May 16, 2008

Good News on Housing

Well, what do you know.

NEWS ALERT
from The Wall Street Journal
May 16, 2008
Home construction turned up unexpectedly in April and showed surprising vigor, making the biggest increase in two years, while building permits also rose, a sign of optimism for the sickly housing sector. Housing starts increased 8.2% to a seasonally adjusted 1.032 million annual rate, driven higher by a surge in apartment building construction, the Commerce Department said. Starts plunged by a revised 13.8% in March to 954,000. Economists expected April starts to drop by 1.4% to a 934,000-unit annual rate.

Posted by Carter Wood at 8:40 AM | 1 comment; click here to read it or submit your own! | Send to a Friend

May 14, 2008

The President's Statement on the Farm Bill: Veto

The President's statement is here. Excerpt:

By increasing trade-distorting subsidies, the bill undermines our ability to open foreign markets to American agricultural goods. The bill creates an egregious new sugar subsidy program that will keep sugar prices high for domestic consumers, while making taxpayers subsidize a handful of sugar growers. These are just a few of the reasons why I cannot support this bill.

In the absence of a good farm bill, I call on Congress to extend current law for at least one year. The Administration’s reform-minded proposal would be preferable to current law, but in light of the bill produced by conferees an extension is now the better policy for American agriculture and American taxpayers. It is a far superior option than supporting a bill that increases farm subsidy rates, spends too much and fails to reform farm programs for the future.

Posted by Carter Wood at 10:27 AM | Click here to comment | Send to a Friend

Hanging In There

From today's Wall Street Journal (subscription required):

A funny thing happened to the economy on its way to recession: It's taken a detour.

That, at least, is the view of a growing number of economists -- including some who not long ago were saying a recession was all but inevitable. They note that stock and credit markets have steadily improved since the Federal Reserve intervened to keep Bear Stearns Cos. from bankruptcy in early March, while a series of economic reports have been stronger than expected.

And from David Leonhart in today's New York Times:

Only a month ago, a recession looked inevitable. Job cuts were picking up speed, and stock prices were falling. The Federal Reserve was cutting its benchmark interest rate rapidly, in an effort to keep the downturn from snowballing. But the notion that the economy could avoid a recession altogether seemed fanciful.

It looks less fanciful today. The economic news hasn’t exactly been sunny lately, but there also haven’t been any nasty new surprises. If anything, the economy seems to have stabilized. The pace of layoffs has eased a bit, stocks have risen and the Fed has signaled that the rate cuts are over for now.

Posted by Carter Wood at 9:44 AM | Click here to comment | Send to a Friend

May 13, 2008

Congratulations and Good Work, Secretary Chao

The National Review today takes note of Secretary of Labor Elaine Chao reaching a milestone today, the second longest tenure as a labor secretary following only Frances Perkins. And Secretary Chao hasn't just been marking time.

Chao’s most significant achievement, however, may be proactive rather than defensive: Unions now must provide a far more detailed accounting of their money and activities. In last week’s hearing, Harkin called this “going after labor unions” for making them file “onerous new financial disclosure requirements for rank-and-file members.” In reality, Chao has empowered rank-and-file members by demanding that labor leaders comply with modern standards of transparency. They must report income, expenses, salaries, and so on. It’s all online in a searchable database, too. It means that in the future, union bosses will have a harder time keeping the lid on everything from their left-wing politicking to the bar tabs they rack up at their Las Vegas conventions.

For more Shopfloor.org posts on labor reporting and the Office of Labor Management Standards, start here.

Congratulations, Secretary Chao.

Posted by Carter Wood at 9:42 AM | Click here to comment | Send to a Friend

May 7, 2008

Exports, Keeping Economy In the Black

Good story in today's Washington Post, "Buoyed by Foreign Money," on export-driven economic growth, including a 5.5 annual rate of increased exports in the first quarter.

Locally, firms have shared in the growth, and they have a lot at stake should it tail off. Virginia's export shipments totaled $16.9 billion in 2007, up 56 percent from 2003. Meanwhile, Maryland's export shipments totaled $8.9 billion in 2007, an increase of 18 percent from the year before and 81 percent from 2003.

The story quotes the NAM's David Huether, our chief economist.

"What is happening now in the economy really shows why it is important for the U.S. economy to be engaged globally," Huether said. "When there are slowdowns in certain parts of the domestic economy, it is a real benefit when there is another pillar holding things up."

This related Bloomberg story is of interest, big picturewise, "German Economy to Grow More Slowly, IW Institute Says."

The survey partly reflects that companies are still benefiting from export growth and consumer demand that's growing as unemployment falls and real wages expand, the IW said. "Robust'' economic growth this year in the euro-region will likely deter the European Central Bank from lowering interest rates, Michael Huether, the IW's director, said in an interview. "Lower interest rates are just not on the agenda."

Hold on, there. An economist named Huether?

Posted by Carter Wood at 8:18 PM | Click here to comment | Send to a Friend

May 6, 2008

Something to Consider on Primary Day

From the Greater Fort Wayne Business Weekly:

Indiana's manufacturing and logistics industries are growing, according to a report released today by Ball State University.

The first "Indiana Manufacturing & Logistics Report Card" is an initiative focused on the state's manufacturing and logistics economy. The report card shows Indiana leading its neighboring states in key measures like productivity, capital investment per worker and business costs.

The report card was created by Ball State University's Bureau of Business Research, with a team of economists and researchers led by Michael Hicks.

Overall, the report indicated that manufacturing is growing in Indiana and nationally. Last year was a record year for U.S. manufacturing in terms of industrial output, according to the report. Hoosier manufacturers lead neighboring states in capital investment per worker and industrial research and development.

The report and more are available at the Miller College of Business website.

Last February Indiana Gov. Mitch Daniels discussed Indiana's economic successes in a talk at the American Enterprise Institute, highlighting trade at one point, and noting -- and not in an invidious way -- the state's differences with Michigan.

I’ve just come from this meeting they have once a year. I do get letters and e-mails and things from neighboring states that remark on this contrast, and so forth, so anyway. On the subject of trade, Susan Schwab was one of the presenters and gave a very good presentation, pointed out among other things that since NAFTA, manufacturing output in America has more than doubled. So among her messages was, whatever problems you may be experiencing don’t have anything to do with NAFTA.

But the governor of Michigan took exception to that, and in what I thought not very persuasive terms, attempted to lay the problems of her state on that. I didn’t say anything…there’s no point in that place, or any place, I guess, to have an argument about it. But there’s nothing about Michigan that doesn’t apply to Indiana, too. And yet we have made economic progress. It leads you to think that there are other things, other variables involved, like tax, and costs and regulatory policy and so forth.

Posted by Carter Wood at 7:46 AM | Click here to comment | Send to a Friend

May 5, 2008

Manufacturing Edges Out Overall Economy in 2007

While the media has been rightly focused on first quarter GDP and April employment numbers, which showed that the economy grew by a modest 0.6 percent in Q1 while overall employment edged down in April for a fourth consecutive month, the Commerce Department released a separate report last Tuesday on GDP by Industry for 2007 that you might find interesting.

According to the report, which breaks down the economy (GDP) by contributions by industry (as opposed to the typical Consumption+Investment+Government+Trade), the GDP grew by 2.2 percent in real terms on an annual basis last year. The manufacturing sector edged out the overall economy and grew a slightly faster 2.3 percent in 2007.

Here are some highlights of the report.

Manufacturing accounted for 11.7 percent of GDP last year, the same share as 2006 and virtually the same as the 11.9 percent in 2005.

Six of the 15 major industrial sectors, accounting for roughly a third (36 percent) of the overall economy grew faster than manufacturing last year. The Information sector (4.7 percent of GDP) grew the fastest, advancing 9 percent in 2007. The only individual sector larger than manufacturing which also grew faster than manufacturing was Professional Services, which at 12.2 percent of the economy grew by 4.6 percent last year.

8 sectors, accounting for roughly half (52 percent) of GDP grew slower than GDP. Not surprisingly, the only sector where there was an outright decline was construction. Following a 6 percent decline in 2006, construction GDP, which accounts for 4 percent of the overall economy, fell by 12.1 percent last year. This is the biggest yearly decline going back to 1988.

Over the course of the current expansion, the manufacturing sector has grown in tandem with the overall economy. From 2001 to 2007, manufacturing GDP has risen by 16.7 percent, nearly identical to the 16.9 percent rise in overall GDP.

During the ongoing presidential campaigns, the issue of NAFTA (the North American Free Trade Agreement) has repeatedly come up. Some have claimed that NAFTA has been bad for the U.S. economy and has contributed to the deindustrialization of America.

Well, with the latest data now available, here is what the facts show. In the 14 years since NAFTA went into effect, the U.S. economy has grown by 54 percent, which is 17 percent more than the 46 percent rise in GDP during the 14 years prior to NAFTA. At the same time, the manufacturing sector increased by 61 percent between 1993 and 2007, which is nearly 80 percent faster than the 34 percent rise in manufacturing GDP during the 14 years prior to NAFTA's implementation (1979-1993).

Posted by Dave Huether at 7:00 AM | Click here to comment | Send to a Friend

May 3, 2008

Flash! Breaking News! Food Prices Up!

A month or two ago, the "world hunger crisis" burst upon the scene, suddenly seizing the media high ground and dropping horror stories and analyses down on the unsuspecting public. A remarkable example of a herd mentality marrying up with pack journalism running with the boys on the bus....oh, and ethanol's to blame.

Not to say there's no connection between ethanol and food prices -- in fact, it's been argued for years -- but the explosion of coverage raises suspicions. It's as if editors who have long disliked government subsidies for ethanol found a new angle that more effectively made the case against this particular renewable fuel.

Alternative theory: Environmentalists who had for decades promoted alternative fuels turned to their global master plan, Page 472, the chapter entitled, "The Promoting Phase is Over. Time to Pull the Rug Out on Ethanol." Because no energy is always preferable.

Cliff May* of the Foundation for the Defense of Democracies seems to share some of the same suspicions. In a smart column, "The Hunger," he notes The Washington Post's recent page one story, "The Global Food Crisis: Siphoning Off Corn to Fuel Our Cars," and comments,

The Post article asserts that corn prices have “been climbing for months on the back of booming government-subsidized ethanol programs.” This has quickly become the conventional wisdom. But while free market types (like me) are skeptical about both subsidies and tariffs, there is actually no evidence that these market manipulations have been a major factor behind rising prices for corn or other grains. Researchers Robert Zubrin and Gal Luft point out that the total U.S. corn crop has increased 45% since 2002. The amount of corn available for food and feed has increased 34 percent --- after the part used for ethanol has been taken out.

But haven’t those farmers cut back on other crops -- soy and wheat, for example -- to plant more corn and hasn’t that led to increases in the prices of those grains? Apparently not. As Zubrin and Luft also note, U.S. soy plantings this year are expected to be up 18%, wheat plantings 6%, and overall, U.S farm exports are up 23%.

Well, then, it's global warming!

The Post article also blames higher prices on global warming. But there is no solid evidence to suggest that whatever global climate change we have experienced in recent years – an increase of 0.31 degrees Fahrenheit per decade since the mid-1970s is the best current estimate -- has reduced food production. In fact, a warmer climate should mean a longer growing season allowing for more food production.

At any rate, there's an odd media/economic/public relations/activist/media dynamic going on here, a dynamic that historically translates into political pressure and impetuous policymaking. Be on guard.

*May is a supporter of federal mandates that would encourage development and use of flex-fuel vehicles. So he's not an anti-ethanol guy, by any means.

UPDATE (3:10 p.m.): Over at Planet Gore, Henry Payne rebuts what he takes to be May's ethanol touting, arguing for a close connection between ethanol as fuel as world food prices. Our post was more about the sudden shift among the public-opinion influencers, which, as said, engenders suspicions.

Posted by Carter Wood at 2:16 PM | 2 comments; click here to read them or submit your own! | Send to a Friend

May 1, 2008

War is Peace, Growth is Recession

From an e-mail just sent out by the labor-backed Economic Policy Institute

When slightly positive is as bad as negative
EPI's take on the latest GDP numbers, released Wednesday morning by the Commerce Department, was that the miniscule 0.6% growth reported is not nearly enough to prevent rising unemployment. Economist L. Josh Bivens noted in an early response that "There's nothing magical about staying above zero. In fact, annual growth of less than 2.5% is a recipe for rising unemployment. We're already seeing this in three consecutive months of job loss, and considering the GDP numbers released this morning, we'll surely see more in the coming months."

Very clever attempt at changing the terms of political debate. There has been so much screaming about slipping into recession, and then reality intruded. So now the screaming must be about, well, not slipping into recession.

And for the record, yes, 2.5 percent annual growth would be a lot better than 0.6 percent growth.

Posted by Carter Wood at 5:25 PM | 1 comment; click here to read it or submit your own! | Send to a Friend

April 30, 2008

We're Not in a Recession

From the Bureau of Economic Analysis:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 0.6 percent in the first quarter of 2008, according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP also increased 0.6 percent.

Nothing to burst out in joyful shouts about, but the reality is: Two quarters of growth in a row do not amount to a recession.

UPDATE (3:18 p.m.): James Pethokoukis at Capital Commerce:

Out: Recession. In: Expansion. That's my quick take on today's first-quarter gross domestic product number, which showed that the economy grew 0.6 percent in the first quarter. Now that's not a robust number by any means, but it's not so bad given all the worry out there that the economy is headed off a cliff. Before you declare a recession, as many economic pundits have, shouldn't the economy, well, actually recess a bit—if only for a quarter?

Posted by Carter Wood at 1:23 PM | Click here to comment | Send to a Friend

April 22, 2008

Flash! Ozone Rules Hit Hard

From USA Today, page one: "Strict EPA rules tag unlikely areas
350 counties would violate new smog limit"

Smaller metropolitan areas — not gritty urban centers — are the most likely to be labeled as smoggy under a strict definition that the Environmental Protection Agency announced last month, an analysis by USA TODAY found.

The new limit also would ensnare many communities that contain large expanses of pristine wilderness. Places that would fall under the new ozone limit include Boise; Bar Harbor, Maine; and Biloxi, Miss.

And, according to the USA Today analysis:

Counties in metro areas of more than 1 million people, which now account for two-thirds of U.S. counties with unhealthy air, would account for 40% of new violators.

The number of high-smog counties with fewer than 250,000 people would jump from five to 47.

The number of smog-ridden counties with federal wilderness areas would nearly triple from 16 to 46. The total number of wilderness areas in such counties would rise to 185 from 106.

Many counties that face the prospect of cleaning up their air receive pollutants from elsewhere on prevailing winds. To address that problem, adjacent counties that contribute to smog will be declared in violation, too, the EPA says.

Which is exactly what the NAM and other critics of the then-proposed ozone rules argued, that the new restrictions would hit many, many areas hard -- imposing huge costs on producers and consumers for purely theoretical health gains.

And good for USA Today and all, but this might have been a productive area to explore BEFORE the EPA promulgated its rules.

(The NAM's ozone resources page is here.)

Posted by Carter Wood at 11:07 AM | Click here to comment | Send to a Friend

April 21, 2008

1st Quarter NAM Survey: Softening Business

Results from the 1st Quarter NAM/Industry Week Manufacturing Index shows that
confidence among large manufacturers eroded (for a third consecutive quarter) in the first quarter of 2008 to the lowest level in five years, with sales expectations falling to their lowest level since the second quarter of 2001. For small manufacturers, the business outlook moderated as well in the first quarter of the year, but remained elevated compared to large survey respondents.

70 percent of small manufacturing companies who responded to a survey conducted by the National Association of Manufacturers (NAM) had a positive business outlook for their firm in the first quarter of 2008. This marks a 10 percent drop in confidence from the 80 percent of survey respondents who had a positive outlook in the fourth quarter of 2007. This was the biggest quarterly drop since the 11 percent decline in first quarter of 2001. Having declined five of the past eight quarters, the level of optimism in the first quarter of 2008 was at the lowest level since the second quarter of 2003.

After tumbling 17 percentage points in the third quarter of last year, and dropping another 4 percentage points in the fourth quarter, the percent of large manufacturers with a positive business outlook eroded another 2 percentage points to 57 percent in the first quarter of 2008, the lowest level since the first quarter of 2003.

Despite the moderating business outlook that had taken place over the past two years, the level of optimism for both large and small survey respondents remained higher in the first quarter of 2008 compared to the first quarter of 2001. This is consistent with survey responses indicating that most companies' business environment is better than it was back in 2000-2001.

Asked how their current business environment compares to the 2000-2001 period, nearly two thirds (61 percent) of survey respondents answered that current conditions for their company are 'better than 2000-2001,' 17 percent responded that current conditions are 'similar to 2000-2001' and 22 percent responded that current conditions are 'worse than 2000-2001.'

Asked if the U.S. economy would go through a recession in 2008, half (50 percent) of the survey respondents answered 'yes,' 17 percent answered 'no' and 33 percent answered 'maybe.'

Survey results also show that more export-oriented companies are more optimistic. For firms that expect at least 25 percent of their company's sales growth this year to come from exports, 81 percent reported a positive business outlook in the first quarter survey. However, just 60 percent of firms that do not export reported a positive business outlook.

Results from the first quarter survey also show that more export-oriented companies have more positive outlook with respect to sales, capital investment and employment.

Looking ahead 12-months, both large and small manufacturers expect their sales to continue to increase, but at slower rates than earlier in the expansion. Small firms expect their sales to increase by 3 percent, which is the same pace as the prior two quarters but slower than the expectation during the first half of last year.

Meanwhile, large firms expect their sales to increase by just 0.9 percent over the next 12 months. This is less than half of the pace of the fourth quarter, and the slowest sales expectation since the second quarter of 2001.

Posted by Dave Huether at 3:17 PM | Click here to comment | Send to a Friend

April 20, 2008

On the Manufacturing Economy

NAM's chief economist, David Huether, was on CNBC Friday in a report on the manufacturing economy, reacting to an interview with Jim Owens, CEO of Caterpillar. Also in the segment, Brian Rayle of FTN Research. The 4-minute video is here. And more from David in the AP story:

Nearly half of the manufacturing industry's 73 subsectors were expanding through February, according to the National Association of Manufacturers. Manufacturing output rose 1.8 percent in 2007 and is forecast to climb to 1.5 percent in 2008 as continued export strength cushions the blow of slumping home and automobile sales, said David Huether, NAM's chief economist.

Construction machinery makers like Terex Corp. are straining to keep up with foreign demand for equipment used on infrastructure development projects. Also thriving are food processors, oil refineries, electronics makers and others, Huether said.

Posted by Carter Wood at 5:24 PM | Click here to comment | Send to a Friend

April 10, 2008

Greenblatt: Small Business Can Save Economy

National Association of Manufacturers member Drew Greenblatt on Thursday told lawmakers small and medium businesses could help revive the sluggish economy if they didn't have such heavy tax and other burdens.

"We are the job machine," said Greenblatt, who owns the Marlin Steel Wire Products custom hook and basket company in Baltimore. "And we're going to get us out of the recession."

Greenblatt, who testified on behalf of the NAM before the House Small Business Committee on tax code reform, also said Congress shouldn't let Bush tax cuts expire because small businesses need them. To read Greenblatt's testimony in full go here.

And Drew, a master at getting publicity for his small company, didn't miss the opportunity to show off his product line. He bought a metal hook and wire basket to show Committee Chairwoman Rep. Nydia Velazquez (D-NY) and other lawmakers.

Posted by Greg Wright at 2:52 PM | Click here to comment | Send to a Friend

April 7, 2008

Congrats to Michael Ramirez on the Pulitzer!

This is great. We were looking for a copyright-respecting rationale to post this cartoon and here it is: The cartoonist, Michael Ramirez of Investor's Business Daily, has just won a Pulitzer for editorial cartooning. Not since Charles Krauthammer in 1987...

His archive at IBD is here.

Wonder if the Los Angeles Times regrets letting him go a few years ago.

(Hat tip: Michelle Malkin.)

UPDATE (2:45 p.m. Tuesday): A Ramirez interview in E&P.

Posted by Carter Wood at 5:24 PM | Click here to comment | Send to a Friend

April 5, 2008

On the Jobs Report

Secretary Carlos Gutierrez's statement on the March jobs report:

Today’s report of job losses and increased unemployment rate is disappointing. At the same time, it reinforces the importance of the stimulus plan the President recently signed into law. The provisions of this plan, which encourage business investment in new equipment, are beginning to take effect, and we expect them to provide a powerful incentive for job creation. And more than 130 million households will receive checks starting next month, which will supply an additional boost for our economy.

The Administration began addressing the problem on housing last year, and so far the FHA Secure program has helped more than 140,000 homeowners stay in their homes by refinancing about $20 billion worth of mortgages. To further address the housing situation, Congress must pass the FHA Modernization Act, pass legislation to reform the regulation of the Government Sponsored Enterprises and help at-risk homeowners by giving state and local governments the authority to issue tax-exempt bonds for mortgage refinancing.

“We recognize that the first half of this year is going to show slower growth and we are taking steps. It is important to recognize that key fundamentals of the economy remain sound. We are a competitive nation with a highly educated workforce, the most productive workers in the world, and unemployment, while higher than last month, is historically low.

“Trade remains a source of growth and exports support good-paying American jobs. We need to take advantage of trade opportunities and expand export markets to boost our economy. Congress should act to pass the Colombian Free Trade Agreement with the same sense of bipartisan urgency as they did the economic stimulus plan.

The fact sheet on necessary economic steps to take calls on Congress to enact the pending free trade agreements.

UPDATE (12:40 p.m.): A bit of contrariness from Newsbusters about the media...which is what they specialize in, and kudos for it.

Did you know that 574,000 and 1.1 million more Americans had jobs in March than in February and January, respectively?

Posted by Carter Wood at 12:31 PM | Click here to comment | Send to a Friend

April 4, 2008

A Therapeutic Bit of Retraction

Always worth considering, is Larry Kudlow on the economy. "An Economic Cleansing" is the first time we've seen him say, yeah, maybe there is a recession. But then, let's use it to rectify policy:

[Domestic] corporate profits are down 20 percent from their peaks of late 2006. Since profits are the mother’s milk of stocks, businesses, and the economy, we will need to see profit improvement before the recovery-turn can be called.

How this recession affects the presidential race remains to be seen. Hill-Bama are calling for big-government spending and trade-protection — exactly the wrong medicine. Oh, and did I say tax hikes? Just what the doctor didn’t order. If government wants to play a role, economic policymakers should reduce the corporate tax rate to generate more profits, more jobs, and higher real wages. That would reignite the economy. Home prices and sales should be driven by corrective market forces.

Meanwhile, the U.S. dollar, which some are now calling the U.S. peso, should be appreciated in order to curb inflation. Inflation is the biggest economy-killer of all. Whether Sen. McCain will adopt Reagan-style growth policy to lower taxes and curb inflation remains to be seen.

Which allows us to link to a Wall Street Journal we overlooked earlier in the week, "Hoover's Heirs."

Posted by Carter Wood at 5:35 PM | 1 comment; click here to read it or submit your own! | Send to a Friend

Unemployment Rises, Jobs Lost in March

The setting for this morning's news event at the NAM with Commerce Secretary Carlos Gutierrez. From the Bureau of Labor Statistics:

The unemployment rate rose from 4.8 to 5.1 percent in March, and nonfarm payroll employment continued to trend down (-80,000), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Over the past 3 months, payroll employment has declined by 232,000. In March, employment continued to fall in construction, manufacturing, and employment services, while health care, food services, and mining added jobs. Average hourly earnings rose by 5 cents, or 0.3 percent, over the month.

And ...

Manufacturing employment fell by 48,000 in March and by 310,000 over the past 12 months. Employment in motor vehicles and parts was down by 24,000 over the month, largely reflecting the impact of a strike in auto parts manufacturing. The strike resulted in a parts shortage that led to plant shutdowns elsewhere in the auto industry. During the 12 months ending in February, the motor vehicle and parts industry lost an average of 6,000 jobs per month. In March, factory employment also fell in several construction-related industries, including wood products (-5,000), nonmetallic mineral products (-5,000), and furniture and related products (-5,000). Plastics and rubber products and textile mills also lost jobs over the month.

Posted by Carter Wood at 8:46 AM | 1 comment; click here to read it or submit your own! | Send to a Friend

April 1, 2008

Yeah, Why Isn't It the Law Already?

From page one, The Washington Post:

Senior Treasury officials identified three immediate targets yesterday for their plan to overhaul the nation's financial regulatory structure, including streamlining the approval process for securities that contributed to the crisis now roiling Wall Street. But their hopes for a few quick changes are running into mounting opposition from interest groups and officials elsewhere in the Bush administration.

Mounting opposition? Mounting?

Secretary Paulson unveiled the proposal at 10 a.m. yesterday.

Posted by Carter Wood at 10:37 AM | Click here to comment | Send to a Friend

Comeback of the Blue-Collar Guys: Echt!

The Rheinischer Merkur -- a weekly newspaper circulated nationally in Germany -- included a major piece on the U.S. manufacturing economy in a recent issue, part of a special section, "The American Nightmare." (It's OK. Despite the title, the Merkur is not one of those reflexively anti-American publications.)

Entitled, "Comeback der Blaumaenner," or "Comeback in the Men in Blue" -- we'd say more, "Comeback of the Blue-Collar Guys" -- the article by Jens Korte features a nice sampling of National Association of Manufacturing member companies and board members, including Drew Greenblatt of Marlin Steel, Mary Andringa of Vermeer Manufacturing and Stephanie Harkness of Pacific Plastics and Engineering. Caterpillar and Al-Jon also figure in the story.

It's a good overview of manufacturing -- the upside, including this context:

According to Peter Esser of the Bundesverband der Deutschen Industrie (BDI) in Washington, the weak dollar is not the only thing drawing foreign businesses back to the United States. “The German middle class is very familiar with the U.S. market. We’ve observed a trend that German operations are increasingly withdrawing from Asia and moving more toward the United States.”

Many firms had their fingers burned in the Far East. Trade secrets and intellectual property went missing. With the American market the middle class can better judge what to expect. “On top of that, there’s the shipping costs,” says the lobbyist, Esser. With oil topping $110 a barrel, freight costs are also exploding. “That’s contributed to the comeback of manufacturing in the United States.”

Many customers are also sensitive to the advantages of “Made in the USA.” And for that reason Pacific Plastics & Engineering (PPE), a contractor for custom work and medical technology, is doing quite well. “Our customers want to be sure that we can meet their required specifications,” says Stephanie Harkness, chairwoman of PPE. The 100-man company sits in the middle of Silicon Valley. Many of the new customers are start ups, for which PPE develops prototypes. “So a lot of development directors are coming our way.” Harkness, too, is seeing the return of those who are turning away from Asia. “America is still the place where most of the ideas and new technologies are being born, and now we have the chance to use that.”

Here is a .pdf of the original article in German, and here is our not-so-polished translation. We added the links.

Posted by Carter Wood at 9:50 AM | Click here to comment | Send to a Friend

March 31, 2008

Secretary Paulson on Regulatory Reform

His speech proposing lots and lots of financial regulatory changes is available here. Among the recommendations is merging the SEC and the OTC, but this proposal about authority for the Federal Reserve is likely to draw the most attention:

Market Stability Regulator

The Federal Reserve would have the responsibility and authority to gather appropriate information, disclose information, collaborate with the other regulators on rule writing, and take corrective actions when necessary to ensure overall financial market stability. To fulfill its responsibilities to gather information, the Fed would have authority to join in examinations with the prudential and business conduct regulators.

This new role will replace the Fed’s more limited, traditional role as the supervisor of financial holding companies, bank holding companies, and certain state-chartered banks.

The Fed would have the ability to monitor risks across the financial system.

That's from the Treasury Fact Sheet on the proposal.

The report is "Blueprint for a Modernized Financial Regulatory Structure." You can download it here.

And the news release.

Posted by Carter Wood at 10:14 AM | Click here to comment | Send to a Friend

March 28, 2008

Charles Schumer: Rethink Financial Regulation

Well-reasoned column in today's Wall Street Journal by Sen. Charles Schumer (D-NY), "Regulatory Rethink." This is a compelling point:

Look closely at unifying and simplifying our regulatory structure, perhaps moving toward a single regulator. In this era of global markets and global actors, we cannot return to the older model of separate businesses with separate regulators. We must consider whether a more unified financial regulatory system could provide more efficient regulation. In our report on maintaining the competitiveness of our financial sector, Mayor Michael Bloomberg and I suggested we should look closely at the system now in place in the United Kingdom. They have a single strong, effective financial regulator, focused on results and not rules, with the power to act. Such a regulator would likely have called in Bear Stearns managers and told them to improve their capital position long before the crisis arose, thus avoiding the backdoor action the Fed was forced to take.

Schumer adds a gratuitous knock against the Bush administration's "hostility" to regulation, even though Treasury has been a consistent advocate of a single regulator for the housing-related GSEs. And the absence of any mention of Sarbanes-Oxley's excesses jumped out at us.

Still, really good piece.

Posted by Carter Wood at 8:52 AM | 2 comments; click here to read them or submit your own! | Send to a Friend

Lieberman-Warner: Intended Consequences

We're always on guard against new laws and regulations creating unintended consequences that take a whack at manufacturers and the economy, but when Phil Kerpen of Americans for Prosperity considers the Lieberman-Warner cap-and-trade scheme, he sees a lot of intended consequences. Kerpen cites the NAM-ACCF commissioned study on S. 2191, America's Climate Security Act, which projects inflation-adjusted costs including 3 to 4 million fewer jobs, $4,022 to $6,752 in lost household income, an annual hit to GDP of between $631 billion and $669 billion, and higher energy prices — 60 percent to 144 percent higher for gasoline and 77 percent to 129 percent higher for electricity. From "Bad Times for Green Schemes":

But these costs are not unfortunate side effects of the bill; they are intended effects. The bill’s key regulatory scheme is called “cap and trade,” which is a complicated, indirect way of levying an energy tax. Instead of charging a set amount for carbon-dioxide emissions, the government would sell a fixed number of permits, with prices set at auction and then determined by trading on Wall Street. This has all the costs of a tax, with price uncertainty and administrative costs thrown in.

Al Gore acknowledged that the House-sponsored energy tax of 1993, which he championed as vice president, contributed to Democratic congressional defeats. Yet while the cap-and-trade scheme helps hide the tax from voters, its purpose remains the same: Make energy much more expensive so that people use less of it.

Meanwhile, cap-and-trade has failed in Europe to achieve its goals, and even if successful, does anyone seriously believe such a program would do anything to curb supposed global warming?

Better to encourage the prosperity that allows the developed world to afford to address the environment, Kerpen argues.

Posted by Carter Wood at 8:21 AM | Click here to comment | Send to a Friend

March 27, 2008

Pessimism, Unrestrained by Economic Reality

Since we're citing James Pethokoukis of US News today, we appreciated his response to this bit of unnecessary glumness.

This is the most downbeat thing I read today. From the Wall Street Journal:

"We have to accept that this is no longer a nation of 4% real economic growth. This is a mature nation that no longer has a strong manufacturing base," says Steve Leuthold, chairman of Leuthold Weeden Research in Minneapolis.

My take: The last time I heard this talk was back in the mid-'90s, right before the economy turned on the jets. Back then, the common wisdom was that the economy could grow no faster than 2.5 percent a year or so. Here is a bit from a 1996 New York Times story on the topic:

History and circumstance, in sum, have locked the United States into a level of economic growth that, measured against expectations raised by the 1996 Presidential campaign, is politically unacceptable. "It might be good for our politics if some candidates acknowledged this," said William Kristol, editor of the Weekly Standard and a Republican strategist, addressing an issue that most politicians don't, in public.

I might buy into this theory today if it looked to me that the U.S. economy was already optimized for speed. But it clearly isn't, not with the second-highest corporate tax rate in the world, for instance, or a healthcare system that is a terrible burden on employers. Now is no time to give up on growth.

Right you are, James.

Suppose there's always a Club of Rome constituency out there, at least among the media and think tank crowds, but the record of economic pessimism is a notoriously bad one. And the record of politicians who embrace that pessmism is even worse.

Posted by Carter Wood at 12:12 PM | Click here to comment | Send to a Friend

March 26, 2008

The President, Off to Colorcraft of Virginia

From today's Washington Post:

Bush will be back in Virginia this morning for a briefing at the Pentagon. From there, he will travel to Sterling for a visit to ColorCraft of Virginia. The stop at the commercial printer is meant to illustrate in part the importance of Bush's economic stimulus package to small businesses, according to James Mayes, the president of the company, which employs 66 full-time workers.

Mayes said ColorCraft produces invitations, pamphlets and fliers for a number of government agencies including the Defense and Agriculture departments.

He said that he would not presume to ask Bush whether the family had decided on a printer for Jenna Bush's wedding invitations.

"I will ask of course how Mrs. Bush is," he said. "She's everybody's favorite."

An outstanding, great, great member of the National Association of Manufacturers, we add. Colorcraft, that is. Not Mrs. Bush.

Posted by Carter Wood at 12:00 PM | Click here to comment | Send to a Friend

March 18, 2008

New Jersey, Too, Harms its Competitiveness

Speaking of the "Rich States, Poor States" economic rankings (see post below), we see that New Jersey comes in 43rd out of the 50 states. And apparently a lot of lawmakers are working to sink the state even lower.

The General Assembly last week passed by a 46-30 vote a bill mandating paid leave for employees, financed by a new payroll tax. The Commerce and Industry Association of New Jersey issued a news release in reaction:

Paramus, New Jersey – The Commerce and Industry Association of New Jersey (CIANJ) today criticized the New Jersey General Assembly for passing legislation that would make New Jersey only the second state with a paid leave mandate on virtually all companies. If it were to become law, A-873 would allow almost all workers to take up to six weeks of paid time off to care for a newborn or newly-adopted child or a sick family member.

The program would be funded through a tax increase on Temporary Disability Insurance (TDI) and a diversion of $25 million from that fund.

CIANJ opposes the measure, contending the bill would hamper NJ companies’ ability to compete, and provides another disincentive for organizations to locate to or expand within New Jersey. The Association noted companies will incur additional expense through hiring temporary staff or paying overtime to cover shifts lost while employees are out on leave. Unlike current unpaid leave laws, there is no exemption for small businesses.

“New Jersey’s job growth is the weakest in five years, yet the General Assembly has decided to impose another requirement unique to New Jersey companies,” said CIANJ President John Galandak. “Trenton should be doing all it can to help our state grow itself out of the current slump, not imposing a job-killing mandate.”

Delaware's economic development mavens must be grinning.

A Senate vote is expected soon. New Jersey Business Matters, the Commerce and Industry Association's blog, has been keeping close tabs on the foolhardy legislation.

UPDATE (5:25 p.m.) NJBiz explains the legislative process more fully, saying the inability to move the bill last week means it could be May before a final vote occurs in the Senate. The additional time gives business owners and anyone interested in a strong New Jersey economy an opportunity to derail the legislation, which Gov. Jon Corzine has said he will sign.

Posted by Carter Wood at 9:15 AM | Click here to comment | Send to a Friend

March 15, 2008

Larry Kudlow Interviews President Bush

A transcript of the interview is here. Much talk of dollar policy, with the President affirming his belief in the "strong dollar."

Posted by Carter Wood at 11:32 AM | Click here to comment | Send to a Friend

March 14, 2008

We Compete in a Global Economy

Yesterday's budget votes in the House and Senate went whistling past the graveyard of global competition, willfully ignoring the reality that their other countries are cutting their corporate tax rates to improve their competitive positions. From The Wall Street Journal:

WASHINGTON -- Congress endorsed letting many of President Bush's tax cuts expire during largely symbolic voting on budget blueprints.

Certain marginal tax rates and reduced rates for long-term capital gains and dividends, which are set to expire at the end of 2010, wouldn't be extended under a budget blueprint passed by the House yesterday and in a separate plan passed late last night by the Senate.

Time to turn again to the Tax Foundation's work on corporate tax rates across the world as reported in its Fiscal Fact No. 108 from last October:

Five countries in the Organization for Economic Cooperation and Development (OECD) cut their corporate income tax rates in 2006, and eight more, including Germany, will have cut their rates by January 1, 2008.

In the OECD, only Japan's 39.5% rate is higher than thef U.S. rate right now.

Posted by Carter Wood at 8:45 AM | 1 comment; click here to read it or submit your own! | Send to a Friend

March 13, 2008

Learn from History: Lower Tax Rates to Compete

Mark Bloomfield, President and CEO of the American Council for Capital Formation does an excellent job in today’s Wall Street Journal of laying out the case for a lower tax rate on capital gains from a historical perspective and debunking the myth that lower capital gains tax rates are “tax breaks for the rich.” As Mr. Bloomfield so accurately states in his column, "How We Beat the '70s":

Mainstream economists know that lower capital gains taxes result in lower capital costs, more savings and investment, and a strong economy. And ordinary citizens understand that low taxes on capital gains make it possible for them to buy a new lathe or the newest software, which will give them the chance to compete effectively in today’s global economy. Retirement security is also at stake. Low taxes on capital gains allow Americans to build up larger nest eggs.

From our perspective here at the NAM, there is strong evidence that the investment tax relief enacted in recent years—both the lower tax rates on capital gains and dividends—has played an important role in spurring economic growth. Any talk of raising these rates is, at best, irresponsible and, at worse, a serious threat to our country’s economy. NAM members believe it is critical that Congress make these investment tax cuts permanent.

And while they’re at it……policy makers also should significantly reduce the U.S. corporate long-term capital gains tax rate. For corporations, capital gains represent the after-tax proceeds retained by a company for future investment in new business ventures or for dividend payments to shareholders. The current 35 percent rate on corporate capital gains — one of the highest tax rates on corporate capital investment in U.S. history—creates a “lock-in” effect that discourages corporate taxpayers from selling appreciated assets because the tax cost significantly reduces their after-tax return on investment. In contrast, reducing the corporate capital gains rate will enable U.S. corporations to redeploy and invest capital in its most productive use and contribute to economic growth and job creation.

Posted by Dorothy Coleman at 12:40 PM | Click here to comment | Send to a Friend

March 12, 2008

Productivity Gains, Costly Progress

From Dragnet, The Big Gamble, broadcast broadcast May 8, 1952.

A union would have saved those jobs.

Posted by Carter Wood at 9:23 AM | Click here to comment | Send to a Friend

March 9, 2008

Is a recession brewing? Trade Flows May Help

The Labor Department reported on Friday that the economy failed to create jobs for a second consecutive month in February. After falling by 22,000 in January, the economy shed a net 63,000 jobs last month. As many newspaper articles have noted, the U.S. economy rarely averts a recession when employment declines at least two consecutive months. So, is Friday's news the final nail in the coffin for the six-year long expansion. Maybe, but there is still a real possibility that the expansion will instead go through a moment of pause before resuming later in the year.

To be sure, the downside risks to the expansion are substantial. In addition to the housing downturn, high energy prices are eating into real wage growth, consumer confidence is down, stock prices have moderated, corporate profits have slowed, and (now) employment growth has turned negative. While these factors are not in nearly as bad a shape as they were earlier in the decade, together they pose a strong headwind for the economy.

So what is keeping the economy going. Well, an improving trade balance for one thing. During the 2001 recession, the manufacturing sector was much harder hit than the rest of the economy. One of the reasons for this is that export growth plummeted. This was mainly due to the combined effects of an overvalued dollar and stagnant growth abroad (not problems from U.S. trade policy as free-trade foes would have you believe).

Since then, conditions have improved significantly on the trade front. The dollar has fallen about 23 percent and now stands at its 1996 level. At the same time, economic growth abroad has picked up, not just in Asia, but in Europe and Americans as well. Back in 2002, when the dollar was at its most-recent peak, economic growth of our 30-largest export markets averaged just 1.1 percent. By the end of 2007, this pace increased to 3.7 percent.

In the past two years, U.S. export growth alone has added more to the nation's economy (GDP) than residential investment (housing) has taken away. With effects from the housing downturn spilling over into other parts of the economy, whether or not the economy enters recession will be largely determined by whether or not the improvements in trade can offset these spillover effects.

That being said, it is downright curious why some of the candidates for President of the United States are trash talking trade -- Free Trade Agreements like NAFTA to be exact. Not only is blaming current economic troubles on trade blatantly inaccurate, categorizing opening up foreign markets for U.S. producers through more Free Trade Agreements as "part of the problem" instead of "part of the solution" shows a fundamental lack of understanding of how our economy works.

Going forward, it will be important to make sure that the next president understands that lowering barriers abroad for U.S. products makes U.S. manufacturers more competitive globally. And increased export growth is one way that our country can weather domestic problems (such as the current housing downturn) without going through a deep recession.

Posted by Dave Huether at 11:44 AM | Click here to comment | Send to a Friend

March 7, 2008

A Different Take on the Jobless Figures

From First Trust Advisors, L.P., Data Watch:

Implications: Today’s report on payrolls is disappointing but not nearly as bad as many are making it out to be. Reports on layoffs in February ran below the level of February 2007 and unemployment claims are not signaling recession. What we have is a temporary hiring freeze at many firms in response to fears of a recession, not the kind of layoffs that occur during actual recessions. In addition, the February number may have been influenced by heavy snow that covered much of the US, particularly in the Midwest, which contains much of our nation’s manufacturing sector. This was layered on top of another understandable 26,000 loss in home building jobs. The overall decline in payrolls in February is the second straight monthly drop, which rarely happens outside recessions. However, this is the first business cycle in history when Baby Boomers have started to retire. Negative payrolls in the 1980s and 1990s would have been a very bad sign given trend payroll growth of 200,000+ per month. In a world with trend payroll growth near 100,000, payroll declines are less indicative of recession. Also, the recent weakening in the labor market resembles the acceleration of post-recession job loses in early 2003, as fears mounted about the war with Iraq. That weakening was temporary, and we expect recent weakness to be temporary too. We were glad to see the unemployment rate tick down to 4.8% and note that the measure of the unemployment rate that includes “discouraged workers” also ticked down.

(Hat tip: Ramesh Ponnuru.)

Posted by Carter Wood at 12:32 PM | 1 comment; click here to read it or submit your own! | Send to a Friend

Not a Good Jobs Report

March 7 (Bloomberg) -- The U.S. unexpectedly lost jobs in February for the second consecutive month, adding to evidence the economy is in a recession.

Payrolls fell by 63,000, the most in five years, after a revised decline of 22,000 in January, the Labor Department said today in Washington. The jobless rate declined to 4.8 percent, reflecting a shrinking labor force as some people gave up looking for work.

And, Bloomberg reports, manufacturing payrolls declined by 52,000, the biggest reduction since July 2003, after falling 31,000 a month earlier.

The Bureau of Labor Statistics release is here, and the full page of data is here. Secretary Chao's statement is here.

The unemployment rate for last month dipped to 4.8 percent, but today's report of negative job growth in February shows that the president's concerns about the near term challenges to the economy are right on target. It also underscores the importance of keeping taxes low and making the president's tax cuts permanent, so workers can keep more of their hard earned wages.

UPDATE (10:25 a.m.): Boy, that's quick. House Majority Leader Steny Hoyer reacts by saying, vote Democrat.

The Bush Administration seems flummoxed when it comes to the economy, and has taken a ‘hands-off’ approach. It is imperative that our nation and our economy head in a new direction, and that will only occur when a Democrat occupies the White House.

Hoyer's full statement in the extended entry.

WASHINGTON, DC – House Majority Leader Steny Hoyer (MD) released the following statement this morning after the Labor Department reported that the U.S. economy lost 63,000 jobs in February, the largest monthly job decline in nearly five years:

“The steep job loss for February reported today by the Labor Department is simply confirmation that the Bush Administration’s economic policies are failing the American people, and another indication of the economic insecurities that face hard-working families.

“What is especially troubling is that this is the second straight month of job losses, and that the Labor Department had to reduce their original numbers for December and January. Only 41,000 jobs were created in December – far less than the 82,000 originally reported and well below the monthly increase of 150,000 that is necessary just to keep pace with population growth. Even more jobs were lost in January than previously stated, with 22,000 jobs lost as opposed to the 17,000 announced a month ago.

“The bipartisan economic stimulus passed by the Democratic Congress and signed into law by President Bush earlier this year was an important step forward, but it cannot possibly make up for the dismal performance of our economy over the last seven years. Under this Administration, household incomes are down, while the number of uninsured has skyrocketed, poverty has risen, college costs have exploded, and gas prices have more than doubled.

“The Bush Administration seems flummoxed when it comes to the economy, and has taken a ‘hands-off’ approach. It is imperative that our nation and our economy head in a new direction, and that will only occur when a Democrat occupies the White House.”

Posted by Carter Wood at 10:16 AM | Click here to comment | Send to a Friend

March 4, 2008

Good Ideas for Manufacturing (Sorta)

The EPI’s Susan Helper writes in today’s Washington Post:

One-tenth of all U.S. jobs are in the manufacturing sector -- good jobs that pay 20 percent more than the national average. Manufacturing accounts for 12 percent of gross domestic product and over half of our national spending on research and development.

Because even the most modern economies cannot thrive without making things.

Good ideas that will help presidential candidates win in Ohio today can also help America win in the global economy. Let's remember that, long after the votes are counted.

What kind of good ideas? Helper recommends that we “start with more investment in education, training, and research and development.” In that, the NAM agrees, but it's not enough. Addressing the skills gap, improving our national infrastructure and promoting R&D are a start, but we also need to address the serious challenges faced by manufacturers in the United States -- things like soaring energy costs, the high costs of civil litigation, and a corporate tax structure that discourages investment.

Today’s manufacturers need pro-growth policies put in place to help them compete in this global market place. Candidates who advocate one set of policies, however credible, without addressing the costs of doing business aren't doing anyone a favor.

Posted by Keith Smith at 5:21 PM | Click here to comment | Send to a Friend

February 27, 2008

Reality Versus Rhetoric on Trade

Floated last night in the Democratic presidential campaign debate in Cleveland, the idea of "opting out" of the North America Free Trade Agreement if our trade partners, Canada and Mexico, refuse to renegotiate the agreement as we demand.

Not a serious idea.

Theoretically, yes, it's possible, but who not running for high office could possibly think that it's a good idea? You'd have 14 years of U.S. business contracts, arrangements, supply chains, personal relationships, on and on and on, simply tossed out the window. Picture the effect on U.S. companies who have factored Canada materials and Mexican parts assembly into their product, companies perhaps just squeaking by. It's cutting off the nose of your face to toss into the Pyrrhic victory.

The implausability of such an "opting out" also explains why the campaign vows to reopen NAFTA "or else" are just politics. The governments of Mexico or Canada would simply reject such negotiations as an economic disaster.

This kind of anti-trade pandering detracts the real issues -- including manufacturing employment -- involved with trade and the global economy. Moderator Tim Russert asked exactly the right question last night, positing a multitude of factors for the decline of manufacturing jobs in Ohio. As Russert characterized the study:

"MR. RUSSERT: Senator, two journalists here in Ohio wrote a piece called "Business as Usual," which is very well known, suggesting it wasn't trade or manufacturing jobs that were being lost because of it, but rather business as usual: lack of patents, lack of innovation, lack of investment, 70 percent of the Ph.D.s in biology, chemistry, engineering leaving the state.

The fact is, exports now have the highest share of our national income ever. Ohio ranks fourth in terms of exports to Canada and Mexico. Are you sure this has not been better for Ohio than you're suggesting?"

The Toledo Blade Series, published in 2006, is available here: "'Business as Usual."

Posted by Carter Wood at 9:11 AM | Click here to comment | Send to a Friend

February 26, 2008

Overselling a Recession

Rich Karlgaard, publisher of Forbes, contends that the public's anticipation of a recession is based on four wrong reasons, identifiable and dismissable.

President Bush's unpopularity: "The 70% who say the country is on the wrong economic track are merely expressing their Bush fatigue."

Presidential election year: "If you belong to the out party--this year, the Democrats--your gambit is always to say the economy is in bad shape."

Business press incompetence and fear: "The thin talent pool in business journalism combines with two other forces: Journalism is populated by left-of-center people, many of whom are hostile to business; and traditional journalism itself faces threats of disruption from the Internet, leaving business journalists in a fearful mood, which gets projected into their stories.

Trouble with numbers: "When reading about any business problem or challenge, how often do you see the problem stated in relative terms? For example, what dampens spirits today? The subprime mortgage mess. How big a problem is this? No one really knows, but so far banks have written off about $150 billion in bad loans. Now, $150 billion sounds huge. But it is only 1% of America's annual GDP. It is also less than 1% of the market capitalization of U.S. stocks. In any typically volatile trading day U.S. stocks gain or lose $150 billion every hour. How often does one hear that?"

Smartest business columnist around...Put him in the Rough Rider Hall of Fame.

(Hat tip: Norm Heikens, Indiana Business Journal.)

Posted by Carter Wood at 10:29 AM | Click here to comment | Send to a Friend

February 24, 2008

Gov. Sanford on Taxes and Competitiveness

Governors showed up on this morning's TV news-talk shows today, including four chief executives on Fox News Sunday: Republicans Mark Sanford of South Carolina and Tim Pawlenty of Minnesota, and Democrats Tim Kaine of Virginia and Jon Corzine of New Jersey.

Questioned by host Chris Wallace, Sanford hit directly on the issue that should dominate any economic discussions during this year's national campaigns.

SANFORD: Well, I think a lot of folks — and there's a lot of economic data to support this — don't believe that you can tax your way to prosperity.

And so I think that come this fall, there's going to be a tremendous debate between where Senator McCain will be and whoever the Democratic nominee might be on where we go next as a country.

And I think it goes straight to — you know, Thomas Friedman visited yesterday with the nation's governors...

WALLACE: The New York Times columnist.

SANFORD: ... and talked about competitiveness. And I think that if you really look at an agenda of competitiveness, one of its absolute foundations has to be being competitive with the rest of the world with regard to tax and spending policy.

The United States has the second highest corporate tax rate among developed nations. (OECD chart here, via the Tax Foundation.)

Posted by Carter Wood at 12:05 PM | Click here to comment | Send to a Friend

February 21, 2008

Kudlow's Money Politics

Our favorite opportunity optimist, Larry Kudlow, has a new home for his blog, Kudlow's Money Politics. It's now part of Blow Row at National Review Online:

http://kudlow.nationalreview.com/

Kudlow promotes and discusses his CNBC program, Kudlow & Company, opines on the political scene, and provides both analysis and prescriptions for the U.S. economy. Always a good read.

Posted by Carter Wood at 11:27 AM | Click here to comment | Send to a Friend

February 19, 2008

The Politics Risks of Anti-Business Rhetoric

Larry Kudlow compares the three leading candidates for president (McCain, Obama and Clinton) on their attitudes toward business. As do we, he doubts the political wisdom of anti-corporate populism.

There are a lot of reasons why the anti-business message doesn’t work. One important reason is that 138 million Americans work for these corporations. Their livelihoods depend on businesses. 138 million is a big number. Think of it.

Posted by Carter Wood at 3:11 PM | Click here to comment | Send to a Friend

Popular Mechanics: Made in the USA

Popular Mechanics has now posted online its March feature story (and exceptional photos) on manufacturers who have prospered in the United States in the face of global competition: "Five American Manufacturers Doing It Right: Made in the USA."

The package highlights:

Bulldozers, manufactured by Caterpillar in Peoria, Ill.

Wire baskets, produced by Marlin Steel Wire in Baltimore, Md.

Televisions, by Syntax-Brillian in Tempe, Az.

Farm equipment, manufactured by Case IH in Racine, Wisc. (including flexible fuel tractors).

Racing bikes, by American Bicycle Group in Ooltewah, Tenn.

The gist of it all:

America’s manufacturing sales stagnated at the $4 trillion mark in the late 1990s. But then something surprising happened. America started selling again—finding more customers for tractors, steel, plastics, knives and medicines than ever before. Manufacturing sales hit a record $5 trillion in 2006, according to the U.S. Census Bureau.“People talk about a doomsday scenario for manufacturing, but that’s not the case,” says Vinod Singhal, a professor at the Georgia Institute of Technology’s College of Management. “The best U.S. manufacturers have become more competitive, no doubt about it.”

Very nicely done, but then, you can always rely on Popular Mechanics for clear and understandable reporting (and illustrations) on the practical side of engineering and technology.

Posted by Carter Wood at 2:27 PM | Click here to comment | Send to a Friend

February 18, 2008

Ratcheting up the Anti-Business Rhetoric

From page one of this weekend's The Wall Street Journal:

As the Democratic presidential contest moves to the distressed industrial Midwest, Hillary Clinton and Barack Obama have ratcheted up their antitrade, anticorporate rhetoric.

The candidates have made broad attacks on corporate wealth and tax cuts they say tilt toward the rich, along with more specific attacks against health insurers and oil companies, among other industries. On Friday, Mrs. Clinton began airing a TV spot in Wisconsin in which she says, "The oil companies, the drug companies, have had seven years of a president who stands up for them.... It's time we had a president who stands up for all of you."

Both candidates increasingly sound like former North Carolina Sen. John Edwards as they pursue his endorsement and the voters -- particularly union members -- who were drawn to the populist candidate before he dropped out last month. Illinois Sen. Obama got a boost toward that goal Friday with the backing of the Service Employees International Union, one of the most politically powerful labor organizations.

It's hard to see how embracing this kind of invidious rhetoric and anti-growth policies succeeds in a general election. Who was the last candidate of class warfare who won the presidency? FDR in '36? Andrew Jackson?

Posted by Carter Wood at 12:38 PM | Click here to comment | Send to a Friend

Starting off 2008 in Low Gear

The Federal Reserve reported last Friday that overall industrial production edged up jus 0.1 percent in January, mirroring the pace in December. For manufacturing, which makes up over three quarters of industrial production, production stalled in January -- no growth -- after modest increases in November and December. Under the surface, however, there was a lot of action.

Of the 19 major manufacturing industries, 8 sectors (representing about 60% of manufacturing output) experienced increases in production (nonmetallic minerals, computers, electrical equipment, aerospace, misc. manufacturing, food production.)

At the same time, 10 sectors (representing 40% of manufacturing output) experienced decreases in production. (Motor vehicles, furniture, wood products, textiles had the biggest declines.)

Basically, the January report on manufacturing is the latest chapter of a story that has been going on for some time. While positive growth in exports are helping some sectors continue to expand, slowing domestic demand (particularly sectors connected to housing as well as motor vehicles) is hurting other sectors within manufacturing.

Posted by Dave Huether at 12:27 PM | Click here to comment | Send to a Friend

February 15, 2008

Larry Kudlow Says No Recession

Slowing, but no recession.

While modest gains in retail sales and industrial production suggest temporarily slower growth for the U.S. economy, these indicators are not signaling recession. In particular, Friday’s 0.1 percent production increase — which comes to 2.4 percent at an annual rate over the past 3 months and 2.3 percent over the past 12 months — removes the recession scenario. It’s slow growth, but it’s growth nonetheless.

Much in the way of irresponsible politicking, though, Kudlow reports.

Posted by Carter Wood at 5:33 PM | Click here to comment | Send to a Friend

Senator Clinton's Manufacturing Speech

With the Wisconsin primary on Tuesday and Ohio's on March 4th, the Democratic presidential candidates have been talking a lot about manufacturing on the campaign trail. We've linked to recent stories about Sen. Obama's speeches, so here's the text of Sen. Clinton's remarks Thursday morning at the General Motors plant in Lordstown, Ohio.

Today, I'm announcing an agenda to rein in the special interests and save the American people at least $55 billion a year.

Money that can go back into your pockets. Money we can use to create new jobs, rebuild our infrastructure, make college affordable and so much more.

We'll take on the oil companies and harness their record profits to create millions of clean energy jobs, high-wage jobs you can raise a family on.

I'll end their special tax breaks and give them a choice, invest some of your profits in alternative energy, or we'll do it for you.

People have been paying through the roof at the pump, and it's time the companies paid their fair share.

Etc. We appreciate the visit to a manufacturing facility. Would have liked to hear more about U.S. competitiveness in the global economy, perhaps less talk of "reining in" and more talk about "freeing up."

UPDATE (10:45 a.m.): The text of Sen. Obama's manufacturing speech in Janesville, Wisc.

Posted by Carter Wood at 10:27 AM | Click here to comment | Send to a Friend

The American Dream, It IS Possible

From The Christian Science Monitor:

In a test of the American Dream, Adam Shepard started life from scratch with the clothes on his back and twenty-five dollars. Ten months later, he had an apartment, a car, and a small savings.

Actually, the savings was $5,000, which is pretty healthy given the short time he had to raise it. More:

The effort, he says, was inspired after reading "Nickel and Dimed," in which author Barbara Ehrenreich takes on a series of low-paying jobs. Unlike Ms. Ehrenreich, who chronicled the difficulty of advancing beyond the ranks of the working poor, Shepard found he was able to successfully climb out of his self-imposed poverty.

He tells his story in "Scratch Beginnings: Me, $25, and the Search for the American Dream." The book, he says, is a testament to what ordinary Americans can achieve.

Shepard is young, educated, muscular and good looking, so has some natural advantages, true. But his experience still serves as a useful response to those who think the American economy keeps people down. Upward mobility is reality, and determination is the determining factor.

(Hat tip: Instapundit.)

UPDATE (10:45 a.m. Saturday): Nice interview with Shepard on the taxpayer-supported NPR, Saturday's Weekend Edition.

Posted by Carter Wood at 7:07 AM | Click here to comment | Send to a Friend

February 13, 2008

Retail Sales Dampen Fear of Recession

We recently groused about the media always reading recession into every story featuring bad economic data, but never writing that good economic data -- and there are some -- eased the fears of recession.

Well, today reporters added that context. Good for them.

From Bloomberg: "Feb. 13 (Bloomberg) -- The dollar strengthened against the euro and yen after a report showed retail sales unexpectedly rose last month. ...Traders bought the dollar as the data cooled speculation a housing slump will push the economy into a recession."

From The Wall Street Journal: "U.S. retail sales unexpectedly climbed 0.3% in January, given a boost by demand for cars and gasoline in a positive sign for the economy. Excluding the gas and auto sectors, demand at other retailers last month was unchanged."

Posted by Carter Wood at 9:01 AM | Click here to comment | Send to a Friend

Made in the USA: Quality, Speed and Innovation

Drew Greenblatt at Marlin Steel Wire passes on a really fine article in the March issue of Popular Mechanics, "Made in the USA." As the blurb states, "A funny thing happened to America's industrial meltdown -- the country started making and selling more goods than ever. How did companies do it? With quality, speed and innovation."

The article features:

Bulldozers, manufactured by Caterpillar in Peoria, Ill.

Wire baskets, produced by Marlin Steel Wire in Baltimore, Md.

Televisions, by Syntax-Brillian in Tempe, Az.

Farm equipment, manufactured by Case IH in Racine, Wisc. (including flexible fuel tractors).

Racing bikes, by American Bicycle Group in Ooltewah, Tenn.

Reporter Phaedra Hise observes,

America's manufacturing sales stagnated at the $4 trillion mark in the late 1990s. But then something surprising happened. America started selling again -- finding more customers for tractors, steel, plastics, kinves and medicines than ever before. Manufacturing sales hit a record $5 trillion in 2006, according ot the U.S. Census Bureau. 'People talk about a doomsday scenario for manufacturing, but that's not the case,' says Vinod Singhal, a professor at Georgia Institute of Technology's College of Management. 'The best U.S. manufacturers have become more competitive, no doubt about it.'

The article is not online (yet?), but it's well worth taking a look at as some saluatory reporting amid the all-too-common pessimism.

And thanks, Drew!

Posted by Carter Wood at 7:47 AM | Click here to comment | Send to a Friend

February 10, 2008

President Bush on Stimulus, FISA