Tuesday, January 05, 2010

We Will Soon Make Nothing To Sell


The latest news is that manufacturing is making a comeback. Yet somehow those stories seem a little hollow. Sort of like employment losses declining. Improvements; yes. Time to get excited; not quite.

We continue to hear from economists that outsourcing to Asia and elsewhere only affects the industries that are too labor intensive or just not all that important. The Bureau of Labor Statistics breaks down the winners and losers for various "industries." One thing to note is that "industry" doesn't necessarily mean "industrial" in the more familiar sense. It means business sector.

The startling picture is that we are on a fast track to nowhere. Manufacturing is rapidly declining and we are now a "service" economy... getting poorer by taking care of non-productive segments of the economy. The only growth seems to be in health care. Does that mean we need to have more sick people to continue economic growth? Hardly seems plausible. [click "Read more" link below for the full story]

Table 2.3 Industries with the fastest growing and most rapidly declining wage and salary employment, 2008 and projected 2018
Industry description Sector Thousands of jobs Change Average annual rate of change
2008 2018 2008-18 2008-18
Fastest growing
Management, scientific, and technical consulting services Professional and business services 1,008.9 1,844.1 835.2 6.2
Other educational services Educational services 578.9 894.9 316.0 4.5
Individual and family services Health care and social asistance 1,108.6 1,638.8 530.2 4.0
Home health care services Health care and social asistance 958.0 1,399.4 441.4 3.9
Specialized design services Professional and business services 143.1 208.7 65.6 3.8
Data processing, hosting, related services, and other information services Information 395.2 574.1 178.9 3.8
Computer systems design and related services Professional and business services 1,450.3 2,106.7 656.4 3.8
Lessors of nonfinancial intangible assets (except copyrighted works) Financial activities 28.2 37.9 9.7 3.0
Offices of health practitioners Health care and social asistance 3,713.3 4,978.6 1,265.3 3.0
Personal care services Other services 621.6 819.1 197.5 2.8
Outpatient, laboratory, and other ambulatory care services Health care and social asistance 989.5 1,297.9 308.4 2.8
Facilities support services Professional and business services 132.7 173.6 40.9 2.7
Software publishers Information 263.7 342.8 79.1 2.7
Independent artists, writers, and performers Leisure and hospitality 50.4 64.8 14.4 2.5
Local government passenger transit State and local government 268.6 342.6 74.0 2.5
Elementary and secondary schools Educational services 854.9 1,089.7 234.8 2.5
Scientific research and development services Professional and business services 621.7 778.9 157.2 2.3
Waste management and remediation services Professional and business services 360.2 451.0 90.8 2.3
Other miscellaneous manufacturing Manufacturing 321.0 399.4 78.4 2.2
Community and vocational rehabilitation services Health care and social asistance 540.9 672.0 131.1 2.2

Most rapidly declining
Cut and sew apparel manufacturing Manufacturing 155.2 66.7 -88.5 -8.1
Apparel knitting mills Manufacturing 26.2 12.5 -13.7 -7.1
Textile and fabric finishing and fabric coating mills Manufacturing 48.3 23.5 -24.8 -7.0
Fabric mills Manufacturing 65.4 35.0 -30.4 -6.1
Audio and video equipment manufacturing Manufacturing 27.0 14.6 -12.4 -6.0
Apparel accessories and other apparel manufacturing Manufacturing 17.0 9.2 -7.8 -6.0
Fiber, yarn, and thread mills Manufacturing 37.4 20.7 -16.7 -5.7
Textile furnishings mills Manufacturing 75.4 41.9 -33.5 -5.7
Railroad rolling stock manufacturing Manufacturing 28.4 17.5 -10.9 -4.7
Footwear manufacturing Manufacturing 15.8 10.0 -5.8 -4.5
Pulp, paper, and paperboard mills Manufacturing 126.1 81.9 -44.2 -4.2
Basic chemical manufacturing Manufacturing 152.1 99.9 -52.2 -4.1
Semiconductor and other electronic component manufacturing Manufacturing 432.4 286.8 -145.6 -4.0
Computer and peripheral equipment manufacturing Manufacturing 182.8 124.7 -58.1 -3.8
Other textile product mills Manufacturing 72.2 49.4 -22.8 -3.7
Federal enterprises except the Postal Service and electric utilities Federal government 63.5 44.9 -18.6 -3.4
Leather and hide tanning and finishing, and other leather and allied product manufacturing Manufacturing 17.8 13.0 -4.8 -3.1
Cutlery and handtool manufacturing Manufacturing 49.1 35.9 -13.2 -3.1
Manufacturing and reproducing magnetic and optical media Manufacturing 34.9 26.0 -8.9 -2.9
Ventilation, heating, air-conditioning, and commercial refrigeration equipment manufacturing Manufacturing 149.5 112.8 -36.7 -2.8
Source: Employment Projections Program, U.S. Department of Labor, U.S. Bureau of Labor Statistics

That whoosing sound it our economy heading toward Asia.



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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
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- O. Henry
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)