Posted on 11/04/2002 5:27:17 PM PST by Red Jones
Factory Orders Continue to Decline
By JEANNINE AVERSA, Associated Press Writer
WASHINGTON (AP) - Orders to U.S. factories fell for a second straight month in September. It was another setback for manufacturing, which has seen almost 2 million jobs evaporate over the last two years and is struggling not to sink even deeper into the quicksand of economic uncertainties.
The Commerce Department (news - web sites) reported Monday that factory orders declined by 2.3 percent in September, after a 0.4 percent drop in August. September's decline marked the third decrease in the past four months.
"With consumer demand softening of late, businesses remain very cautious about levels of new orders and production," said Susan Polatz, economist with Banc of America Securities.
While September's performance was better than the 3 percent decline analysts had predicted, more forward-looking data suggest a somber outlook for manufacturing.
The Institute for Supply Management reported Friday that manufacturing activity shrank in October, the second monthly drop in a row.
On the same day, the government reported that 49,000 factory jobs were lost in October, marking the 27th straight month in which manufacturing jobs were eliminated. Job losses during that period came to nearly 2 million.
"Clearly, manufacturing is suffering," said economist Clifford Waldman of Waldman Associates. "Manufacturing has lapsed from a moderate growth path into a modest recession."
Hardest hit by last year's recession, manufacturing has been the weakest link for the sputtering national economic recovery, which many analysts say is losing momentum in the current October-December quarter.
The economy, powered by consumer spending, especially on cars and other big-ticket goods, rebounded in the summer, growing at a rate of 3.1 percent. But many analysts worry that the summer boom foreshadowed a winter lull.
Pessimistic economists believe the economy will grow at around a 1 percent pace in the October-December quarter as consumers tighten their belts, worried about the economy's direction and a possible war with Iraq. The wobbly economy will be weighing on voters' minds when they vote in midterm elections Tuesday.
Growing numbers of economists believe the Federal Reserve (news - web sites) may cut short-term interest rates for the first time this year at its next meeting Wednesday. If not, analysts say a rate cut would be likely in December.
Wall Street has rallied in recent days on rising hopes of a rate cut. The Dow Jones industrial average rose another 53.96 points on Monday to close at 8,571.60.
Rates have been at four-decade lows all year long. By keeping rates low or possibly nudging them down, Fed policy-makers hope to motivate consumers and businesses to spend and invest more, helping to boost economic growth.
Consumers, whose spending accounts for two-thirds of all economic activity in the United States, have been the main force keeping the economy going this year. Some analysts worry that they might be getting tired.
Low interest rates and extra cash from a boom in mortgage refinancing have helped support consumer spending this year. On the other hand, negative factors, including the stagnant job market, eroding consumer confidence and the turbulent stock market, seem to be making consumers more cautious, analysts say.
Businesses, meanwhile, have yet to see their profits fully recover from last year's recession. Because of that, they have been reluctant to make big commitments to hiring and investment, factors restraining the recovery.
Virtually all the weakness in September's factory orders reflected slackened demand for durable goods, big-ticket items expected to last at least three years. Those orders fell by 4.9 percent, after a 1.1 percent drop in August.
Primary metals, machinery, commercial airplanes and parts were among areas posting losses in September. Those losses swamped gains elsewhere, including orders for cars, computers and household appliances.
For nondurable goods, such as food and clothes, orders to factories rose by 0.9 percent in September, down from a 0.5 percent increase in August.
I guess if we have to do a big military buildup like we did in 1942, then we'll just subcontract it out to China. But what if we have to do the military build-up because China attacks us. I guess the Federal Reserve will bail us out then.
A lot of people feel that because these jobs can be done cheaper somewhere else that these were unproductive jobs for low wage people. That's not true. You see the 2 million manufacturing jobs that were lost paid something like an average of $18/hour. They paid more than the lower wage service jobs in the US because these people were operating machinery that was very productive. The people who own that machinery want it to be used effectively, that's why those jobs paid more than the average. They were productive jobs.
When these jobs go to china they are still productive jobs. It's just that in the chinese economy the people doing the jobs don't get paid extra for the productivity. The net result of the whole thing is that a lot of people have less money to spend.
We need to re-think our trade policies because our conventional wisdom on this issue is wrong. Our nation may pay a terrible price for this.
Gone from the USA: Not a superpower without a strong manufacturing base
Here's a more accurate quote:
''If we all join hands together and buy a new SUV, everything will be OK,''
Perhaps you think toiling in a field or a factory is the path to fortune, the makings of 'a good life'? No thanks. I'll take innovation over (labor) organization and gladly leave the former economies to machines and the Chinese.
Yeah, but try telling that to Republicans and Democrats.
The problem goes a lot deeper than just lost jobs. We are now dependant on the rest of the world to provide us with our daily needs. Used to, we could just tell them to shove off. Now we've got to go and beg them to approve us attacking a pipsqueek dictator like Saddam. And as you mentioned, the jobs lost are the ones that actually produced things of value. Our money is only worth what it can be traded back to us for. Someday all that money we have sent overseas (buying their things) is going to want to come home. What will we offer in exchange for it that will maintain it's value? I don't feel good about this.
And what will you do with all of the people? Dotcoms maybe? The Roman empire had this problem. They collapsed.
Second, NAFTA was passed in 1993; free trade was in effect in most places long before that. So only in the last two years have these had an effect?
Third, this may sound sarcastic, but I've been hearing since 1980 that the U.S. didn't "have any manufacturing jobs" anymore. So where did we get 2 million to lose?
I'm not saying that some sectors aren't hurting. I can attribute 95% of this to a) the terrorist attacks and collapse of air travel/tourism/civilian and commercial aircraft manufacturing and related electronics and b) to a temporary (could be a couple of years) lull in TECH.
Watch how fast jobs come back when Saddam attains room temperature and the public regains confidence in flying. Not that the airlines don't have MAJOR problems, but SOME of their problems are the result of 9/11.
You're not alone.
Wealth is created only by engaging in value-added activities. By the same token, Service sector activities do not create wealth, they merely transfer, redistribute and eventually dissipate wealth as consumption. Thus, as value-added activities move offshore and the U.S. labor force shifts to the Service Sector, wealth is dissipated, not created. And the U.S. standard of living declines as a result.WEALTH: The net ownership of material possessions and productive resources. In other words, the difference between physical and financial assets that you own and the liabilities that you owe. Wealth includes all of the tangible consumer stuff that you possess, like cars, houses, clothes, jewelry, etc.; any financial assets, like stocks, bonds, bank accounts, that you lay claim to; and your ownership of resources, including labor, capital, and natural resources. Of course, you must deduct any debts you owe.
VALUE ADDED: The increase in the value of a good at each stage of the production process. The value that's being increased is specifically the ability of a good to satisfy wants and needs either directly as a consumption good or indirectly as a capital good. A good that provides greater satisfaction has greater value. In essence, the whole purpose of production is to transform raw materials and natural resources that have relatively little value into goods and services that have greater value.
SERVICE: An activity that provides direct satisfaction of wants and needs without the production of a tangible product or good. Examples include information, entertainment, and education. This term good should be contrasted with the term good, which involves the satisfaction of wants and needs with tangible items. You're likely to see the plural combination of these two into a single phrase, "goods and services," to indicate the wide assortment of economic production from the economy's scarce resources.
Nah ... the Welfare sector wll take care of that.
One of the better definitions of money and wealth I've heard is that wealth is the natural resources of the earth with labor added to them to make them into something usefull.
Well, I don't know if I'm reflective of the public, but ... I won't fly anymore if there is any alternative because of the current security check system. It seems somehow insulting and demeaning to me.
Are they?
When I was in college some of the guys I knew would get jobs in steel mills for the summer. Every fall they would come back with stories on how they witnessed workers avoiding work on their union protected jobs, sometimes only working an hour or two a day. My uncle, a steel mill engineer, comfirmed it
Personnally, I've worked a few factory (non-union) jobs where I and everyone else there worked their fannies off.
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