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Post by unlawflcombatnt on Feb 28, 2007 4:21:16 GMT -6
Below is a graph showing the slowdown in the manufacturing sector, and a link to an interesting article by New York Times writer Dave Leonard, titled A Recession That Arrived on Cats' Paws In the above graph, anything below 50 denotes a contraction. Note where we are at present. The article describes how the manufacturing sector is already in Recession, and how it's gone almost unnoticed.
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Post by blueneck on Feb 28, 2007 5:39:33 GMT -6
Manufacturing is in depression now - massive job cuts and closings, under 50 MPI rating which indicates retraction, durable goods off the cliff, job cuts and layoffs in automotive reaching the transplants now not just the domestics
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Post by jeffolie on Feb 28, 2007 21:20:55 GMT -6
The US economy contains only 25% manufacturing. Those most hurt by the coming devistation will be out of the country manufacturing.
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Post by blueneck on Mar 1, 2007 5:28:46 GMT -6
A qurter of the economy is still a pretty sizable chunk. i would not downplay at all the economic effects of a downturn in manufacturing. what is not also taken into account with manufacturing is all the service, supply and support business and jobs that depend on manufacturing - tool and die shops, raw materials, equipment builders, computer services, transport, factory supplies. For every direct manufacturing job there is at least three more service and supply jobs that go along with it - they all suffer when mfg suffers - A much more significant effect than say if retail goes down for a spell.
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Post by jeffolie on Mar 1, 2007 14:57:29 GMT -6
The ISM gained ground as reported today and clocked in at 52 and change. Any reading above 50 indicates an expanding manufacturing sector.
In my interpretation the manufacturing section is just treading water.
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Post by unlawflcombatnt on Mar 1, 2007 16:07:19 GMT -6
The ISM gained ground as reported today and clocked in at 52 and change. Any reading above 50 indicates an expanding manufacturing sector. In my interpretation the manufacturing section is just treading water. I think today's increase is just an isolated blip. The long-term trend is downward. Manufacturing employment & wages continue to decline. Goods-producing industries' payrolls decreased $0.2 billion in January. Average weekly hours are stagnant to declining. Manufacturing employment declines almost every month. For 2006, manufacturing employment has declined every month since June's peak of 14.238 million. January's total was only 14.109 million, indicating a total loss of manufacturing jobs of 129,000 since June. The index of Manufacturing hours peaked at 97.2 in July 2006, but has fallen every month since. January 2007's index had declined by 2.8 points from July to 94.4. Though some might attribute the decline in employment & hours to "automation," my interpretation is that it's due to lack of demand for workers, due to lack of demand for American manufactured products. And this lack of demand for domestic production is because increasingly more foreign-manufactured goods are taking their place.
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Post by jeffolie on Mar 1, 2007 20:23:33 GMT -6
The 800 pound gorilla is the consumer. The consumer spending out today showed healthy spending. The consumer is confident and still had negative savings. So for this moment, I still think the economy is healthy. I still believe the economy will slide into a deflation, but not until the public fear level increases enough to escape this denial by their demonstrated spending reflecting the attitude that all is fine.
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Post by unlawflcombatnt on Mar 1, 2007 21:42:38 GMT -6
I think the consumer is showing healthy spending only because of the extended borrowing ability that still has not yet evaporated through recently increased credit card limits and home equity extraction. The latter is already declining. For the year of 2006, consumers spent $102 billion more than they earned. For 2005, consumers "only" spent $35 billion more than their Disposable Personal Income. In 2004, consumers spent $174 billion less than their DPI. Over the last 2 years alone, consumers have increased their spending $276 billion more than their Disposable Personal incomes have increased. This trend is not sustainable indefinitely. Consumer spending cannot continue to increase more than income. (The Personal Income numbers can be found on Table 10 of the GDP report .) The "strength" of the consumer is very tenuous at present. It would be surprising if that "strength" lasted through the end of the year. The borrowing bubble is leaking, and consumer spending power will start losing air in the near future.
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