Posted on 03/24/2016 3:59:50 AM PDT by expat_panama
* FEB. DURABLE GOODS ORDERS FALL 2.8%; EX-TRANS. DOWN 1%
— negative durable goods orders in 3/4 months running.
— FEBRUARY DURABLE GOODS ORDERS EX-DEFENSE DECREASE 1.9%
— DURABLE GOODS INVENTORIES IN U.S. FELL 0.3% IN FEBRUARY
— JAN. DURABLE GOODS ORDERS ROSE 4.2%, REVISED FROM 4.7% GAIN
— DURABLE GOODS ORDERS ROSE 4.2%, REVISED FROM 4.7% GAIN
— 3 mo AR for core cap goods falls to -9.8%, 3rd negative in a row
— core shipments fall 1.1%, prior revised down to -1.3% from -0.4% << big GDP negative.
— 3 mo AR core shipments drop 6.8%, 4th negative in a row
** This is a very weak report with downward revisions. Note the drop in core shipments which correlates best with GDP and so this report will force downward GDP revisions. With Atlanta Fed GDP-Now at 1.9% we’d say that goes to 1.6-7%. Even while civilan air will warrant attention, down 27.1%, and defense, down 25.6%,, even ex air it’s down 1.8% and ex defense down 1.9%. Weakness is widespread.
** And the market does nothing with it. Prices are little changed to a itsy bitsy bit bid led by long end. Go figure
Red Herring. ZIRP destroys economies in the long run. How can it not? In the short run it may spur a little extra lending in a credit contraction. We had a credit contraction, it spurred some lending, it created the China bubble, it raised commodities although not to the extent it did in 2008, but most of all it prevented long term recovery based on long term investment with real dollars. All the borrowed or printed dollars in the world won't make up for that.
Well, it's true that if Godzilla ate the universe then the U.S. economy would be destroyed and thereafter the sum of all interest payments would in fact be zero. Just the same we don't want to blame it all in zero interest. Zero is just a number. One percent could be ruinously high or outrageously low --depending. Same w/ ten percent, or -5%. It depends on other things that are more important.
hard numbers in bank accounts/payrolls tell a different story
, the economic observation came from ex Fed Chairman Alan Greenspan,
True, but that was when he was testifying before the Senate Banking Committee and he added that "too many people on the Free Republic are quoting me as saying things I never said" (link here).
--off shoring is considered "massive" by folks that want to outlaw it all together,
--destruction of our manufacturing it the best fanatasy/scifi story around since Godzilla.
You paint with a broad brush. In my field, everything you just pointed out is 100% false.
---and "100%" is not what you'd call "broad". No matter, in fact I'd be even willing to stipulate that I'm a bad guy if we could simply drop all this silly personality cr@p and get back to talking econ.
I mean say, using numbers. Sure, I know our off shoring feeeels massive and our favorite pundits make U.S. manufacturing feeel destroyed, but like I said above the actual bank-account/payroll numbers say otherwise. Nobody wants to look there. Math is hard I guess...
Sounds real official, but also kind of like something made up. OK, at least we're putting aside all that price-wage-broken, destroyed-manufacturing and massive-offshoring nonsense.
Much of the rest follows implicitly from that observation
Of course it goes without saying that the laws of supply and demand hold sway and govern all
We certainly agree on that
I think we also can agree that free trade, open markets , a wide selection of product choices competing in the free market place and the resulting competitive pressure provide efficient markets that deliver products at the “right” price which closely tracks the lowest rational price for that particular product at a given level of supply and demand
It is beyond dispute that pretty much every market segment in America is heavily penetrated, if not dominated by foreign imports, mostly from the Far East. For many consumer goods it is all but impossible to find a made in America product option to purchase
Many of these foreign products are produced at costs much lower than comparable American made products and are available in, for practical purposes, virtually unlimited quantities.
The quality of the low cost foreign products may or may not be inferior to their American competition. Some are, some are not. Equal quality products compete head to head at lower price points and lower quality options may not compete directly but they are functionally a viable option at much lower costs which dilutes market share even if they don't compete directly in the same market segment. This market dolution reduces domestic producer demand and revenues while simultaneously reducing domestic producer economies of scale which drives up domestic production costs across the board
I don't think this is controversial
All of this results in a competition imposed hard price ceiling for a given product in a given market segment
In some cases this simply reduces margins and profitability for domestic producers which dampens enthusiasm for continued future reinvestment for product improvement , new development or capitol and plant asset modernization
In many cases that price ceiling is lower than the price point that can support viable domestic production and the companies that produce these products have either shifted to off shore production, eliminated that product from its product line or have went out of business.
In marginal cases, business have continued to produce products on a non reinvestment grade business basis by cutting corners where ever possible and doing minimal maintenance and upkeep to capitol assets until they are no longer economically viable to operate
There are a distressingly large number of these zombie production plants in the country eeking out their last days until they succumb to the inevitable shut down. After shut down they are scrapped because the equipment is so obsolete and run down its not worth overhaul or re purpose
Those that continue cut costs where possible and the most viable cost cutting option is automation, which eliminates entire job functions dropping production wages to zero and creates a surplus supply of workers with bills to pay which, via the laws of supply and demand you cite, results in downward pressure on wages.
End result is job loss, persistent unemployment for those unable to find new jobs and lower wages for those who can find jobs.
Not sure what part here you disagree with
This is the reality that many of us deal with on a daily basis and if you are not aware of the situation you really need to get out more.
Sorry, I got sidetracked today. The loaf of bread could also be a dollar or a penny, they are both numbers. Pricing credit is much more difficult but is still based on supply and demand. Supply comes with a cost which is inflation. Increasing supply is like making bread from next season's seeds. It works great in the short run but screws us in the long run. The idea that a commodity bubble collapse is bad deflation is ludicrous, the bubble was the problem not removing it. Deleveraging is a less obvious case but the over leveraging was the original problem that has to be solved painfully.
To this workforce, many of which are illegal to boot, what are slave-labor wages by American standards look to them to be high wages.
Our loss is their gain for sure, plus USA taxpayers subsidize many of their in-country benefits.
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