Still Searching for the Contracting Problem

In a statement released by the NAM in response to the recent announcement of proposed regulations and guidance to implement the so-called Fair Pay and Safe Workplaces Executive Order, I said they were a solution in search of a problem. There has been scant justification for the recent efforts of the administration and their allies to inject political subjectivity into what should be a clinical judgment about the ability of a contractor to fill an order on-time and on-budget. In what appears to be the best argument for creating an entirely new process and giving authority to political appointees to exclude businesses from federal contracting for political reasons, a blog post was put out Wednesday by the White House. (continue reading…)

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Greener Goods Trade Depends on TPA

Much of the focus surrounding Trade Promotion Authority (TPA) has been on the two large regional free trade agreements being negotiated by the United States – the Trans-Pacific Partnership (TPP) with eleven Pacific Rim countries, and the Transatlantic Trade and Investment Partnership (TTIP) with the European Union. And with good reason: Taken together, the countries negotiating these agreements collectively account for more than 60 percent of global GDP, and if done right, TPP and TTIP would help level the playing field for U.S. goods and services, opening up major new commercial opportunities for manufacturers in the U.S. in a number of key export markets. (continue reading…)

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The U.S. Economy Contracted in the First Quarter for the Second Year in a Row

The Bureau of Economic Analysis said the U.S. economy contracted in the first quarter for the second year in a row. Real GDP shrank by 0.7 percent in the first quarter, according to the latest revision. It was originally reported to be a gain of 0.2 percent. Overall, these data continue to show the effects of strong headwinds on the economy and for manufacturers in the early months of 2015. These challenges have included weaknesses abroad, a strong U.S. dollar, lower crude oil prices, the residual effects of the West Coast ports slowdown, bad weather in some regions of the country and a still-cautious consumer.

The largest declines came from net exports, which subtracted 1.90 percentage points from real GDP in the first quarter. Goods exports plummeted 14.0 percent for the quarter, with goods imports up 5.1 percent. International demand for manufactured goods exports have been hampered the stronger dollar and weaker-than-desired economic growth in key markets. Net exports have been a drain on growth in four of the past five quarters. (continue reading…)

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Blacklisting Regulations Proposed

Today, the Department of Labor and the Federal Acquisition Regulation Council announced the proposed regulations to implement President Obama’s “Fair Pay and Safe Workplaces Order.” The proposed regulations are the culmination of nearly a year’s work by the agencies in drafting what are perhaps the most politically motivated changes to the federal procurement process in decades. The last attempt to inject such partisan politics into procurement happened at the end of the Clinton Administration in 1999 and 2000. Those regulations were rolled back in 2001. Back then it was called “High-Road Contracting,” but the intent was the same. (continue reading…)

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Rep. Scalise, Sen. Capito introduce Legislation to Improve Air Permitting

Last week, Rep. Steve Scalise (R-LA) and Sen. Shelley Moore Capito (R-WV) introduced H.R. 2557/S. 1425, the “Promoting New Manufacturing Act,” in the House and Senate. The NAM has been a longtime supporter of this bill, on which we testified and supported with a Key Vote Letter in the 113th Congress.

The Promoting New Manufacturing Act would make a series of relatively simple enhancements to the air permitting process to enable manufacturers to get their permits quicker while allowing the EPA to continue to protect the environment. It would create a permitting dashboard, requiring EPA to publish information on the regarding the estimated number of permits issued annually and timelines for making final permit decisions; it would require that if the EPA Administrator establishes or revises a national ambient air quality standard (NAAQS), the agency publish implementing regulations and guidance at the same time, including information regarding the submittal and consideration of preconstruction permit applications; and it would require EPA to report annually to Congress on actions being undertaken by the agency to expedite the processing of permit applications. (continue reading…)

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Dallas Fed: Manufacturing Activity Contracted in Texas for the Fifth Straight Month

The Dallas Federal Reserve Bank said that manufacturing activity contracted in Texas for the fifth straight month. The composite index of general business conditions declined from -16.0 in April to -20.8 in May, falling to its lowest level since June 2009. Manufacturers in the district continue to struggle with lower crude oil prices; although, there might also be a sense of stabilization. As one fabricated metal manufacturing respondent said in the sample comments, “With some recovery in the price per barrel of oil, the general feeling is that our business has leveled.”

Still, these data suggest that demand and production remain very weak right now. The underlying data were mostly lower across-the-board, with declines in activity getting larger, at least for now. This included measures for new orders (down from -14.0 to -14.1), production (down from -4.7 to -13.5), shipments (down from -5.6 to -13.2), capacity utilization (down from -10.4 to -11.6), employment (down from 1.8 to -8.2) and hours worked (down from -5.0 to -11.6). Illustrating this point, 31.0 percent of survey respondents cited declining new orders for the month, with just 16.9 percent noting increases. On the other hand, capital expenditures (up from 3.3 to 3.4) continued to expand somewhat modestly, providing some degree of optimism moving forward. (continue reading…)

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Conference Board: Consumer Confidence Rebounded a Little in May

The Conference Board said that consumer sentiment rebounded a little in May. The Consumer Confidence Index has been quite volatile over the past six months, ranging from a low of 91.0 in November to a high of 103.8 in January (a post-recessionary peak).  Confidence plummeted to 94.3 in April, but it edged somewhat higher to 95.4 in May. On the positive side, Americans are more confident today than they were one year ago (when the index was 82.2), and they were slightly more upbeat for the month. Yet, these data indicate that the public remains anxious about employment and income growth, mirroring softer-than-desired economic data in the early months of this year. (continue reading…)

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Richmond Fed: Manufacturing Activity Expanded Ever-So-Slightly in May

The Richmond Federal Reserve Bank said that manufacturing activity expanded ever-so-slightly in May, an improvement after contracting in both March and April. The composite index of general business activity improved from -3 in April to 1 in May. The underlying data were also better, including new orders (up from -6 to 2) and capacity utilization (up from -4 to 7). Shipments (up from -6 to -1) continued to contract, but at a slower pace of decline for the month. At the same time, the labor market was mixed. The rate of employment growth (down from 7 to 3) eased somewhat, but the average workweek (up from 4 to 6) and wages (up from 9 to 20) were stronger. (continue reading…)

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Durable Goods Orders Fell 0.5 Percent in April, but Up Modestly Excluding Transportation

The Census Bureau said that new durable goods orders declined by 0.5 percent in April, pulling back from the 5.1 percent increase in March. Strong defense and nondefense aircraft orders in March helped to buoy that month’s figures, with April’s data reflecting a slight pullback from those levels. Aircraft sales are often bulked together in batches, making them more volatile from month-to-month. As a whole, transportation equipment orders fell 2.5 percent, largely on the decreases for aircraft. Motor vehicles and parts sales, which are also part of transportation orders, rose 0.3 percent in April, edging a bit higher after growing by 4.2 percent in March.

Excluding transportation, new durable goods orders were up 0.5 percent in April. It was the second straight monthly increase, building off of the 0.6 percent gain observed in March. That provides a degree of comfort, and yet, we have seen softness in this measure over much of the past year. New durable goods orders excluding transportation measured $157.7 billion in April, down 0.9 percent year-over-year from $159.1 billion in April 2014. Indeed, this broader measure has fallen from $164.3 billion in September, its peak of 2014. (continue reading…)

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Monday Economic Report – May 26, 2015

Here is the summary for this week’s Monday Economic Report:

The minutes of the April 28–29 Federal Open Market Committee (FOMC) meeting highlighted the nuance that many of us see in the economy right now. The Federal Reserve highlighted a number of challenges facing consumers and businesses in the early months of 2015, noting how these headwinds have dampened overall activity year-to-date. On the other hand, the FOMC felt that slowing economic growth was largely due to “transitory factors,” with its outlook mostly unchanged for the rest of this year. The Federal Reserve projects growth of 2.3 to 2.7 percent in 2015, and it expects the unemployment rate to fall to 5.0 to 5.2 percent.   (continue reading…)

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