Factory Growth Fastest in 20 Years

ensuring profits for the super-wealthy by selling to Europeans cheap soccer balls stiched together by your grandmoter and your 12 year old.

Soccer is pretty popular in Asia too, you know. ;-)

Unless there is some awful economic news hiding around the corner, or Iraq all but blows up, this is a bad kick to anyone wanting to see Bush go. The Manufacturing Index is a huge, if little-known, leading economic indicator. My own guess at this point is Bush is a mortal lock for 55 -56% of the vote as things stand, and that's against a strong candidate. Any candidate whose primary message is economic, or who has an economic plan that is based on repealing Bush's tax cuts is going to be DOA, because people aren't going to vote against something that is perceived as 'working,' no matter what logic is used to convince them. I lived through Reagan, I saw it happen once before.

that in the end people will look at their own lives not factory output, when deciding whether things are good.

Where will factories be in 6 months? Who knows? What will be going on in Iraq? Who knows? Will personal incomes go up? Probably not.

In any case the deficit will not get smaller. Trade gaps will not get smaller. Outsourcing will not slow. And so on. It probably is not a good idea to suggest or hint at suggesting that the Democrats want the people to suffer economically until 2004 so we can win. I hope we are all doing well in 2004. We can still win as this is not going to be a single issue election.

That's simple reality. The Manufacturing Index is a leading economic indicator, which means employment and GDP growth typically occur after upticks in this measure, and the same is true of downticks. If the economy is going to go bad in time to hurt Bush, the window is closing; in 6-8 months it will be shut.

In any case the deficit will not get smaller. Trade gaps will not get smaller. Outsourcing will not slow. And so on.

When you find a presidential election that was decided on these issues, let me know. I can show you one, Mondale-Reagan, where Mondale ran on exactly those three issues plus a promise to raise taxes, and lost 49 states. If you can find someone who won on them, I'd like to be in on it.

hope we are all doing well in 2004. We can still win as this is not going to be a single issue election.

So do I.

And as for being a single issue election, see above about people voting their pocketbooks.

Time to despair? No. Time to hope something goes bad (for the believers in magic thinking among us)? No. Time to look at our electoral strategy and make some adjustments? Seems like the smart thing to do -- adapt to the environment one finds one's self in. Of course, many of the people here are too irrational or arrogant to do that, and will construct some fanciful scenario, or go into denial (already seen several denial posts) as a means of dismissing unpleasant and inconvenient reality.

maybe by 2010. In my opinion, this is an anomaly caused by huge deficit spending and a second tax break. Is it enough to bail Bush out for 2004? I don't think so. I doubt this "surge" in GDP and manufacturing will last another quarter. The fundamental strengths are not there for a recovery. Debt is at an all time high, bankruptcies, foreclosures, stock P/Es are at a level consistent with the end of a bull market, not the end of a bear market, etc. They can't spend their way out of this, but they are trying (Bush, Al Greenspan, etc.).

On the outside chance that they can make the "recovery" last through 2004, I say let Bush have it and the collapsing economy will go down in his name. I hate to see Dean or any Democrat stuck with this mess, so it is a double edged sword. We won, but was that a good thing?

I guess I see 2008 as a better year for the dems to win than 2004, since the economy will surely be bottomed by then. If a dem does win in 2004, then it will not be the rosy economic times of the Clinton era, but depression economics. Who will be best able to deal with that? My guess is Dean.

money, it puts into focus the truth of Bush Ameirca: it's all for the profits for a very few, on the backs of the middle and working class.

Bush would be better off lying that the crappy economy is caused by terrorism, than he would be to show corporate profits to Americans who feel like they're getting the shaft.

Reading at least three times a week about Companies LAYING OFF workers. In my Fl. paper on the business page...2000 here 5000 there.

Are we putting all of our eggs in onw basket here?

I've read a couple economists looknig at the latest data saying they now expect unemployment to be in the 5.3%-5.5% range by the middle of next year. If the number drops from 6.4% to 5.4% in 8-10 months will this still be a campaign issue? It's still higher than when he "took" office and the number was clearly rising at the time. Will it still be a potent enough issue? Can we say "anything lower than when he showed up is bad"?

We'll know more in the next couple days when the new employment figures show up... the Institute for Supply Management numbers published today indicate that it's going to be a pretty solid "job creation" number. Can we say "well it WAS bad last year"?

I'm just afraid we're behind the power curve on this one. That we'll still have people pretending the numbers don't exist in March/April when everyone else knows that things are improving.

We need to set a higher bar.

took office. Unemployment reached its peak in 1982 so by 1984 things were looking better. I hope history doesn't repeat itself with George the dumbass.

It's easy enough to put up a chart that shows the direction unemployment was headed when he took office (just like it was for Reagan)... then you can point to the part of the chart for 9/11/01 and nobody will blame him for that either. BUT if unemployment drops significantly by Sept 2004? How can he NOT take credit for it?

Yeah, it worked for ray-gun. It could work again.

Everybody talks like it's "are you better off than you were four years ago?", but it's really "are you better off than you were last year and do you expect to be better off next year?". Four years is a long time in a political memory. Our guy comes in and says "change paths - I can get things going again" and the other team says "things ARE on the right path - why change now?"

It's a tough sell.

You know, how high is up from a standstill?

the latest footballs are glued together.

wants and from past experience he will do all to get it...how can you validate these numbers?

stephen roach for morgan stanley. everybody is asking if he's really sure.

wants and from past experience he will do all to get it...how can you validate these numbers?

regardless of who we might nominate is if the people begin to think that the economy is doing well and believe that Bush's tax cuts deserve credit for it.

at least the ones with jobs that still have benefits.

All this deficit spending will caught up to dubya, timing will be key!

the economy. the question is will it last. believe me I would love for the economy to do a clinton. I need the money, but I'm not seeing this fantastic growth. my company is hiring but it's all temp. 8 - 9 bucks a hour and no benefits, it if the economy sneezes, they are gone.

...MASSIVE GOVERNMENT SPENDING as the reason for the improving economy????

If it works, it's good -- such are the standards of your fellow man.

War materiels?

I don't - no jobs, no health insurance, mortgage foreclosures highest ever - bull crap

All that "cooking the books" that few have been prosecuted for? They fooled us once, now they will fool us twice. Military spending is being
factored into these numbers but hidden, and as far as factories...maybe the "bomb/WMD factory orders are up given all the bombing and equipment losses in Bush's Wars, and that would account for much of the boost. What real consumer products do we make here in the US anymore? Military spending has always been an easy way out of recessions and depressions.

As for the housing numbers, I think they are cooked, too! I find it hard to believe anything out of this Administration when we have documentation that they are all liars, and the Wall Street Analysts are still pumping to keep their jobs, commissions, and bonuses going.

The worry is that whoever is elected is going to have a huge Bust on their hands. Dem or Bush. No way to keep this train wreck from happening when it all comes tumbling down.

I think this is pure BS.

Factories here are closing at a tremendous rate putting all the workers out of a job. How can this be an accurate description of what's going on? I don't buy it one bit!

(Southern Textile News) that the downturn in the industry is deeper than during the depression." Article goes on to say "it's expected to get worse."

That's from the front page of Raleigh, "News & Observer" this morning.

(I'm sorry, I can't get the link to their online to work.)

this means nothing. Cities and states continue cutting personnel as county and state governments keep looking to cut budgets.

I find it difficult to want to do aerial sommersaults knowing that this estimate is an index that doesn't reflect that industrial jobs have been cut in half since 1983, and that job additions of 150,000 per month will be needed for the next 2 years to bring employment back to where it was in 2000.

It simply isn't possible for US manufacturing to add that number of jobs. So my application for the third shift snack bar operator at the local casino will be competing with many others.

Make are making orders just to fill up ionventory now that they get all the big handout tax breaks from W?

Wouldn't that create a false impression of the economy?

Factory activity up because inventory is down from two years of stagnent growth. Once current inventory and orders are filled expect to return to very quickly to horrible numbers.

real response to devaluing the dollar? Don't know of any seasonal adjustments, so either military or currency driven "happy news" for Bush.

In any case the short term effect - through 6/1/04 - will be that Bush looks good on the economy.

You can tell folks about the inflation that is coming, the deficit that the kids will have to pay, the decreased living standard from the weak dollar - but if nothing hits in a big way, Bush will have the economy as a plus with unemployment rate decreasing.

But then Gore had a good economy going into the election, and while he won - he did not blow Bush away - indeed Bush was close enough for the USSC to steal the election for him.

I do not think that this decides the election - although it makes it harder - IF TRUE!!!!!

The back side of a currency devaluation of a country as large as the US is that it will screw Japan and Germany - and thus eventually we cut our own throat. But for short term Nov 04 election purposes - this is a good message for Bush. Our media will not dare say it is not morning in America, given the way they have been kissing Bush's ass since 1999.

But there is something very wrong with the numbers - 8.2% GDP growth should be higher with these numbers. Growth in employment should be over 500,000 in a month like this - and even a rise in net new jobs from the "great" 120's to "even better to be released this Friday" 150,000's is just not consistent.

It just does not hang together.

...and are the factories that are receiving all of these orders located in the U.S., or overseas?

There are other factors that may come into play:

What if OPEC decides enough is enough and lowers production by some dramatic amount sometime before next summer?

What if the Fed sees inflationary tendencies and raises the interest rates? That would certainly tend to slow any potential recovery.

If we were to suffer another terrorist attack, all bets would be off.

From Mike Hartman 11/26/03 (As link will change tomorrow from this one)

Snippets from "Economic Reports are Booming"

http://www.financialsense.com/Market/wrapup.htm

Earlier in November the Federal Government borrowed $57 billion with the issuance of new three, five and ten-year bonds, and today sold a very hefty $26 billion of two-year Treasury Notes. Mr. Bush and company have borrowed $83 billion dollars this month alone! This causes me to look back at the huge GDP figure for the third quarter at 8.2%, which is obviously unsustainable unless similar federal stimulus is repeated. The big number can easily be attributed to one-time tax rebate checks spent immediately into the economy right along with increased military spending by government and cash-out re-financing which kept the consumer spending.

The problem I see with the “borrow and spend economy” is that the borrowing must continue to expand. Some analysts are suggesting that business spending is back and will take the baton from the consumer to keep on spending. Time will tell. The way I see it, the money was borrowed to goose the GDP in the third quarter, but now all that remains is momentum moving forward and the debt liability from the borrowed money. We got the growth, and now we have the debt that remains to pay for the growth which will continue to act as an anchor on the economy. It seems to me that government deficit spending is nearly out of control and the markets are beginning to see it by moving away from U.S. dollars and more specifically, U.S. Treasury debt.

While the bullish spin for the U.S. economy is for continued strong growth, it has yet to be seen if the growth can be accomplished without massive borrow and spend stimulus coming from the Feds. In the near term it looks like 45-year low interest rates will be the primary backbone to sustaining our economic momentum. We may not see the inflation right now, but the lag time is about nine months to see all of the current stimulus end-up as inflation to consumer prices. For now we are seeing the re-inflation go into asset prices, not consumer goods.

Yet he suffered from the 'time for a change' syndrome -- after 8 years of a Democratic president, people were more willing to look to the other side. This is a historical trend: after a couple of terms of a given party, people start looking to change leadership.

All this means is that they are getting more goods out of fewer people working longer hours for less money.

How did we accomplish this record factory growth? Did you see a lot of new hiring going on? You have people is such a tight labor market and economically fragile position that they will do whatever it takes to put food on the table.

Pardon me, but I'm not going to celebrate the continued exploitation of the working class.

I guess the economy IS booming — that is if you already have accumulated wealth. You know who's having a nice Christmas this year? The rich!

Construction spending is booming (especially residential construction). I was wondering if the increase in factory output are related. The danger I see here is that with the postive numbers and the glut of bonds being issued by the Shrub administration, bond prices will drop and their rates will increase. Wouldn't this then have a negative feedback on the constuction industry since the higher home loan rates spurred by the higher bond rates would hamper them selling these new residences? It sounds like a dangerous situation to me. While I hope that (against my pessimism of the competency of this administration) that the economy improves, I still remain pessimistic. I'm afraid that we will have a downturn next year and it will be a bad one.

Once all of the slower factories have shut down or laid off people, doesn't this mean that the other factories have to pick up the slack?

I keep thinking about the stories where a company shuts down one of it's factories, Factory A, and moves the work over to another factory, Factory B. Seems that Factory B will have a fairly sharp uptake in production even though the total factory output will have dropped. Good for statistics, but still bad numbers.

L-

So such sleight of hand shouldn't have much input.

Think of it this way: if the factories were shut down, that means people were thrown out of work, and already show up in unemployemtnt figures and so on. Now that the manufacturers are forced to expand to meet demand, employment will also expand. Actually, by the way, certain types of employment are part of this index, iirc, so it is already measuring job gains to a certain extent.


There is also an issue with the use of 'production' in your post. What you referred to was more 'productivity,' which is about the efficiency of capital rather than total production, which is what this index focuses on. Productivity has its own index, which is another leading economic indicator.

production falls back and there you go.

Nobody ever got a paycheck from an expectation yet, and the replacement rate for jobs for population growth is 150,000 per month.

And if you think books can't be cooked, you don't remember Poppy handing off the deficit to the Clintons which turned out to be double the size claimed. I do.

to 20 grams.

It's an index that's normed to 50% for stable values. Anything above that indicates a growing manufacturing sector.

Here's a link:

http://www.ism.ws/ISMReport/ROB122003.cfm

The rest of the report is almost universally as bad (politically - economically it's almost all "good news").

All of this "increase" is due to massive government spending, incredibly cheap debt, and a weak dollar abroad. IOW, it's highly manipulated growth, just like what Enron did. The sad news is that it will propel Bush over the top next year, as the media whores will report these numbers as huge growth.

However, some time starting in 2005 or so, it will all come home to roost. All of this manipulation will start to unravel with widespread, sweeping defaults across the board. My friends, 2006 will be the biggest down year since the Great Depression.

He'll get some more short-term stimulus in early 2005 to ride out through the mid-term elections. It's the 2008 elections that we have a shot at (why do you think Hillary is waiting? She's got three to four times the support of the "frontrunners" in the primaries. She's staying out because she knows 2004 is already a lost cause (or near enough that there's no point in risking it).

That's where she failed to learn the lesson her husband taught us. When he got into the race, Bush I was unbeatable. But still lost. Our big names stayed out of the race to avoid embarrasing themselves... and the Gov of a tiny state slipped in.

they're tearing down apartment complexes and not building any new ones. They're tearing down 25 abandoned houses a month and building seven new ones. This for two years now. Oilfield employment has dropped from 1 million in the state of Texas in 1985 to 150,000 now. The big deal now is to get forklift jobs that pay $6 an hour at Family Dollar's warehouse here that the taxpayers gave $4 million to build and an exemption from taxes for 10 years.

120 school teachers laid off here in spite of increased enrollment. Burglary and auto theft double last year's.

Sounds like a damn rosy world to me!!

SO he can get jobs for all his TX buddies in oil?

Sorry to hear about your town. That sucks. Things have been just as bad in parts of NC where I am. But it's a mistake to extrapolate local economic issues onto the whole economy.

Cali and NJ based firms could result. Actually, the apartment problems, home demos and teacher layoffs grip the entire state of Texas, not just Odessa.

Pretty serious stuff.

That's the "bar" now.

He'd cry beg forgiveness from Gawd, and everyone would say what a great christian he was, and how even the best can be tempted by satan. Then they would burn the intern at the stake for being a witch.

the most sought after christmas gift is a dvd player. uh, where are we building dvd players in america. yes walmart will do great business, but they are not paying gm wages.

The big slide will likely start with steel and autos in early 2004.

Steel shortages will trigger auto manufacturing cutbacks, auto cutbacks will trigger cutbacks in just about everything else.

I really believe that the downturn will be very severe in most economic sectors.

Construction will be hurt by shortages of building materials and ridiculously high prices for rebar, concrete, wood products, etc.

I doubt that Bush will survive the downturn, particularly now that the federal debt is completely out of control.

We are bulging at the seams and the damn is close to breaking. The more they manipulate the economy the further and harder we have to fall. They borrowed 83 billion in the month of November alone in the form of bonds and treasury notes.
We will be hit with inflation, big time. I'm guessing 6 to 9 months, short of any major catastrophies, but that's just a guess.

...and that will effectively kill the faux-recovery that is currently being gleefully trumpeted by the NeoCons.

then we've got to kill them in the 2006 midterms.

Mind you, I still think we've got a good shot at ousting squatter.

Called it a "chilling" bit of news from Walmart. Apparently Walmart's (and Target's) sales were down in Sept, than again in October into November. Their warning is to be taken seriously. The article said it's easy to talk about 5% growth in holiday sales, but it's nothing coming off of last year.

It said the Walmart warning has to be taken seriously as we go into 04.

During the last holiday period, EVERYTHING was discounted to a certain degree in hopes of getting people out to the stores to salvage something from 2002.

This year, very little is being discounted, and the increase in sales growth is actually based on less items being sold. For volume houses like Walmart, that's not good news.

Toys-R-Us is another example of the retail industry taking a hit regardless of what we're being told by the economic cheerleaders of the mainstream media. Toys-R-Us is suffering such a decline in overall revenues that they're being forced to close a number of stores across the country.

January...it was announced a few weeks ago....Says it will absorb lost jobs into Toys R Us. I don't believe that for one minute...

smells like weapons of mass destruction to me. I remember people telling me to watch out or else I would get egg on my face because the weapons would be found. No weapons, no Economy, no reelection.

goods.

By JOHN CRUDELE

It's nice of The New York Times to toss the Bush administration a bone by making "Manufacturing at Highest Level in Two Decades" the paper's lead story on Tuesday.

But think about it for a moment: There is no way manufacturing is at its highest level in the last 20 years, not with all the outsourcing American companies are doing to foreign countries.

The Times headline was based on a report by the Institute of Supply Management, which each month surveys only 400 of the nation's manufacturers.

It uses a so-called diffusion index - which means, if the number is over 50, manufacturing is growing; if the index is under 50, there is a contraction.

The index jumped to 62.8 in November, which is the highest reading since 1983 - i.e., in 20 years.

Does that mean that manufacturing is at the highest level in two decades? Nope.

It means that the 400 manufacturers - who still happen to be in business and who answered the ISI survey - are the most optimistic from one month to the next than they've been in 20 years.

Just thought that might deserve one of those famous Times clarifications.

*

Federal Reserve officials are quietly spreading the word that they intend to add massive amounts of liquidity to the banking system over the next year.

In theory, that will keep the economy going and make incumbent politicians very happy - unless one of many nasty consequences occurs.

More on those consequences in another column.

*Please send e-mail to:
jcrudele@nypost.com

http://www.nypost.com/business/12500.htm

and equation instead of just the usual cheerleading for the result of the equation.

(Don't you just hate it when that cheerleading throws in "Not since Reagan" crap)