There is much wisdom in the Principle of Subsidiarity. See, e.g., Thomas C. Behr, Social Justice and Subsidiarity. This is a key principle of the social doctrine of the Catholic Church. Concordian economics offers the opportunity for an automatic application of this principle.
Usually, I compare the JAMSTEC forecast with the NOAA forecast after NOAA Issues its Seasonal Outlook. But this month, JAMSTEC was very early so I thought I would share it with everyone now. NOAA calls their predictions an outlook but JAMSTEC calls their predictions a forecast. I am going to show the JAMSTEC forecasts by month and by season and some of the indices they use in their model. They make world forecasts and for any readers who do not realize it, the U.S. is part of the world so it is covered by a world forecast. Of the two seasons that include our monsoon, I will extract the North American forecast from their world forecast and enlarge it.
I like the JAMSTEC forecast because the U.S. is part of the world and our weather is not independent of the worldwide weather pattern. In fact, most of U.S. weather originates in the Pacific Ocean and the Pacific Ocean is where Japan is located. In fact, Japan and the US jointly manage the monitoring system along the Equator that helps predict the phases of ENSO. So one of the reasons I include worldwide forecasts in articles is to encourage the understanding of worldwide weather patterns. It is not that the U.S. does not cooperate with other nations with respect to weather forecasts as it does. But to view weather forecasts on the Internet or TV you would not easily notice that. The U.S. pays hardly any attention to what other meteorological agencies predict.
For those interested in the U.S., the forecast for the Summer Monsoon and the overall placement of the drought is of interest. We will have the NOAA forecast this Thursday and it will be interesting to see the level of agreement or disagreement.
They did three big things:
Let me elaborate on each …
The Philadelphia Fed’s Second Quarter 2022 Survey of Professional Forecasters now predicts the economic outlook is weaker. 2022 GDP annual growth is now forecast at 2.5% – down from the 3.7% forecast just three months ago.
|
|
REAL GDP (%) |
UNEMPLOYMENT RATE (%) |
PAYROLLS (000S/MONTH) |
||||
|---|---|---|---|---|---|---|---|
|
PREVIOUS |
NEW |
PREVIOUS |
NEW |
PREVIOUS |
NEW |
||
| Annual data (projections are based on annual-average levels): | |||||||
| 2022 |
3.7 |
2.5 |
3.7 |
3.6 |
430.9 |
479.7 |
|
| 2023 |
2.7 |
2.3 |
3.4 |
3.6 |
197.2 |
172.7 |
|
| 2024 |
2.3 |
2.0 |
3.6 |
3.8 |
N.A. |
N.A. |
|
| 2025 |
2.3 |
2.3 |
3.7 |
3.8 |
N.A. |
N.A. |
|
These same forecasters now forecast higher inflation. Can you believe that only three months ago – 2022 inflation was forecast the 3.8%?
|
|
HEADLINE CPI |
CORE CPI |
HEADLINE PCE |
CORE PCE |
|||||
|---|---|---|---|---|---|---|---|---|---|
|
PREVIOUS |
CURRENT |
PREVIOUS |
CURRENT |
PREVIOUS |
CURRENT |
PREVIOUS |
CURRENT |
||
| Quarterly | |||||||||
| Q4/Q4 Annual Averages | |||||||||
| 2022 |
3.8 |
6.1 |
3.6 |
4.8 |
3.1 |
5.0 |
3.1 |
4.1 |
|
| 2023 |
2.4 |
2.9 |
2.5 |
2.9 |
2.2 |
2.5 |
2.2 |
2.5 |
|
| 2024 |
2.3 |
2.3 |
2.4 |
2.5 |
2.2 |
2.2 |
2.2 |
2.2 |
|
U.S. IMPORT AND EXPORT PRICE INDEXES – APRIL 2022 – Year-over-year inflation moderated from 13.0% to 12.0%.
Student Debt Relief – A Philadelphia Fed Study found “most respondents without education debt preferred no, or relatively limited, cancellation of federal education debt (e.g., $10,000 or less per borrower). In comparison, those with education debt overwhelmingly (86 percent) preferred some debt relief. However, even among this group, there did not appear to be widespread support for canceling most or all education debt. A majority of respondents, with or without education debt, felt that any debt relief provided should be targeted.”
These and other headlines and news summaries moving the markets today are included below.
On the second Thursday of every month, NOAA issues its analysis of the status of ENSO. This includes determining the Alert System Status. Although the current status remains the same i.e. La Nina Advisory, the forecast has been adjusted somewhat from last month. The forecast calls for the La Nina to continue. The timing is shown in the NOAA discussion and the IRI probability analysis. Of importance, the chances of a Triple Dip La Nina are still difficult to predict but seem to be slightly higher than the estimate last month. That would be a real disaster for the Southwest and the West Coast. The NOAA estimate for La Nina lasting into early Winter is 61%. This is a minority opinion in terms of other meteorological agencies almost all of which see La Nina ending sooner.
The impact of the NOAA forecast for the slow or non-existent transition from La Nina to ENSO Neutral will show up next Thursday when NOAA issues its Seasonal Outlook. The NOAA ENSO Status Update provides an advance indication of how the Outlook might change. There is a lag between the ENSO state and the impact on U.S. weather. Thus the exact strength of the La Nina may not be very important in terms of the actual impact on Summer weather including the North American Monsoon (NAM). We may see some changes farther out in the NOAA Outlook that will be issued next Thursday in particular Fall and Winter. Although the chances that this will happen are slightly less this month, the possibility of a Triple Dip should be of considerable concern. It most likely will be reflected in the Outlook issued next Thursday but perhaps not. We will learn more about what NOAA thinks next Thursday.
For the week ending 07 May 2022, initial unemployment claims continue to modestly increase.
The Producer Price Index’s final demand year-over-year growth modestly declined from 11.5% to 11.0% (similar to the decline seen in the CPI).
These and other headlines and news summaries moving the markets today are included below.
The Consumer Price Index (CPI) for April 2022 shows year-over-year inflation moderated from 8.5% to 8.3%.
These and other headlines and news summaries moving the markets today are included below.
The NFIB Small Business Optimism Index was unchanged in April. The expectation index (optimism 6 months from today) associated with this survey sank to the lowest level recorded in this index. Inflation remains a major concern.
CoreLogic Loan Performance Insights, which monitors mortgage delinquency, improved in February 2022.
These and other headlines and news summaries moving the markets today are included below.
Fed Bostic Speech – The Federal Reserve raised the target for the fed funds rate by half a point to 0.75%-1% during its May 2022 meeting, the second consecutive rate hike and the biggest rise in borrowing costs since 2000, aiming to tackle soaring inflation. The central bank added that ongoing increases in the target range will be appropriate, with Chair Powell pointing to 50bps hikes in the next couple of meetings. The Fed will also begin reducing asset holdings on its $9 trillion balance sheet on June 1st. The plan will start with a monthly roll-off of $30 billion of Treasuries and $17.5 billion on mortgage-backed securities for 3 months and will then increase to $60 billion and $35 billion for mortgages per month. On the economic front, policymakers noted that the invasion of Ukraine and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. source: Federal Reserve
Wholesale Inventories – The headlines say wholesale sales were up month-over-month. Year-over-year change in the inventory-to-sales ratio is what is important. A jump in the ratio could indicate a slowing economy (one month of data is not a trend). A flat trend would indicate an economy that was neither accelerating or decelerating. A decelerating trend would indicate an improving economy. Wholesale sales, therefore, are indicating an improving economy.
These and other headlines and news summaries moving the markets today are included below.