As we enter the final days of October and nearly a month into the government shutdown, it’s worth taking time to examine the economic activity in the United States and what we can anticipate in the coming months.
What people commonly refer to as “the economy” is actually more accurately represented as economic activity. Economic activity is a measurement of the sum of what lots of people are doing, which is the most important aspect to consider—not some summary measurement thereof. All too frequently, broad generalizations about how the economy is performing rarely match the actual experiences of the majority of the population. For example, it is one thing to say the average income of everyone in the country has gone up by a certain amount if everyone’s income has gone up by that amount. It means something totally different if the income of one percent of the people has gone up hugely, and the income of ninety-nine percent of the people has not gone up at all. The latter is an example that is far more common in the United States, where a majority of the wealth is hoarded by the top .01 percent.
This is one of the shortfalls of the employment reports from the Bureau of Labor Statistics. Despite being one of the most cited sources on the health of the economy, the employment statistics are based on a household survey, and an employer survey, asking who was employed during the pay period which includes the twelfth of the month. About a third of employers generally do not respond in time for their responses to be included in the results which are published the first Friday of the succeeding month. In fact for companies with monthly payrolls, it is virtually impossible to respond on time. Almost all of the surveyed businesses—over ninety percent—get their data in over the next month or so, and the Bureau publishes a revised report every month for the previous month. A few months ago, the president dismissed the head of the Bureau, accusing her of revising the report for nefarious political purposes. I do not believe in the veracity of that accusation. One concern is that the people now in charge will make the reports reflect the wishes of the president, as opposed to their best estimate of reality.
The Bureau has also been subjected to staff cuts. That has impacted its ability to produce both the employment reports and the inflation reports. And with the government shutdown, there was no September employment report published. They did produce an inflation report which will be used for the annual cost-of-living adjustment for Social Security payments.
Equifax, one of the three big credit reporting companies, publishes some reports every month. They get data on people repaying loans from banks, mortgage companies, etc. Economists and businesses use their data as a reference point by analyzing its data on all residential mortgages and bank credit cards (Visa and Mastercard) etc. in the United States.
Here is a brief summary of how we can utilize the data private companies provide and how it can inform us on the health of economic activity within the United States:
“Delinquent” generally means different things, but it is generally understood when it comes to things like mortgages, car loans, or bank cards that the borrower has failed to make the last three payments. The percentages are dollar weighted, so (for example) if you look at all of the car loans that are delinquent, the amount owed on those loans is, in aggregate, 1.54% of all of the money owed on all outstanding loans.
If you look at the total amount of money charged off (meaning the amount of money the lenders are owed that they do not expect to receive) that is equal to about 84 ten-thousandths of one percent of the total amount owed (in other words, the banks lose a little less than one one-hundredth of one percent per month). The dollar amounts are rounded to the nearest 10 billion. Below, we have listed in millions to be consistent with the loan count column:
| Count in Millions | Dollars in Millions | Percent ($) Delinquent | Percent ($) Charged Off | |
| First Mortgages | 54.1 | 12,630,000 | 0.72 | 0.0084 |
| Bank Credit Cards | 583.7 | 1,080,000 | 2.73 | 0.555 |
| Student Loans | 145.8 | 1,320,000 | 16.78 | |
| Car Loans and Leases | 87.0 | 1,670,000 | 1.54 | 0.243 |
| Other | 268.4 | 1,210,000 | ||
| Total | 1,139.0 | 17,910,000 |