Manufacturing: Poised for Rebound or More Decline?

 

http://www.reuters.com/article/ousivMolt/idUSTRE59E4WJ20091015

The above-linked Reuters article reports on statements by the Manufacturers Alliance regarding its latest release of its monthly manufacturing index.  The index jumped nicely in September to a reading of 38, from its low of 24 in June.  So manufacturing is rebounding, right?  That’s what the Manufacturers Alliance and the Reuters article would lead you to believe. 

But, as former British Prime Minister Benjamin Disraeli famously said, there are three kinds of lies:  “lies, damnable lies and statistics.”  Statistics can be twisted so support any position.  In this case, yes, the manufacturing index improved.  But there’s just one problem:  any reading below 50 indicates contraction.  So, although the index improved from 24 to 38, what it really means is that conditions in the manufacturing sector continue to get worse, not better, but at a slower rate.  Does that sound like a rebound to you?  Of course not. 

The only part of the index that improved above 50 was the “expectations” part of the index – what the survey respondents expect to happen next year.  It seems they expect conditions to improve.  But there’s no evidence of improvement to support it.  It’s just pure hope and optimism – all part of a grand plan to boost consumer confidence by hyping “green shoots” in the economy while ignoring reality. 

Eventually, manufacturing will rebound from the level it’s at today, but not to the level it was at before the recession began.  The decades-long decline in manufacturing has been driven by idiotic trade policy that traded away our market without gaining access to equivalent foreign markets, and that decline will continue for lack of courage on the part of our leadership to make the changes necessary to restore a balance of trade.

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2 Responses to Manufacturing: Poised for Rebound or More Decline?

  1. ClydeB says:

    The CEO of the US Chamber of Commerce said yesterday on the Neil Cavuto Show on FoxNews that 20 million new manufacturing jobs could be created in the next 5 years if only the administration would allow it. He also claimed that the worldwide damand for our goods would grow exports to absorb this new manufacturing output.
    HOGWASH.
    Our own market could readily provide the demand were we not to continue importing the stuff made by the labor we subdize.

  2. ClydeB says:

    As of this AM, Bernanke still does not “get it”. According to the story:
    http://news.yahoo.com/s/nm/20091019/bs_nm/us_usa_fed_bernanke_5
    all that is needed is for the countries in Asia to stop saving and start spending. He knows nothing of their constraints caused by over population.

    Until he and others come to realize the real world facts, we’re stuck with this sort of mind set.

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