The US Industrial economy (if pipeline scheduling is correct) advanced again smartly last week, while consumer spending added to its recent string of gains.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) rose for its second week in a row, climbing to 118.9 (vs last weeks 117.7). In its raw dailies (above), the measure was impressive...looking firm throughout the entire week.
The Consumption Index also gained (for its fifth week-in-a-row), lifting to 137.6 (from last weeks revised 135.5). In its raw dailies the measure was slightly softer than the previous week, though the overall measure reflected stronger gains as a much-softer week fell off the end of its 4-week moving average.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), again continues its re-acceleration to the downside as the spread between consumption and production continues to widen.
Within the gas-flows, there remains support for the consumptive upturn (of the past 5 weeks), however, steel-group scheduling continues a grave concern (durable-goods still look a mess), and without some further external stimulus (Federal Reserve QE-3, foreign binge-buying of US equities, etc) long-term extensions of the present short-term trends look questionable.
Saw a bumper sticker the other day, something to the effect of ... "Care About Jobs... Stop Buying Foreign !". Now Michigan (Robry's home state) is big on automotive production (the Detroit area known as the "Motor City"), and folks up here are really suffering unemployment in this economy... even as imports of all types (including automotive) soar.
Now that bumper sticker has (more or less) been around Michigan for decades (can remember them in the 70's), and it evokes tensions between employment and consumption... with employment (especially the big auto-unions) pushing for trade-protection (to defend industry and jobs) even as consumers prefer the choice that imports give them on style and price.
But that bumper sticker, for the first time, really struck me... as I (for the first time) saw a third element in it that I am sure those two sides miss completely.
That third element relates to neither employment or consumption. It has nothing to do with neither union or consumer. It is neither Democratic nor Republican. That element is an assumption that is insidious (and if I might say as a Christian, pure evil) that (in its truth) tears at the heart of the economy and the nation.
The third element of that simple little"Care About Jobs... Stop Buying Foreign" bumper sticker is an implied, forced, like-it-or-not choice... that we must choose between a foreign-built car, or a US-built car (and by extension the US must choose between foreign goods and US-produced goods)... meaning that we are NOT allowed both.
That is, there is someone (or some thing) that puts a cap on the free market, rationing supply to demand. Literally... Buy a car from India, Detroit must make and sell one car less. Buy a car from Detroit, India must send one car less. Build an automotive plant in China dedicated solely to US consumption, and one automotive plant in the US must be shut down!
The trouble is... I see reality in that "Care About Jobs... Stop Buying Foreign" bumper sticker. I see a Federal Reserve, in its blind ambitions to defend against non-existing inflation, restraining the US economy to the point of forcing that choice.
And if that is true (that production of goods are capped), then... (1) the production of ALL goods is capped (including goods made in the US),... (2) the US standard-of-living is capped,... (3) the US economy is capped, and... (4) US employment is capped.
(I believe it to be true.)
Unfortunately, it appears to me at present, that the US is all but blind to this economic-capping, and that the US population is lowering itself to a "Democrat vs Republican" fight over each-others slices of a rapidly-shrinking economic-pie, rather than to join together to defend the whole of that economic-pie.
I think that the nature of the shrinking of that "economic pie" is well evident in the growth of the US National Debt, the growth of the US Gross External Debt, the growth of US consumer-debt of all types, the ultra-low interest rates (courtesy of the US Federal Reserve) to keep the borrowing growing, and the growing ownership of US equities and industry by foreign interests.
When will the US wake up to this? Time will tell.
-Robry825
