The US manufacturing sector is struggling to grow. Despite President Joe Biden and the Democrats injecting hundreds of billions of dollars into the industry to achieve the incumbent’s plagiarized Made in America objective, the return on investment has been poor, especially for taxpayers. What are the recent data points conveying to the public?
The Manufacturing Numbers
Last month, manufacturing payrolls declined by 35,000, according to the Bureau of Labor Statistics’ October jobs report. After an initial bump to kick off the year, employment in the sector has flatlined and slumped. While the White House repeatedly claims that it created 800,000 new manufacturing jobs, the accurate data show that the figure is closer to 200,000.
In addition, the two chief industry reports point to a stagflationary environment, a combination of higher inflation, slowing employment growth, and stagnating expansion.
First, the Institute for Supply Management’s Manufacturing Purchasing Managers’ Index (PMI), a broad indicator of economic activity, was stuck in contraction territory in October. The PMI clocked in at a smaller-than-expected 46.7, down from 49 in September – anything below 50 suggests recession. For the last 12 months, the organization’s PMI has struggled to crack the 50 mark. It alluded to shrinking employment, falling new orders, and rising prices.
Second, the S&P Global Manufacturing PMI reached the expansion threshold for the first time since April and only the second time since October 2022. “Of concern were reports of dwindling backlogs of work, previously used to help support production, as firms also revised down their expectations for future output to the lowest in 2023 so far. At the same time, manufacturers cut employment for the first time in over three years as workloads were reportedly insufficient to warrant additional hiring or the replacement of voluntary leavers,” said Sian Jones, the principal economist at S&P Global Market Intelligence, in the report.
Taxpayers are on the hook for astronomical amounts of “investment” in the manufacturing industry. So far, the administration’s corporate welfare is not achieving much for the sector besides showering free money on domestic and foreign companies. This is Bidenomics in action, baby.
NYT’s Inflation Epiphany
The New York Times just realized that inflation impacts the entire country and that prices have not fallen. Here is what the newspaper opined:
“A pound of bacon costs an average of $7.08 in the U.S., 21 percent more than when Biden took office. The price of coffee beans has risen 33 percent. A gallon of gas is 72 percent more expensive. And because inflation affects everyone, it can damage the public mood more than almost anything else. (Yes, inflation has fallen sharply this year, but most prices have not fallen. Only their rate of increase has.)”
As the Kenny Bania character from Seinfeld says, “That’s gold, Jerry. Gold!” This type of analysis is akin to some of the business news outlets’ claims that pop singer Taylor Swift is single-handedly growing the US economy because of her concerts or Beyonce Knowles contributed to inflation pressures overseas.
No, inflation has not declined; only the growth rate has slowed in 2023. The annual consumer price index is still roughly double the Federal Reserve’s 2% target and many essential goods and services continue to climb year-over-year. Moreover, cumulative inflation has surged around 17% since Biden moved into 1600 Pennsylvania Ave., while America’s purchasing power has eroded nearly 20% since the pandemic.
Of course, this is the same newspaper that has employed Keynesian economist Paul Krugman, who declared the inflation fight to be over because, aside from food, shelter, energy, and used automobiles, there is no inflation. Where’s Kenny Bania when you need him?
Coal for Christmas
Retailers may need to turn down the torturous Mariah Carey song “All I Want for Christmas Is You” this year if they wish to attract shoppers to their locations this holiday season. According to a new CNBC Supply Chain Survey, logistics firms do not anticipate a spike in demand during the most wonderful time of the year. Ostensibly, industry observers warn of an “inflection point in consumer spending” as retail juggernauts are reporting customers are already trimming their spending, even on groceries. In other words, soaring household debt, higher interest rates, and exhausted pandemic-era savings are weighing on the public’s appetite for buying stuff they do not need with money they do not have. As a result, stores are approaching their inventories with caution, which might not bode well for an economy that relies on two-thirds consumption.