M. Porcius Cato's Blog

Is this measured in dollars? Is this nominal or adjusted? If adjusted, with what criteria?

 

That graph aside here is a picture of current conditions from the Fed

 

www.federalreserve.gov/FOMC/Beigebook/2008/20080305/fullreport20080305.pdf

Reports on the manufacturing sector were mixed but, on the whole, subdued. New York, Philadelphia, Richmond, Kansas City, and Dallas indicated that production or shipments were sluggish or falling. Atlanta, Minneapolis, and San Francisco characterized activity as varying across industries. Boston, Cleveland, and Chicago indicated stable levels or trends. Only St. Louis noted a strengthening relative to prior reports.

Various Districts cited strong demand for steel, aircraft and parts, energy-related equipment, and exports, but mostly continued weak markets for products and equipment used for building and furnishing homes. Atlanta, Chicago, and Dallas indicated that automotive production and sales have been light or declining. On the other hand, the Cleveland District saw an uptick in the production of foreign nameplates during January, and St. Louis was anticipating additional capacity and employment in automotive parts manufacturing. Dallas reported that refining production fell in the face of weak margins. Reports on food processing were mixed, with some Districts indicating that high prices were constraining demand, while others cited rising demand. Boston and New York mentioned that some manufacturers are experiencing slower payments from their customers.

All Districts commenting on the near-term outlook mentioned caution or concern on the part of at least some segments of manufacturing. Boston, Philadelphia, Kansas City, and San Francisco indicated that some firms are adjusting their hiring or capital spending plans downward. A couple of Districts mentioned risks associated with financing constraints. For example, Chicago cited concerns on the part of the auto industry that tight credit would cause its customers to become more price-sensitive and less able to obtain car loans.

 

www.federalreserve.gov/monetarypolicy/files/fomcminutes20080318.pdf

The information reviewed at the March meeting indicated that economic activity had continued to decelerate in recent months. The contraction in homebuilding intensified, consumer spending appeared to be weakening, and survey measures of both consumer and business sentiment were at depressed levels. Industrial production fell in February, and private payroll employment posted a third consecutive monthly decline. After having increased in recent months through January, both headline and core inflation as measured by the consumer price index (CPI) dropped noticeably in February. In early March, however, prices of oil and other commodities rose sharply.

 

Labor demand softened markedly in recent months. The decline in private payroll employment that began last December steepened through February. Although employment by firms in the nonbusiness services sector and in state and local governments continued to rise, declines elsewhere were widespread. Losses were greatest in the manufacturing, construction, and retail trade sectors. Aggregate hours of private production or nonsupervisory workers fell slightly in the first two months of the year. The unemployment rate edged down to 4.8 percent in February, but was still up from the 4.5 percent rate of a year earlier. The labor force participation rate declined in February.

 

Industrial production declined in February after edging up slightly in the previous two months. The output of utilities dropped back after a weather-related surge in January, while mining output fell somewhat in the first two months of the year on average. Manufacturing production edged down after having flattened out in January. The motor vehicle and construction-related industries continued to hold down overall manufacturing output even as high-tech production posted moderate increases. The factory utilization rate edged down in February to a level noticeably below its recent high in the third quarter of 2007.

Is this measured in dollars? Is this nominal or adjusted? If adjusted, with what criteria?

Output is measured in inflation-adjusted dollars and indexed for the first year. The fed reports concern only recent monthly changes, which still reflect near record levels of manufacturing output.

 

Right now the Obama and Clinton camps are sniping at each other about the 'pain' in 'rust belt' states like Pennsylvania, which (last I checked) had an unemployment rate of 4.9%--a rate of employment that would be the envy of almost any industrialized nation on Earth--and a GDP comparable to the whole Netherlands.

Do you have a link to the source? I'm not doubting what you are saying, BTW, I'm just interested in how the statistics are created. You may like this, it's from Money, Bank Credit, and Economic Cycles from Jesus Huerta de Soto:

...Therefore the key is to study gross

saving and investment, i.e., the aggregated value, in monetary

terms, of the stages of intermediate goods prior to final consumption,

an amount which remains hidden if we focus exclusively

on the evolution of accounting figures in net terms.

 

This is precisely why we should be especially critical of

traditional national income accounting measures. For example,

the traditional definition of

Nevermind, I found it here, on page 286: http://www.gpoaccess.gov/eop/2008/2008_erp.pdf

 

Informative paper on the NAICS data used to create the graph: http://www.bea.gov/papers/pdf/SIC_NAICS.pdf

 

Still trying to find the basic data that this was all compiled from, but there's very little information about it. BTW, I dislike NAFTA because free trade doesn't require government agreements, it requires the removal of artificial barriers. I haven't really developed my viewpoint on its exact effects, but I do think that we will need greater export capabilities to aid recovery from our current problems. I would really like to see statistics which include the "value of circulating capital goods, intermediate non-durable products, or of capital goods which are not yet finished or if so, pass from one stage to another during the process of production," of which I believe a great share is imported.

I would really like to see statistics which include the "value of circulating capital goods, intermediate non-durable products, or of capital goods which are not yet finished or if so, pass from one stage to another during the process of production," of which I believe a great share is imported.

 

But aren't those nearly the perfect imports since they're less profitable goods?

 

Consider the iPod. Analysts find (see HERE) that although almost the whole shebang--the hard drive etc--is made in Japan and Korea, Americans take $163 of $299 off of each unit--despite the fact that the iPod and its sundry parts aren't even made or assembled in the US. Given this, wouldn't you rather be Apple than Toshiba? I sure would!

Sure, as long as consumer spending stays up and we quit debasing our currency.

A low currency increases exports while decreasing imports and also reduces budget deficit. The only problem is that will reduce purchase power so shrink consumption but this is less of the problem for the dollar that has so many economies tied to it.

A low currency increases exports while decreasing imports and also reduces budget deficit. The only problem is that will reduce purchase power so shrink consumption but this is less of the problem for the dollar that has so many economies tied to it.

And what if these economies 'untie' themselves from ours by unloading depreciating dollar-based assets, similar to what Iran, Venezuela, and Iraq did by trading oil in Euros?

Dollars are losing much of their international appeal facing a stable euro.

Just a couple of comments:

1. Some may be searching for Net National Product.

2. The Full Employment Act envisioned a 100% usage of the means of production (broadly defined), and a 100% labor employment rate.

3. The 'Unemployment' rate the government reports excludes those who are off the 'dole' and have given up looking for a job.

4. The 'Core' inflation rate is produced by the government to shaft those on Social Security. Of course, no one uses fuel or eats food. I wonder what the rate would be if the base year had not been shifted forward.?! Once upon a time a guy at Merrill, Lynch,Pierce, Fenner and Bean (or Smith) calculated the inflation rate using the prices of things that people buy day in and day out. It beat the then Inflation Rate handily. Over the long term, the DJ is probably a better guide to inflation than the government's lies. The pollsters don't shop where I do.

5. 'Trade' occurs when one nation's businesses export their goods and/or services to another. It is not 'trade' when a business exports itself to another and then re-imports its goods. (Just ask any kid about 'Trade'.) The profits engendered here have a five year repatriation period for taxation purposes. The price of these 'imported' products does not come down by a nickel.

6. Adam Smith has been bandied about recently. I doubt very much if he was actually read.

7. I have now been driven to Demon Whiskey. Satisfied?