Posted on 2/3/2009, 11:23:40 AM by expat_panama
U.S. manufacturing's descent was a little less steep in January, a key survey reported Monday, while consumers saved rather than spent amid the worst recession in a quarter century.
The Institute for Supply Management's factory activity index rose to 35.6 last month, up from a 28-year low of 32.9 in December. But it's the 12th straight month below the break-even 50 level.
"The readings went from bad to worse to horrible to horrendous, and January's improvement means we're back to horrible," said Wachovia analyst Mark Vitner.
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The U.S. lost 2.6 million jobs in 2008, with three-quarters of that coming in the final four months. Economists expect Friday's jobs report to show employers slashed payrolls by 500,000 in January.
Separately, personal income fell 0.2% in December, the third drop in a row amid a wave of layoffs, the Commerce Department said.
Consumer spending, which accounts for 70% of economic activity, declined 1%, the sixth straight retreat. Goods buys fell sharply.
Weak demand has hit small businesses: Proprietors' income, both farm and nonfarm, fell 0.6%.
"Proprietors' income accounted for more than half of December's decline," Vitner said. "This shows that small businesses are hemorrhaging cash and that could lead to further layoffs in the coming year."
Disposable income, adjusted for falling prices, actually climbed for a third straight month, but Americans still curbed spending amid job anxieties. As a result, the personal savings rate rose to 3.6% — the best in a decade excluding a few one-time spikes.
Bolstering savings may be prudent on an individual household level, but it "is not good for the economy," said Raymond James economist Scott Brown.
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(Excerpt) Read more at investors.com ...
I admit it, I’m hoarding. Matter of fact, I’m racking my brain trying to remember all the little oddities my grandmother did to reuse things. No more tupperware for me, nor that expensive “gladware”. Nope, butter tubs washed and rinsed. Leave it at a friend’s or relative’s? Who cares? I have four more in the cabinet. Oh, and soda has become a luxery in our house. So much so, my children are using it as bartering tools for chore swaps. And I went to buy myself a sewing kit for the first time ever. I don’t really know how to sew, but thank God for the internet.
Luckily I know how to cook pretty good, so no need to worry about not eating out.
There is no sense ofbalance to any of this.
This recession has construction, stock prices, home sales, and factory output way down, while we got incomes, economic activity, and doom'n'gloom way up.
“Disposable income, adjusted for falling prices, actually climbed for a third straight month, but Americans still curbed spending amid job anxieties. As a result, the personal savings rate rose to 3.6% — the best in a decade excluding a few one-time spikes.”
Once again, what happens in the Jenk household happens nationwide.
Color me a Bad American then, I am hoarding and every extra penny goes to an account that gives me decent interest with high security.
ALso we are paying down our debt and eliminating extras like Netflix and such.
Mad Dawgg
Bad American
Investor's Business Daily isn't cut from the same cloth as CNN, MSN Money, and Wall Street Journal. The IBD people seem have a better grip on what's going on so we rarely (if ever) hear them spouting off the old 'Americans are spendthrift fools' line.
Incomes are way up? Where? Most people I know are either holding a pink slip, have received a pink slip or is anticipating getting one any day.
Remember, even in the Great Depression with 25% unemployment, there was still 75% employment. Doesn’t mean it wasn’t bad for a lot of people.
Who is John Galt?
Wachovia analyst Mark Vitner.
Hey! There used to be a bank called something like
“Wachovia”!
Wonder what happened to that? [snark]And just how good an analyst is Mr. Vitner that he didn’t see the demise of his company?
All that aside, this is an orchestrated attempt to cajole folks into spendspendspending again. Yesterday’s rag had an article about how Americans are saving more but we need to be spending.
You know what? I am tired of spending. I think many boomers are...just a natural progression. And this downturn hit all at once and brought that natural feeling of satiation for “stuff” home. A little hoarding might gain me a couple weeks more before I have to go live in the car.
I know! The 12 million soon not to be illegals can be heroes and spendspendspend...especially with all that gummint money soon to be flowing their way.
Good point autumnraine, we wash sour cream and cottage cheese containers, my mom wipes bags that store bought bread comes in to store her homemade bread in, I have found myself doing the same as of late. I used to bake bread everyweek on Monday when we were really scraping, and I have started up again, only now I work full time so it’s only when I can. If there is no bread in the house—there is no bread in the house until I bake some.-—I sew for a living by the way.-—The soda thing reminds me of something one of my many employers once said to me, “When I was a child, my mother would buy 2 large bottles of soda, and when they were gone, they were gone for a month.”
Same here. On average, America's net-worth is down to where it was a couple years ago --which frankly wasn't all that bad. Then when we also consider our rising incomes we see that our situation just doesn't look like some big crisis Obama & Company want to rescue us from.
“Consumer spending, which accounts for 70% of economic activity, declined 1%”
Wow, a whole 1%. Look at the damamge the consumers are causing because they won’t spend their money. What a joke.
My dentist and my body shop guy are both in this boat - they're probably going to need to lay someone off soon.
Like you, I've learned to cook pretty well so that we almost never go out to eat. I'm stocked up on cereal and staples (broth, rice, beans), got a freezer full of meat, and lots of ammunition in case of a SHTF social scenario. I'm set for now.
This is the first downturn I can remember where Texas wasn’t the first to get massacred but also the first to recover... recalling the oil crash of the late 80s and the tech crash of 00.
Absolutely right! I work in manufacturing, and we cater to special tastes. Our sales dropped off a cliff on November 5th. We are walking a tightrope because of what the world thinks America has just done. My problem is, if Obama doesn’t start saying something righteous and positive, we will keep on sliding. Unfortunately for the sake of perception, after his porkulus passes, he will have something nice and positive to say, which will help loosen some purse strings, and therefore it will look like the porkulus helped. I hope I’m wrong.
who says that it’s the boomers who have grown weary of spending? those of us following the boomers are gonna be the ones who will have to clean up the mess from their life-long spending party...*angry*
My thoughts exactly.
One has the ability, in that few weeks or a month, to "read the tea leaves" and get a better lay of the land.
“I admit it, I’m hoarding. Matter of fact, I’m racking my brain trying to remember all the little oddities my grandmother did to reuse things. No more tupperware for me, nor that expensive “gladware”. “
LOL! My grandma did the same thing.
BTW, if you use dryer sheets, one third of a dryer sheet still gets the whole load soft and static free.
I’ve been cutting my sheets into thirds.
I’ve been using my stew pot and crock pot more often.
Fix up big batches of soup or stew that will feed a small army for a couple of days.
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