% 1.80%

Gross Private Domestic Investment

- Fixed Investment 0.50% -0.07% 0.42% 0.17% -0.23% -5.27% 5.39% 3.02%

-- Residential -0.06% -0.08% 0.17% 0.22% 0.68% -1.60% 2.19% 1.29%

- Change in Private Inventories 0.21% -0.97% -0.09% -0.82% -1.34% -3.50% 6.57% 1.04%

Net Exports of Goods and Services 0.55% -0.79% 0.04% 1.52% 1.13% 0.62% -3.21% -1.52%

Government Consumption 0.43% 0.86% 0.37% 0.42% 0.22% 0.77% -0.75% -0.22%

REAL GDP GROWTH (Qtr/Qtr) 2.93% 1.49% 2.57% 2.37% -4.96% -31.38% 33.44% 4.01%

Final Sales, GDP Less Inventories 2.72% 2.46% 2.66% 3.19% -3.62% -27.88% 26.87% 2.97%

PRODUCT SECTOR

Goods 1.72% -0.13% 1.23% 0.94% -0.98% -7.40% 17.42% 1.45%

Services 0.77% 1.45% 1.12% 1.29% -4.82% -21.32% 14.60% 1.19%

Structures 0.44% 0.18% 0.22% 0.13% 0.85% -2.66% 1.42% 1.37%

REAL GDP GROWTH 2.93% 1.49% 2.57% 2.37% -4.96% -31.38% 33.44% 4.01%

Gross Domestic Product (GDP) 2.93% 1.49% 2.57% 2.37% -4.96% -31.38% 33.44% 4.01%

Gross Domestic Income (GDI) 2.21% 1.20% 0.82% 3.30% -2.53% -32.54% 25.78% --

Gross National Product (GNP) 2.38% 1.91% 2.68% 2.34% -5.57% -32.33% 34.62% --

ShadowStats Corrected GDP* 0.85% 0.56% 0.50% 0.29% -6.88% -32.77% 30.74% 1.91%

Implicit Price Deflator (IPD) Inflation 1.03% 2.60% 1.40% 1.50% 1.66% -2.09% 3.68% 1.88%

Gross Domestic Product (GDP) 2.27% 1.96% 2.08% 2.34% 0.32% -9.03% -2.85% -2.46%

Gross Domestic Income (GDI) 2.03% 2.14% 1.21% 1.88% 0.68% -9.04% -3.87% --

Gross National Product (GNP) 1.88% 1.82% 2.13% 2.33% 0.28% -9.48% -3.14% --

ShadowStats Corrected GDP* 0.20% -0.10% 0.01% 0.27% -1.71% -10.87% -4.81% -4.43%

Implicit Price Deflator (IPD) Inflation 2.00% 1.78% 1.73% 1.63% 1.79% 0.60% 1.16% 1.26%S ources: Bureau of E conomic Analysis, S hadowS tats.com.

( * ) Real GDP corrected for understated headline inf lation, see S pecial Commentaries No. 968 / 983-B for background.

Annualized Quarterly Real Growth Contribution by

Economic and Product Sector

Fourth-Quarter 2020 Real Gross Domestic Product, "Initial" Estimate

SUPPLEMENTAL

Annualized Quarter-to-Quarter Real GDP Change and Headline Implicit Price Deflator Inflation

Year-to-Year Real GDP Change and Headline Implicit Price Deflator Inflation



Table II: Headline GDP Growth Components, Full-Year 2018 to Initial Estimate of Full-Year 2020

GDP COMPONENT GROWTH

CONTRIBUTION BY SECTOR 2018 2019 2020

Estimate Latest Latest Initial

ECONOMIC SECTOR

Personal Consumption

- Goods 0.86% 0.78% 0.81%

-- Motor Vehicles 0.11% -0.01% 0.02%

- Services 0.98% 0.86% -3.44%

Gross Private Domestic Investment

- Fixed Investment 0.88% 0.32% -0.31%

-- Residential -0.02% -0.07% 0.23%

- Change in Private Inventories 0.20% -0.02% -0.63%

Net Exports of Goods and Services -0.25% -0.18% -0.13%

Government Consumption 0.32% 0.40% 0.19%

REAL GDP GROWTH (Qtr/Qtr) 3.00% 2.16% -3.50%

Final Sales, GDP Less Inventories 2.80% 2.18% -2.87%

PRODUCT SECTOR

Goods 1.66% 1.19% 0.07%

Services 1.22% 1.00% -3.55%

Structures 0.12% -0.03% -0.03%

REAL GDP GROWTH 3.00% 2.16% -3.50%

Real Gross Domestic Product (GDP) 3.00% 2.16% -3.50%

- Implicit Price Deflator (IPD) Inflation 2.40% 1.79% 2.21%

Real ShadowStats-Corrected GDP* 0.91% 0.09% -5.46%

- Effective ShadowStats IPD Inflation 4.49% 3.86% 4.17%

Annual Real Gross Domestic Product

Real Growth Contribution by

Economic and Product Sector

Year-to-Year Real GDP Change and Implicit Price Deflator Inflation

SUPPLEMENTAL

S ources: Bureau of E conomic Analysis, S hadowS tats.com

(* ) Real GDP corrected for understed headline inf lattion (see Nos, 968 and 983-B



Graph 1: Annual Real Gross Domestic Product – GDP (1929 to 2020)

Graph 2: Annual Percent Change from Prior Year. Real Gross Domestic Product – GDP (1930 to 2020)

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Graph 3: Real Gross Domestic Product – GDP (1947 to First-Estimate Fourth-Quarter 2020)

Graph 4: Real Gross Domestic Product, Yr-to-Yr Change (1948 to First-Estimate Fourth-Quarter 2020)

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Graph 5: Real Gross Domestic Product – GDP (2000 to First-Estimate of Fourth-Quarter 2020)

Graph 6: Real Gross Domestic Product, Yr-to-Yr Change (2000 to First-Estimate Fourth-Quarter 2020)

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Graph 7: Real Gross Domestic Product – GDP (1q2019 to 4q2020)

Graph 8: Payroll Employment (January 2019 to December 2020)

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Quarterly Real Gross Domestic Product 1q2019 to "Initial" Estimate 4q2020, Billions of 2012 Dollars


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Headline Nonfarm Payrolls - Monthly Level in Millions January 2019 to December 2020, Seasonally Adjusted [ShadowStats, BLS]



Graph 9: Real Gross Domestic Product, Year-to-Year Change (1q2019 to 4q2020)

Graph 10: Payroll Employment, Year-to-Year Change (January 2019 to December 2020)

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Quarterly Real Gross Domestic Product Year-to-Year Percent Change, 1qq2019 to "Initial" Estimate 4q2020


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2%

4%

Jan

2019

Fe

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Nonfarm Payrolls Year-to-Year Percent Change Jan 2019 to Dec 2020, Not Seasonally Adjusted [ShadowStats, BLS]



Graph 11: Unemployment Rate (Jan 2019 to Dec 2020) – Headline vs. Corrected U.3, Inverted Scale

ShadowStats Corrected-Inflation Real GDP

ShadowStats Alternate GDP is the ShadowStats estimate of real GDP, deflated by a more realistic

inflation number (see Special Commentary No. 968 and No. 983-B for details). The Federal

Government’s deliberate understatement of inflation has double benefit for the politicians. First, it keeps

Cost of Living Adjustments (COLA) and related payments artificially low. Second, using artificially low

inflation to deflate GDP, for example, overstates the headline, inflation GDP growth.

For example, looking at Table I, headline 4.01% annualized quarterly growth in Fourth-Quarter 2020

GDP would have been 1.91% using an un-gimmicked inflation rate (ShadowStats Corrected GDP). The

difference is the Real GDP numbers overstate inflation-adjusted growth by about 2%, based just on

inflation misstatement, ignoring other reporting issues.

[ShadowStats Corrected-Inflation Real GDP Graphs 12 and 13 follow on the next page]

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9

100%

3%

6%

9%

12%

15%

18%

21%

Jan

2019

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en

t R

ate

Headline and Corrected U.3 Unemployment - Inverted Scale January 2019 to December 2020, Seasonally Adjusted [ShadowStats, BLS]

Official Recession

Current Headline Detail

Corrected for Unemployed Misclassified as "Employed"

http://www.shadowstats.com/article/c968b.pdf

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



Graph 12: ShadowStats Corrected-Inflation Real GDP (2000 to First-Estimate Fourth-Quarter 2020)

Graph 13: ShadowStats Corrected-Inflation Real GDP, Yr-to-Yr (2000 to First-Quarter 2020)

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ShadowStats Corrected-Inflation Real Gross Domestic Product Nominal GDP Deflated by Implicit Price Deflator Corrected for

Roughly Two-Percentage Point Understatement of Annual Inflation 2000 to "Initial" Estimate 4q2020, Seasonally-Adjusted [ShadowStats, BEA

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-12.0%

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ShadowStats Corrected-Inflation GDP, Yr-to-Yr Percent Change 1q2000 to "Initial" Estimate 4q2020 Seasonally-Adjusted [ShadowStats, BEA]



Section 2 – Record Shortfalls in Real Quarterly and Annual Deficits in

Net Exports and the Merchandise Trade Balance

The November 2020 and implied Fourth-Quarter 2020 Real U.S. Merchandises Trade Deficit Were

the Deepest in History, as Confirmed by the Initial Fourth-Quarter 2020 Net Exports. Confirming

the patterns present in headline monthly trade deficits to November 2020 (December reporting pending

February 5th), the Net Exports in the “advance” reporting of Fourth-Quarter 2020 and for the full-year

2020 were the worst ever, hitting the aggregate economic and GDP reporting hard.

Graphs 14 to 17 update the record real monthly, quarterly and annual trade deficits, Merchandise or the

“Net Exports” (including services) in the GDP. Graph 14 plots the monthly Real Merchandise Trade

Deficit (December 2020 detail is pending February 5th). Graphs 15 and 16 plot the quarterly GDP-

component “Net Exports” respectively in a timeframe comparable with the Merchandise Trade Deficit

plot, and for the full historical timeframe of the quarterly GDP and Net Exports series back to 1947 (see

related GDP plots in Graphs 3 and 5.

Graph 18 plots the full, annual historical series of the Trade Balance in Net Exports back to 1929,

comparable to the GDP plot in Graph 1.

[Graphs 14 to 17 follow on the next page]



Graph 14: U.S. Real Merchandise Trade Deficit (First-Quarter 1994 to Early-Fourth-Quarter 2020)

Graph 15: Real U.S. Net Exports (First-Quarter 1994 to Fourth-Quarter 2020 – GDP Accounting)

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ars

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

Quarterly Deficit at Annual Rate, 1q1994 to Early-4q2020 (Oct/Nov) Seasonally-Adjusted [ShadowStats, Census Bureau]

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U.S. Net Exports of Goods and Services (GDP Accounting) Quarterly Deficit at Annual Rate (1q1994 to 4q2020 [Final Estimate])




Graph 16: Annualized Quarterly Real U.S. Net Exports, Full History (1q1947 to 4q2020)

Graph 17: Annual Real U.S. Net Exports, Full History (1929 to 2020)

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Real Net Exports, Billions of 2012 Dollars, Annualized Pace 1947 to "Initial" Fourth-Quarter 2020, Seasonally-Adjusted [ShadowStats, BEA]

-1,000

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Annual Real Net Exports Level in Billions of 2012 Dollars, 1929 to 2020 [ShadowStats, BEA]



Section 3 – New Orders for Durable Goods – December 2020

Real Year-to-Year Growth in New Orders Resumed a Decline

Two-Year Decline Continued, Also Seen With Production and Freight Activity

Hit by a renewed slowing in Commercial Aircraft Orders, December 2020 Real New Orders for

Durable Goods declined by 0.5% (-0.5%) in the month and by 1.2% (-1.2%) year-to-year. Net of

volatile Commercial Aircraft orders and inflation, real new orders gained 0.1% month-to-month in

December, down by 0.7% (-0.7%) year-to-year, against respective revised November monthly and annual

real gains of 1.0% and 4.5%.

Even in nominal terms, before inflation adjustment, where total orders were up year-to-year by 1.4%, they

also were down by 1.9% (-1.9%) from two years ago, as seen in series such as the Cass Freight Index®

(see accompanying Graphs 22 and 23) as well as Industrial Production (specifically the Manufacturing

and Mining Sectors). That circumstance reflects the pre-Pandemic economic downturn/slowdown in

2018/2019 triggered by excessive FOMC tightening in 2018 (see the discussion in prior Issue No. 1455,

beginning there on page 20).

Again, before inflation adjustment, total nominal orders gained 0.2% in the month, as reported January

27th by the Census Bureau. Where the level of nominal new orders for Commercial Aircraft was

positive, as opposed to order cancellations and resulting net-negative monthly orders, as had been seen

earlier in the year, the month-to-month change in Commercial Aircraft orders was a 51.8% (-51.8%)

contraction, with orders dropping to $1.143 billion in December from $2.362 billion in November.

On the more-positive consumer side, nominal new orders for motor vehicles and parts gained 1.4%,

although new orders for computers dropped by 3.4% (-3.4%) in the month.

[Graphs 18 to 23 begin on the next page]




Graph 18: Real New Orders for Durable Goods (2000-2020)

Graph 19: Real New Orders for Durable Goods, Ex-Commercial Aircraft (2000-2020)

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

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

One-Month Reported

Six-Month Moving Average

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

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

One-Month Reported

Six-Month Moving Average



Graph 20: Real New Orders for Durable Goods, Year-to-Year Percent Change, (2000-2020)

Graph 21: Real New Orders for Durable Goods, Ex-Commercial Aircraft (2000 to 2020)

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30%

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


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




See the Cass Freight Index® discussion in prior Issue No. 1455 , beginning there on page 20

Graph 22: Real New Orders for Durable Goods Versus Alternate Business Cycles

Graph 23: Cass Freight Index® (2000 to 2020)

[Section 4 – December 2020 Existing- and New –Home Sales Coverage begins on the next page]

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2000200120022003200420052006200720082009201020112012201320142015201620172018201920202021

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100

Total Real New Order for Durable Goods Monthly (Jan 2000 = 100) and 12-Month Moving Average, to August 2020

Plotted Against Formal and Unofficial Recessions Seasonally-Adjusted [ShadowStats, Census Bureau]

Formal Recession

Unofficial Recession

Monthly

12-Month Moving Average

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Cass Freight Index® (Re-Indexed to January 2000 = 100) Monthly and 12-Month Moving Average, to December 2020

Plotted Against Formal and Unofficial Recessions Not Seasonally Adjusted [ShadowStats, CassInfo.com]

Formal Recession

Unofficial Recession

Monthly

12-Month Moving Average




Section 4 – Existing- and New-Homes Sales – December 2020

Existing-Home Sales in 2020 Hit a Fifteen-Year High. The National Association of Realtors®

(NAR)

©2021 reported December 2020 Existing-Home Sales on January 22nd. The monthly release headlined:

“Existing-home sales rose in December, with home sales in 2020 reaching their highest level since 2006.”

See the full details at the following link: National Association of Realtors Existing Home Sales.

December 2020 sales gained 22.2% year-to-year, up by 0.7% month-to-month (up by 1.0% net of an

upside revision to November 2020 activity). Full-year 2020 sales activity was up by 5.6% from 2019,

which was unchanged from annual sales in 2018.

Fourth-Quarter 2020 New-Home Sales Contracted at an Annualized Pace of 35.3% (-35.3%), but

Gained 22.8% Year-to-Year. The Census Bureau and the Department of Housing and Urban

Development reported December 2020 New-Home Sales (NHS) on January 28th. The usual lack of

statistically significant initial reporting at the 90% confidence interval returned with the headline

December 2020 NHS detail, both as to the headline month-to-month gain of 1.6% and the year-to-year

gain of 15.2%. The headline December numbers were in the context of a 1.4% (-1.4%) downside revision

to headline November 2020 sales, which now have collapsed by a downwardly revised 12.6% (-12.6%)

[previously 11.1% (-11.1%)] in the month, up by a downwardly revised 19.1% [previously 20.8%].

Yet, the initial reporting of that monthly collapse of 11.1% (-11.1%) in November 2020 New-Home Sales

was on top of a coincident three months of massive downside revisions. The then 11.1% (-11.1%) [down

by 15.8% (-15.8%) net of revisions to October sales], with the year-to-year gain slowing to a meaningful

20.8% in the month, was down from a downwardly revised annual gain of 33.9% [previously 41.5%] in

October 2020.

Both the initial monthly level of and year-to-year change in December 2020 Sales were the lowest since

recovering pre-Pandemic levels in June 2020. At present, headline NHS remain shy of ever recovering

their pre-Great Recession peak activity by 39.4% (-39.4%). That said, headline NHS for full-year 2020

also was the highest since 2006, prior to the Great Recession.

Extreme Quarterly Volatility Tied to Pandemic Distortions. Based on the December 2020 headline

details, Fourth-Quarter (4q2020) New-Home Sales dropped at an annualized quarterly pace of 35.3%

(-35.3%), up by 22.8% year-to-year. Such was in the context of 3q2020 Sales exploding at an annualized

quarterly pace of 268.7%, up by 39.6% year-to-year; with 2q2020 Sales rising at an annualized quarterly

pace of 1.1%, up by 5.9% year-to-year; with 1q2020 Sales declining at an annualized quarterly pace of

5.7% (-5.7%), up by 5.0% year-to-year; with pre-Pandemic 4q2019 Sales gaining at an annualized

quarterly pace of 7.9%, up by 23.3% year-to-year.

[Graphs 24 and 25 of New-Home Sales follow on the next page]

https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales



Graph 24: New Home Sales (2000 to 2020)

Graph 25: New-Home Sales, Year-to-Year Change (2000 to 2020)

[Financial Market Graphs 26 to 34 begin on the next page.]

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New-Home Sales (Monthly Rate) 2000 to December 2020, Seasonally-Adjusted [ShadowStats, Census and HUD]

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New-Home Sales (Year-to-Year Change by Month) 2000 To December 2020, Seasonally-Adjusted [ShadowStats, Census and HUD]



Section 5 - Financial Market Graphs Updated Through

Month-End Trading on January 29, 2021

Irrespective of Massive Economic Stimulus, Major Dollar Debasement Will Continue

Holding Physical Gold, Silver and the Swiss Franc Protects U.S. Dollar Purchasing Power

Collapsing Economic Activity Usually Is Not Long-Term Bullish for Equity Markets

Graph 26: February 3, 2020 to January 29, 2021 Daily Financial Markets (Dow Jones Industrial Average)

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February 3, 2020 to January 29, 2021 Financial Markets Dow Jones Industrial Average vs. Gold and Swiss Franc

DJIA, Gold and CHF All Indexed to Feb 12 = 100 (DJIA Then All-Time )

Gold

Swiss Franc

DJIA

Trading Days - Date Marks First Trading Day of the Week



Off Peak, DJIA and S&P 500—Remain Inconsistent With Horrific Economic Conditions

Graphs 26 and 27 plot the Dow Jones Industrial Average and the S&P 500 against Gold (London PM Fix,

when available) and the Swiss Franc (CHF, 4 PM New York), with each instrument set equal to 100.0,

coincident with the then pre-Coronavirus stock-market record closing highs in February 2020. Massive

new fiscal and monetary stimuli loom for the United States economy and markets in the year ahead. Both

Gold and the CHF should continue to help preserve the purchasing power of Investors’ dollars. Where

DJIA and S&P 500 pre-Pandemic peaks were a week apart, indexing of the pre-Pandemic peak close, and

same-day Gold and Swiss Franc all to 100 varies slightly between the graphs. Extended review of

potential U.S. economic, inflation and financial-market conditions (including interest rates, equities and

precious metals) follows in the pending ShadowStats Benchmark Economic Commentary.

Graph 27: February 3, 2020 to January 29, 2021 Daily Financial Markets (S&P 500)

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February 3, 2020 to January 29, 2021 Financial Markets S&P 500 vs. Gold and Swiss Franc

S&P 500, Gold, CHF Indexed to Feb 19 = 100 (S&P 500 Then All-Time High)

Gold

Swiss Franc

S&P 500

Trading Days - Date Marks First Trading Day of the Week



Graph 28: Dow Jones Industrial Average versus Gold (Monthly Average and Latest)

Graph 29: Total Return S&P 500® versus Gold (Month-End and Latest)

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London P.M. Gold Fix versus the Dow Jones Industrial Average

Monthly Average Jan 2000 to Jan 2021, Indexed to Jan 2000 = 100 PM Gold Fix, Dow Jones Industrial Average Close Jan 29, 2021 [ShadowStats, St. Louis Fed, S&P Dow Jones Indices, Kitco]

Formal Recessions

Monthly Average London PM Gold Fix

Last London PM Gold Fix

Monthly Average DJIA Daily Close

Last DJIA Close

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London P.M. Gold Fix versus the Total Return S&P 500® Index (Reinvested Dividends)

Month-End Jan 2000 to Jan 2021, Indexed to Jan 2000 = 100 PM Gold Fix, S&P Total Return NY Close Jan 27, 2021 [ShadowStats, St. Louis Fed, S&P Dow Jones, Kitco]

Formal Recessions

Month-End London PM Gold Fix

Lastest London PM Gold Fix

Month-End S&P 500 Total Return Index

Last S&P 500 Total Return Close



Graph 30: U.S. Financial- vs. Trade-Weighted U.S. Dollar

Graph 31: U.S. Financial- vs. Trade-Weighted U.S. Dollar, Year-to-Year Change

See the Trade-/Financial-Weighted U.S. Dollar ALTERNATE DATA tab at www.ShadowStats.com.

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Financial- vs. Trade-Weighted Advanced Foreign Economies (AFE) U.S. Dollar

Monthly Average Indices through Jan 2021 Last Point is Late-Day N.Y. for Jan 29, 2021

ShadowStats FWD and FRB AFE Major Currency TWD Indices, Jan 1985 = 100 [ShadowStats, FRB, WSJ]

TWD -- FRB Major-Currency AFE Trade-Weighted Dollar

Latest TWD

FWD-CNY -- ShadowStats Financial-Weighted Dollar

Latest FWD-CNY [Includes Chinese Yuan]

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

1985 1990 1995 2000 2005 2010 2015 2020

Year-

to-Y

ear

Perc

en

t C

han

ge

Financial- vs. Trade-Weighted AFE U.S. Dollar Monthly Average Year-to-Year Percent Change to Jan 2021

Last Point is Late-Day New York for Jan 29, 2021 ShadowStats FWD-C and FRB Major Currency TWD Indices

[ShadowStats, FRB, WSJ]

TWD -- FRB Major-Currency Trade-Weighted Index

Latest TWD

FWD-CNY -- ShadowStats Financial-Weighted Dollar

Latest FWD-CNY

http://www.shadowstats.com/alternate_data/dollar-index-charts




Graph 32: Gold versus Swiss Franc

Graph 33: Gold versus Silver

0.20

0.33

0.46

0.59

0.72

0.85

0.98

1.11

1.24

1.37

1.50

1.63

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

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 January 2021

Latest Points - January 29, 2021 [ShadowStats, Kitco, FRB, WSJ]

Gold - Monthly Average

Gold - Latest

Swiss Franc - USD/CHF - Monthly Average

CHF - Latest

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

0

4

8

12

16

20

24

28

32

36

40

44

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Go

ld P

rice -

U.S

. D

ollars

per

Tro

y O

un

ce

Silver

Pri

ce -

U.S

. D

ollars

per

Tro

y O

un

ce

Gold versus Silver Price Levels Monthly Average Price in U.S. Dollars per Troy Ounce to January 2021

Latest Points - January 29, 2021 [ShadowStats, Kitco, Stooq]

Silver - Monthly Average

Silver - Latest


Gold - Latest



Graph 34: Gold versus Oil

# # #

0

15

30

45

60

75

90

105

120

135

150

165

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Oil P

rice -

Do

llars

per

Barr

el

Go

ld P

rice -

Do

llars

per

Tro

y O

un

ce

Gold versus Oil (Brent/WTI) Monthly Average Prices to January 2021, Pre-1987 is WTI Latest Points - January 29, 2021 [ShadowStats, Kitco, EIA]


Gold - Latest

Oil - Monthly Average

Oil - Latest

Documents

ShadowStats Flash Economic Commentary, Issue No. 1456