U.S. Manufacturing? Say What?

U.S. Manufacturing?

u.s. manufacturingAccording to the latest analyst data, US manufacturing grew slightly in January. But, this is only when comparing it to both China and the Eurozone.

Chinese factories only managed a slight rebound as the new year began,
suggesting that world economic growth remains sluggish.

The euro zone economy, meanwhile, likely contracted again at the end of last year,
though surveys on Friday suggested the worst of the region’s downturn may be over.

In essence this is simply more modest gains, that continue the news of the GDP report. That recent report stated that GDP in q4 contracted by 0.1%. When looking into the GDP report, you see that it indeed was manipulated, both in q3 and in q4.

But, let’s take a closer look at that report.

Federal Spending, down 15%, and Inventories accounted for roughly a 3% drop – had they been flat, GDP would grown by about 3%.

With a 2 % increase in payroll taxes don’t expect the next quarter to be much better! The market will react accordingly!

That 2% payroll tax increase gives the consumer less money to spend..Hence GDP WILL be effected!

Europe is going into a recession. All US citizens just got a tax increase that should reduce US GDP which means less business. Meanwhile, the market is moving up or moving sideways?  The market is being manipulated which means all bets are off. I am in a defensive investment posture now.

I think from any real standpoint, there is no US manufacturing to speak of. Inventories are up, supply, and the economy is contracting, demand. How then can manufacturing be up? Unless there is a report that says there a huge gain in manufacturing export.

The data “suggests the underlying health of the industrial sector continues to improve and rising production will help the economy return to growth in the first quarter, providing there are no set-backs in coming months” said Market chief economist Chris Williamson.

On Thursday the U.S. government reported the economy contracted in the fourth quarter for the first time since the recession ended three years ago, although analysts said there was no reason for panic because consumer spending and business investment picked up..

Separate data showed U.S. employers added 157,000 jobs in January and 127,000 more than initially reported in November and December, suggesting the sluggish recovery remained on track. “This shows that underneath the surface, the fourth-quarter economy was really pretty good despite all the defense cuts. I think the private sector is leading the way,” said Jack Ablin,
chief investment officer at BMO Private Bank in Chicago.

However, like everything else, you cannot take this report as true on its face. Due to the global nature of business today, you have to realize, this is a comparative report. The real news is that COMPARED to china and Europe, manufacturing grew slightly.

“The Chinese economy does appear to be gaining a bit of traction but not a huge amount (and) the euro zone numbers tell us the economy remains stuck in low gear,” said Peter Dixon, an economist at Commerzbank.

Jobs?

The final question is, what does this mean for jobs?

Separate data showed U.S. employers added 157,000 jobs in
January and 127,000 more than initially reported in November and
December, suggesting the sluggish recovery remained on track.
“This shows that underneath the surface, the fourth-quarter
economy was really pretty good despite all the defense cuts. I
think the private sector is leading the way,” said Jack Ablin,
chief investment officer at BMO Private Bank in Chicago.

By itself, this would seem like a great statement. But, you have to put it into perspective.

For us to recover to pre-2008 employment levels, mind you the population has increased over the past 5 years, we would have to add 500,000 new jobs each month for 3 years. And, notice the report said that it was 127,000 jobs more than was “initially reported”. Washington and Wallstreet are notorious for cooking the books.

In cases of jobs reports, they will ignore the number of people losing jobs vs the number of people newly hired. So, if the real numbers are that 127,000 manufacturing jobs were lost and 157,000 were gained, they will report it as 157,000 jobs gained, instead of 30,000 jobs gained.

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shakaama

Ex law school student. I was kicked out for revealing I had a heart actually beating inside. I used to be in a modern dance company. I'm working on my 7 miracles to be proclaimed a saint by the pope. #1 is really hard, but once i get over that hump the other 6 will be a cinch.

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