Monday Economic Report – March 30, 2015

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

As we have seen in past weeks, economic data continue to reflect dampened activity in the early months of 2015 as a result of a number of significant headwinds. These challenges range from weak economic growth abroad, to a significantly strengthened U.S. dollar, to the sharp drop in crude oil prices. Weather and the West Coast ports slowdown have also been relevant factors in some of the softness that we have seen in the reports released since December. As a result, the first quarter is likely to grow around 1.8 percent. This would be less than the 2.2 percent growth rate in real GDP seen during the fourth quarter. Nonetheless, I am predicting 2.8 percent growth in real GDP in 2015, reflecting a slight deceleration in my outlook for the year. The expectation is that we will see some rebounds moving forward, with manufacturers continuing to be more upbeat about the coming months, even with some challenges likely to continue. (continue reading…)

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Real GDP Grew 2.2 Percent in the Fourth Quarter, Consistent with its Earlier Estimate

The Bureau of Economic Analysis said that real GDP grew 2.2 percent in the fourth quarter.  As such, headline growth did not change in this second revision from its earlier estimate, released one month ago. The U.S. economy expanded 2.4 percent in 2014, only slightly better than the 2.3 percent and 2.2 percent rates seen in 2012 and 2013, respectively. Of course, that somewhat understates the strength of the economy mid-year, when real GDP growth averaged a rather robust 4.8 percent in the second and third quarters. (continue reading…)

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Lesser-Skilled Workers are an Essential Part of Immigration Reform

Improving border security is an essential part of immigration reform for the United States. Our current system incentivizes illegal immigrants to remain in the U.S. while providing few opportunities for them to engage in the legal immigration system. As a matter of national security we need to know who is coming into our country and if they pose a threat. Creating a truly functional immigration program for lesser-skilled workers is the most effective way to achieve this important goal. We need to take away the incentive to come to and stay in the United States illegally and the best way to do that is to create a legal framework to manage it. By creating a legal system, we can be assured we know exactly who is here as well as allow temporary workers to return to their native country instead of being forced to live in the shadows for years on end. Under the current system, or lack of one, workers are incentivized to obtain false documents and unable to return home for fear that they will not be able to get back to in the US. (continue reading…)

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Kansas City Fed: Reduced Manufacturing Activity in March

The Kansas City Federal Reserve Bank said that manufacturing activity declined in March, contracting for the first time in 12 months. The composite index of general business conditions declined from 1 in February to -4 in March. Perhaps more worrisome, the decline in new orders accelerated (down from -10 to -20), falling for the third straight month. The sample comments provide clues about why this is the case, with respondents noting a number of headwinds impacting their demand. These include snowstorms, reduced crude oil prices, the stronger U.S. dollar and the West Coast ports slowdown. (continue reading…)

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Purported TPP Investment Text Confirms Pro-Rule of Law and Transparent Processes, but Raises Questions about Some TPP Countries’ Commitment to Fairness and the Rule of Law

Last night, WikiLeaks put out what it claims is the draft of the investment text being negotiated in the Trans-Pacific Partnership (TPP).

For manufacturers in the United States, many of whom use foreign investment to spur U.S. exports and make overseas sales, the text looks familiar because it is substantially based on the highly detailed U.S. model investment negotiating text that has been publicly available on both the websites of the Office of the United States Trade Representative (USTR) and the Department of States since the Obama Administration completed its multi-year review of the investment text in April 2012. That review, which was public and sought input from stakeholders throughout the United States, resulted in a strong investment negotiating document that seeks a more level playing field for our nation’s manufacturers and other job-creators in this country. (continue reading…)

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Death and Taxes – Maybe Not So Certain Any Longer

It’s long been said that the only two things certain in life is death and taxes. Well, for too many family owned businesses this certainty is compounded by the long reviled death tax which is a burden to all successful family-owned businesses. That’s why the National Association of Manufacturers (NAM) applauds Chairman Ryan and the House Committee on Ways and Means for their prompt consideration of H.R. 1105 “Death Tax Repeal Act of 2015”. The bill introduced by Representatives Brady (R-TX) and Bishop (D-GA) issues would finally, fully repeal the death tax. (continue reading…)

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Government Must Facilitate Internet of Things Growth

Industry leaders, academics, and think tanks have all recognized that the Internet of Things is a powerful technology trend that has the ability to transform manufacturing. Recent activity by leaders in Congress and the Administration have sent mixed signals to business that they too are serious about facilitating the growth of IoT in the United States. The NAM is calling on government to be a partner and not a roadblock in the widespread deployment of IoT. (continue reading…)

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NAM Urges Repeal of WTO-Inconsistent Labeling Rules

Linda Dempsey, vice president for international economic affairs with the National Association of Manufacturers (NAM), testified today at a House Agriculture Subcommittee on Livestock and Foreign Agriculture hearing entitled, “Implications of Potential Retaliatory Measures Taken against the United States in response to Meat Labeling Requirements.”

At the hearing, Dempsey underscored that the United States’ continued failure to bring its Country-of-Origin Labeling (COOL) rules for muscle cuts of meat into compliance with its World Trade Organization (WTO) obligations is threatening U.S. manufactured goods exports to Canada and Mexico. The NAM is co-chair of the COOL Reform Coalition, along with the U.S. Chamber of Commerce. (continue reading…)

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Cost Consideration: Supreme Court Hears Arguments in Michigan v. EPA

Today the Supreme Court hears arguments in Michigan v. EPA, to resolve whether the Environmental Protection Agency (EPA) must consider costs when deciding whether it is appropriate to regulate hazardous air pollutants emitted by electric utilities.

It’s surprising that an agency would not consider costs when deciding how to regulate. We could make cars safer by requiring that they be made like tanks. We could reduce hospital infections by requiring hazmat-style protective equipment.  But alternatives like these are usually not appropriate. It is more reasonable to approach every regulation by weighing its unique costs and benefits. (continue reading…)

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Durable Goods Orders and Shipments Were Soft in February

The Census Bureau said that new durable goods orders declined 1.4 percent in February, falling for the fifth time in the past seven months. Much of the decrease in February stemmed from reductions in the demand for transportation equipment, with new orders in that sector down 3.5 percent in February. This included a reduction in sales for motor vehicles and parts (down 0.5 percent for the month) and fewer nondefense and defense aircraft orders (down 8.9 percent and 33.1 percent, respectively). Note that aircraft orders can be quite volatile from month to month, as nondefense aircraft orders had increased 122.2 percent in January. Therefore, we often look at this data by stripping out the transportation equipment sector, and when you do so, durable goods orders decreased by 0.4 percent – still a soft figure. This mirrors other data showing a number of headwinds dampening demand and output in the early months of 2015. (continue reading…)

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