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Manufacturing Shrinks at Fastest Pace in Four Years...
Tell me......I am no "expert" and the only thing surprising is it took this long. Bernanke's stock market bubble burst ain't far off either.

Surprise Manufacturing Downturn Holds Back U.S. Growth: Economy
By Shobhana Chandra - 2013-06-03T16:58:07Z

Manufacturing (NAPMPMI) in the U.S. unexpectedly shrank in May at the fastest pace in four years, showing slowdowns in business and government spending are holding back the world’s largest economy.

The Institute for Supply Management’s factory index fell to 49, the lowest reading since June 2009, from the prior month’s 50.7, the Tempe, Arizona-based group’s report showed today. Fifty is the dividing line between growth and contraction. The median forecast of 81 economists surveyed by Bloomberg was 51.

Across-the-board federal budget cuts and overseas markets that are struggling to rebound will probably continue to curb manufacturing, which accounts for about 12 percent of the economy. At the same time, demand for automobiles, gains in residential construction and lean inventories may spark a pickup in orders and production in the second half of the year.

“Manufacturing is really stymied by slow corporate spending and government spending cutbacks,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who was the only analyst in the Bloomberg survey to correctly project the drop in the index. “Manufacturing will grow at a modest pace this year” although it “is unlikely to accelerate in coming months,” LeBas said. “This is part of the slower expansion we’ll have in the second quarter.”

Estimates in the Bloomberg survey ranged from 49 to 54.

Stocks fluctuated between gains and losses after the report. The Standard & Poor’s 500 Index fell 0.3 percent to 1,626.19 at 12:39 p.m. in New York. The gauge had posted its first consecutive weekly losses since November.
"In 4 more OMao years you won't like how America looks....I guarantee it."
“When injustice becomes law, resistance becomes duty.” -- Thomas Jefferson
Um... Duh. We just "cut" the increase in the military budget and as such the furloughed workers which they had no need to do, they just had to not hire anyone else. Regardless, it's a good thing in the long term, those workers will hopefully find fantastic jobs in the private workforce once and if we ever get our shit straight. That sucks for the short term and I feel bad for them but something has got to give and its in the right direction, the alternative would be tax increases far worse than what we have just endured...
Don't worry, everything's fine.

[Image: obey_consume.jpg]
Until the global debt situation is resolved, I don't think we'll see any real growth. Low interest rates are creating some demand in the housing and auto industries, but overall demand for a wide range of products isn't there because many families are on a tight budget thanks to high food and energy prices, as well as, stagnent wages.

I think we're Japan 20 years ago and the best case scenerio is decades of very slow growth and an ever-expanding debt load. That's assuming the dollar remains as the world's reserve currency. I'm no expert either, and I hope I'm wrong and some day soon we'll have a "Reagen" type recovery, but I don't see how.

If growth is this slow when interest rates are at all time lows, what will happen if they go up? What will happen to the federal, state, and local debt loads if interest rates go up?

The Fed's policy of throwing money at the problem hasn't worked because it's not a liquidity problem, it's an insolvency problem. It's like an individual getting cash advances on his credit card in order to pay bills. Sure it works for awhile and everything seems fine, but the underlying problem (too much debt) isn't being addressed. In fact, it's only getting worse. That's where we're at in my opinion.
Deal_me_in, proud to be a member of since Sep 2012.

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