November 1, 2010
Last week brought positive news on the economic front. Eight of the 11 major indicators improved, two grew more slowly than in the prior period and just one declined. (To see all of last week's reports, see the Latest Economic Reports section below.)
Last week brought positive news on the economic front. Eight of the 11 major indicators improved, two grew more slowly than in the prior period and just one declined. (To see all of last week's reports, see the Latest Economic Reports section below.)
The headline report last week was the Commerce Department's advanced estimate of third-quarter GDP growth, which showed that the economy (GDP) grew at a subdued annual rate of 2 percent, similar to the 1.7-percent growth rate in the second quarter (see green bars in the chart above). Even after five consecutive quarters of growth, the economy has yet to return to its prior peak reached in the fourth quarter of 2007 (see black line in the chart). This has been due to two factors:
- The 2008-2009 recession was both the deepest (-4.1 percent) and the longest (six quarters) in the post-World War II era.
- The 3.5-percent rise in GDP since the second quarter of 2009 has been the second-slowest upturn through the first five quarters of recovery in the post-War era, only surpassing the 2.3-percent growth achieved during the first five quarters of recovery after the 2001 recession.
After temporarily surging by 26 percent in the prior quarter due to the end of the homebuyer tax credit, residential investment plunged in the third quarter, falling at an annual rate of 29 percent. This is clear evidence that the stimulus merely brought forward activity into the second quarter that would have taken place in the third quarter. Also, there was a marked deceleration in business investment in the third quarter -- a sign that firms remain concerned about the underlying strength of the recovery and federal policy with respect taxes and regulations.
While the overall report was not too encouraging, there were some bright spots:
- After anemic growth during the prior three quarters, consumer purchases of services, which make up almost half of the economy, rose by a solid 2.5 percent in the third quarter, the fastest pace in nearly four years. If this positive momentum continues in upcoming quarters, it could be a sign that a stronger recovery could develop in 2011.
- While the advanced report showed that exports grew by a modest 5 percent in the third quarter -- down from a 14-percent average growth rate during the prior four quarters -- this slowdown was mainly due to exports of aircraft, which are extremely volatile from month to month. When September trade data come out next week, there is a good chance that third-quarter export growth, and overall GDP, will be revised upward.
Dave Huether
Chief Economist
National Association of Manufacturers
Today in Business
Food manufacturer Litehouse Inc. will build a new facility in the southern Utah city of Hurricane an expected investment of more than $10 million that will add 162 new full-time positions in the rural community.
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Today in Manufacturing
Americans slowed their spending in September to the weakest pace in three months and their incomes fell for the first time in 14 months ... continue
Today in Manufacturing
Surveys showed Chinese manufacturing accelerated in October with spending on infrastructure projects spurring a jump in new equipment orders ... continue
Today in Manufacturing
President Chavez orders takeover of Venezuela's largest privately owned steel maker, latest in series of takeovers that has raised concerns among business leaders ... continue
Associated Press
According to US officials, "China assured US Secretary of State Hillary Rodham Clinton on Saturday that it would be a 'reliable supplier' of exotic metals key to the global high-tech industry." The AP reports that "Clinton raised the matter with Chinese Foreign Minister Yang Jiechi on the sidelines of a summit of East Asian leaders in Vietnam. ... Yang told Clinton that China would not use rare earths as a diplomatic, political or economic tool in dealing with other countries and that Beijing did not want their export to become an issue in its foreign relations."
Quick Manufacturing News
In week 41, 2010, total traffic for all imports entering U.S. ports was up 17% compared to the same week in 2009, according to U.S. import market data compiled by Zepol Corp. For the year to date, overall traffic maintains its pace of being up 15% over the same period in 2009. Click to continue
Quick Manufacturing News
OSHA recently revised its policy for all Outreach Training Programs to address the number of hours each day a student may spend in OSHA 10- and 30-hour classes in an effort to prevent workers from being saturated with so much information that they may miss content that could prevent injuries, illnesses and death. Click to continue
ELECTION WATCH – WEEK OF NOVEMBER 1, 2010
National Association of Manufacturers – Jay TimmonsThis year's elections promise to be the most important in decades and will have profound consequences for the future of manufacturing in America. Stay up to speed on all the latest election news by visiting the NAM Election Center at http://www.namelectioncenter.org/.
November 1 Political Action
More than any year since 1994, there are more races on the radar this election. At stake on Tuesday are 435 congressional seats, 37 Senate seats, 37 governorships and control of numerous state Senate and state House chambers across the country.
Election Day will answer some questions, and result in several others:
Will the House switch to Republican control after four years of Democratic majority? Signs point to "yes," but if the House does indeed flip, how large a majority will the Republicans have?
Although political prognosticators seem to be clamoring to "one up" each other with a higher number – some say as high as an 80-seat gain for the GOP – a race by race analysis leads me to a more conservative prediction of a 45-seat gain for Republicans.
Similarly, will the Senate switch from Democratic to Republican control? If the Republican tide turns into a tsunami, the answer is probably "yes." But my outlook gives Republicans a seven seat gain.
How will Republicans fare at the state level? If Republicans win the bulk of the gubernatorial races, voters are sending a signal that they prefer the GOP style of executive management, which could be viewed as a danger sign for President Obama's political team when sizing up 2012. If Democrats prevail, the signal from voters will be that they are still willing to give the party in the White House more time to manage government. Of course, races for governor will have a tremendous long-term impact beyond this year because every state with more than one congressional district will be redrawing congressional lines after the 2010 Census results are released.
Just as critical to both parties on the redistricting front is control of the state legislatures. With the possibility that 12 chambers could flip control, the political maps at the congressional level may look drastically different two years from now.
Most importantly, if Republicans do win control of one or both of the federal legislative chambers, will they have learned from the past and now help educate voters on the difference between a capitalist free-market economy and one that is centralized in the bureaucracy of Washington? In the past, Republicans assumed voters would understand the difference, and they failed to make the case for economic growth and job creation. Only time (two years) will tell if they are better at communicating their message or whether President Obama can sell his agenda and return his party to better days.
Manufacturing Today
Activity expanded last month at the fastest pace since May, driven by demand in the United States and abroad for cars, computers and other goods ... continue
Today in Manufacturing
Economy growing 2 percent a year might be tolerable in normal times, but 5 percent growth rate or higher is needed to put major dent in 9.6 percent unemployment rate ... continue
Today in Manufacturing
Oil prices surged Monday on a series of reports that point to improving economic growth in the United States and China ... continue
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