Morning Report: Americans will flee the cities.

Vital Statistics:


Last Change
S&P futures 3034 -8.1
Oil (WTI) 34.44 -0.69
10 year government bond yield 0.68%
30 year fixed rate mortgage 3.28%


Stocks are flattish this morning despite riots in major cities across the US. Bonds and MBS are flat.


Trump will be meeting with the Attorney General this morning to figure out how to respond to the violence in many US cities.


The big economic news will be the jobs report on Friday. The Street is looking for a 7.7 million drop in jobs, an unemployment rate of 20% and a 7% increase in average hourly earnings. More and more states are re-opening so hopefully this will be the last jobs report with negative payroll growth.


Construction spending fell 2.9% in April, which was a little bit better than expected. The ISM Manufacturing Index fell to 43, which again was a little bit better than expected.


Personal Income rose 10.5% in April, largely due to the CARES Act. Personal consumption expenditures fell as people were unable to go to the stores. This caused a big jump in the savings rate, up to 33% from 10%, which ironically shows how big Keynsian spending plans often don’t have the desired effect.

PCE versus PI


The riots are certainly not going to help the jobs situation of course. Much will depend on how long they last. If they peter out over the next few days then we probably won’t see a major effect.


I can’t escape the idea that the riots and COVID have set in place the circumstances for a massive exodus from the big cities, similar to what we saw in the late 60s. During the 60s, manufacturing jobs fled the cities to the suburbs as many employees no longer wanted to work there. This time, I could see white collar jobs fleeing. When people can largely work from home, why pay top dollar for office space in the cities? And if the jobs relocate, why spend ten grand a month for a 1200 square foot apartment? I could see this turning out to be the catalyst for a massive expansion of the suburbs and exurbs,  which will be good for the homebuilders. noted that Connecticut has seen something like a 75% increase in people moving out of NYC.



29 Responses

  1. Escape from Manhattan seems inevitable. Also San Francisco. Sprawling low rise moderately priced cities, not so much.


    • what a waste.

      Liked by 1 person

    • Clearly the worst of the oppressed with no other options to express their rage.

      One step away from Les Misérables .

      Liked by 1 person

    • Colinford Mattis, 32, was allegedly behind the wheel of a tan minivan as his passenger, fellow attorney Urooj Rahman, allegedly hurled the incendiary at an empty NYPD vehicle outside the 88th Precinct stationhouse in Fort Greene early Saturday.

      I’ve always said lawyers were the lowest form of humanity. 😀

      Present company excepted, of course!!


  2. “I can’t escape the idea that the riots and COVID have set in place the circumstances for a massive exodus from the big cities, similar to what we saw in the late 60s. During the 60s, manufacturing jobs fled the cities to the suburbs as many employees no longer wanted to work there.”

    I just got my first cold call on my cell this morning from one of those buy your house companies. I live in the suburbs.

    Liked by 1 person

  3. Good read. I agree with the underlying premise that politics is shaped by lived economic experience.


  4. Antifa driving around handing out bricks to protestors.

    They totally should be classified as a terrorist organization. Other folks get the domestic terror label in the US for less.

    Actual community protestor takes folks in their nice car handing out bricks to school.


  5. No one does contempt for liberals like Jacobin:

    “American liberalism has a distinctly contradictory relationship with black protest. On the one hand, liberals imagine themselves the best friends (in contemporary parlance, “allies”) of the cause of black equality. On the other, since at least the 1930s, liberals have recoiled from black militancy, convinced it served little purpose but to strengthen the hand of reactionaries.

    With uprisings now shaking cities across the country, American liberalism’s divided mind has been revealed once again. Some of the attempts to maintain the balance of supporting the cause while condemning the uprisings have been laughable, like the ridiculously paternalistic idea that the property destruction is all the doing of “white anarchists.” Aside from being a regurgitation of police rationalizations for repression, this kind of argument effectively erases the many forms of black protest that don’t fit the model for liberal approval.”


  6. Judge Sullivan’s response to the request for mandamus:

    Click to access Sullivan-Response.pdf

    Also worth noting, Sullivan didn’t respond himself. He hired an outside attorney to explain his own ruling for him.

    Update: This is the DOJ’s filing on the same issue.


  7. And of course, eventually Democrats come around to the argument that Putin and the Russians are behind all the riots:


  8. Two friends of mine whose judgement I trust were at a march today (separately) that was during the day and scheduled to end before the curfew started. By all accounts, it was totally peaceful without even any littering. Pastors, parents with small children, etc were there and when it ended, they all knelt and put their hands up as a show of solidarity.

    At which point, the police without provocation tear gassed them.

    They weren’t together but both reported the exact same thing. I think the police response is going to whipsaw from under reacting, and the result is looting and vandalism and over reacting and the result is this. Which is being driven by the politicians under and over reacting and pushing for results.


  9. Worth a read:

    “Where did policing go wrong?

    Crime has been down for decades, but incarceration is still sky-high and brutality cases keep tearing the country apart. Does policing in America need a fundamental re-think?

    Matt Taibbi”


    • An excellent read. One small bone to pick – community policing is not a euphemism for Broken Windows. It is the attempt to have cops visible and known by name in the community. The cops stay on their beat and one buddy is usually of the ethnic background of the neighborhood, preferably raised in the neighborhood. The community cop walks a lot and knows and works closely with the community leaders and non-profits and gives lectures in the schools and community halls about what resources are available and how to quickly contact him or her. It predates Broken Windows by decades.

      Imposing Broken Windows and Stop and Frisk on community policing has been to the detriment of the beneficial effect that community policing had. It has put cops back in their patrol cars and made them armed strangers again. It has cut cops off from their most valuable crime fighting resource – the neighbors.

      The confusion that led Taibbi to call community policing a euphemism for Broken Windows is that some urban forces have top-down tried to do both with the same cops, thereby destroying community policing as a tool.

      BTW, this is in that way analogous to trying to federalize local cops to find undocs.

      The article is right on the money in substance.


      • Mark/jnc:

        I also thought the article was interesting, but the 1619 Project-type history is a bit irritating. It may be true that certain police forces in the South evolved out of slave patrols, but I doubt that American police forces in general did. From what I can find, the first recognizable modern police force – publicly funded and organized – was created in the 1830’s in New York City. Not a likely candidate to have evolved out of slave patrols in the South.


        • Agreed on that, as well.

          Also, the APD was reformed from a cowboy outfit to unformed cops during or shortly after WW1, mainly to police the bars and taverns where brawling and random violence were the worst.

          After WW2, around 1947, the Travis County Sheriff’s office broke new ground by hiring Chicano and black deputies who were war vets. Paired them with white guys in the black and brown neighborhoods to build trust. Pre LBJ funded community policing was a local initiative after WW2 in a lot of places.


    • I just read it. It’s good but does that same thing—-“though crime is down incarceration is up” without acknowledging there is a benefit to the mass incarceration. Not all but many of those incarcerated would have committed additional crimes if not in jail, most likely. Less criminals lead to less crime even if the methods used are ultimately dysfunctional.

      Also he uses the fact police forces were tasked with managing minority travel and maintaining segregation—and thus had laws that almost entirely applied to black people—as being the reason police forces exist at all, which is absurd. Of course people for whom their only interaction with cops is getting traffic citations, they often believe the police exist only to write tickets.

      They don’t exist just to be racist. The implication there is that people don’t care about crime, only black people coming to their neighborhoods. Even outright racists likely care about both things.


      • Incarceration should be down. Too many non-violent offenders by the thousands are incarcerated. Incarceration for short terms of a lot of previously non-violent people actually breeds more crime, when they get out unemployable at a decent wage having learned from the many really bad guys who run the prison [prisoners and often guards, as well] how to be pieces of shit.


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