Manufacturers brought in the new year much as we ended the last one. There are definite improvements in the domestic economy, yet worries about Europe and other headwinds continue to weigh heavily on the minds of many politicians and economists. Concern about sovereign debt levels, for instance, brought the value of the euro down to $1.27, its lowest exchange rate since autumn 2010. (As recently as August 2011, one euro traded for $1.45.) Debt challenges are not unique to Europe; U.S. debt levels have now exceeded 100 percent of our annual GDP – putting an exclamation mark on the budget-cutting debates that will continue into 2012.
Despite these challenges, the U.S. macroeconomy is showing signs of strength. The unemployment rate fell to 8.5 percent in December, its lowest level since February 2009. In addition, 200,000 net new workers were added in the month, with 23,000 of those stemming from manufacturers. It appears that the manufacturing sector has started to rebound from weaknesses observed in the middle of 2011. This is especially the case for the durable goods sectors, which accounted for all of the net job gains in December. Since December 2009, manufacturers have added 334,000 new employees, with the largest increases coming in the transportation, metals, machinery and electronics sectors.
Last week, two indicators were released supporting the view that manufacturing activity has picked up. First, the Census Bureau noted a 1.8 percent rise in new orders for manufactured goods in November. While this is largely the result of a large aerospace order, other sectors also had significant increases. One downside: spending on core capital goods orders fell 1.2 percent, suggesting a deceleration in business investment. However, year-over-year core capital goods orders provide a stronger picture.
Second, the Institute for Supply Management's Purchasing Managers Index rose from 52.7 in November to 53.9 in December. Measures for new orders, production, employment, exports and imports were all higher for the month, suggesting that manufacturing activity has picked up some steam. Sample comments from many of the respondents had an upbeat but cautious tone. At least one survey respondents expressed a conservative approach to hiring and investing over the coming months due to uncertainties and frustrations with European and U.S. fiscal policy.
We will learn more about regional strengths and weaknesses in the economy from the Federal Reserve's Beige Book, which will be released on Wednesday. Other highlights include new data on consumer indebtedness, individual and small business confidence and wholesale and retail sales. In addition, the Commerce Department will report international trade figures on Friday, providing additional insights into a major source of growth for manufacturers – exports.
Chad Moutray
Chief Economist
National Association of Manufacturers
U.S. DEBT IS NOW EQUAL TO ECONOMY
USA Today -- Richard Wolf
January 9, 2012
http://www.usatoday.com/news/washington/story/2012-01-08/debt-equals-economy/52460208/1
WASHINGTON – The soaring national debt has reached a symbolic tipping point: It's now as big as the entire U.S. economy.
The amount of money the federal government owes to its creditors, combined with IOUs to government retirement and other programs, now tops $15.23 trillion.
That's roughly equal to the value of all goods and services the U.S. economy produces in one year: $15.17 trillion as of September, the latest estimate. Private projections show the economy likely grew to about $15.3 trillion by December — a level the debt is likely to surpass this month.
"The 100% mark means that your entire debt is as big as everything you're producing in your country," says Steve Bell of the Bipartisan Policy Center, which has proposed cutting nearly $6 trillion in red ink over 10 years. "Clearly, that can't continue."
Long-term projections suggest the debt will continue to grow faster than the economy, which would have to expand by at least 6% a year to keep pace.
President Obama's 2012 budget shows the debt soaring past $26 trillion a decade from now. Last summer's deficit reduction deal could reduce that to $24 trillion.
Many economists, such as the Brookings Institution's William Gale, say a better measure of the nation's debt is how much the government owes creditors, not counting $4.7 trillion owed to future Social Security recipients and other government beneficiaries. By that measure, the debt is roughly a third less: $10.5 trillion, or nearly 70% the size of the economy.
That is still high by historic standards. The total national debt topped the size of the economy for three years during and after World War II. It dropped to 32.5% of the economy by 1981, then began a steady climb under President Reagan, doubling over the next 12 years. The combination of recession and stimulus spending caused it to soar again under Obama.
Among advanced economies, only Greece, Iceland, Ireland, Italy, Japan and Portugal have debts larger than their economies. Greece, Ireland, Portugal and Italy are at the root of the European debt crisis. The first three needed bailouts from European central banks; Italy's books are monitored by the International Monetary Fund.
The White House and Congress agreed in August to cut about $1 trillion from federal agencies over 10 years. An additional $1.2 trillion in automatic spending cuts looms beginning next year if lawmakers can't agree on a better way to do it.
Economist Mark Zandi of Moody's Analytics says reaching the 100% mark shows "the grave need to address our long-term fiscal problems."
EMPLOYERS MORE OPTIMISTIC ABOUT 2012 ACCORDING TO ECONOMIC TRENDS SURVEY
Utah Pulse
“Employers are more optimistic about 2012. The 2012 Economic Trends Survey shows employers’ optimism both for the overall economy as well as their own business,” according to Monica Whalen, President & CEO of The Employers Council.
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THE NEW ADA: GET IN COMPLIANCE
January 26, 2011 Seminar
Utah Employers Council
The EEOC issued new regulations implementing the Americans with Disabilities Act Amendments Act (ADAAA). The ADAAA and these new regulations significantly change the landscape of disability discrimination law! It is now easier for workers to qualify as disabled, demonstrated by the fact that disability discrimination claims have increased nearly 30% over the two years since the ADAAA became effective. Plus, the enforcement focus is on employers: Have they met their nondiscrimination and reasonable accommodation obligations? Learn the latest legal developments and how to apply the rules in real-world situations from prominent attorneys Lois Baar and Cecilia Romero with Holland & Hart. Council professionals will also share helpful practice tips for accommodating people with disabilities. Topics to be covered include:
• Americans with Disabilities Act Amendments Act of 2008
• New EEOC disability regulations
• Expanded definition of disability
• Employer nondiscrimination and reasonable accommodation obligations
• Steps of the interactive process
When: Thursday, January 26, 2012
Time: 8:00 a.m. - 12:00 noon (check-in and full breakfast buffet from 7:30 - 8:00 AM)
Where: Red Lion Hotel, 161 W 600 S, Salt Lake City, UT
Cost: $129 per Council member; $209 per non-member (includes materials and full breakfast buffet)
Call the Council office for information or questions. You can download the registration form at http://ecutah.org/2012springada.pdf. Full refund will be given if cancellation is received one week prior to event. Enrollment is limited to available space.
STEP OUT OF THE SHADOWS, SAYS NUCOR CEO
Quick Manufacturing News
2011 IW Hall of Fame winner Dan DiMicco speaks out. Click to continue
RISING TRANSPORT COSTS UNAVOIDABLE?
Quick Manufacturing News
A year ago, shippers hoped to hold transportation rate increases to the 4-5% range; other industry sources thought rates could rise by 8% or more. As it happened, rates spiked seasonally on the spot market in 2011, followed by steady increases in contract rates. Click to continue
HEALTHY MANUFACTURERS TEND TO EXPORT
Quick Manufacturing News
The majority of executives who reported that their companies have increased their exports said their businesses are thriving. Click to continue
CONGRESS REAUTHORIZES SBIR-STTR PROGRAM
USTAR
After six years with 14 continuing resolutions, Congress passed legislation on December 15, 2011, assuring reauthorization for the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grant program for six years.
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