Posted on 08/05/2009 2:46:21 PM PDT by SeekAndFind
CNBC has some mixed news on the economy this morning, indicating that the American economy has not yet turned a corner. On the plus side, manufacturing rose in June, but slower than it did in May. On the negative side, the services sector — 80% of the American economy — contracted in July rather than expanded as expected:
The U.S. service sector contracted in July at a faster pace than in June, according to a report released Wednesday.
The Institute for Supply Management’s services index fell to 46.4 last month from 47.0 in June, below economists’ median forecast for a rise to 48.0. The dividing line between growth and contraction is 50.
The services sector represents about 80 percent of U.S. economic activity, including businesses such as banks, airlines, hotels and restaurants.
That throws a dash of cold water on the suggestion that the US had turned a corner on economic pain. The Obama administration has been patting itself on the back for rescuing America from a depression, even though no one can detect any impact from the White House/Congressional stimulus package. July represents the start of the third quarter, where the administration had expected to see growth, especially after the -1.0 GDP in Q2. Increasing contraction in the services sector makes that more difficult to achieve and portends lower revenues than expected for the Treasury — which means even higher deficits than predicted.
Even the manufacturing news is a mixed bag. The Commerce Department showed a 1.1% increase in orders in May, slowing down to 0.4% increase in June. That beat analyst expectations, but also indicates that the growth in manufacturing may be petering out at the same time as the service sector contracts. Orders for big-ticket items like cars and appliances fell 2.2% after rising 1.3% in May, which may track with declining consumer confidence after a boost in spring that came with the stimulus package.
All of this hints at a higher unemployment rate, the figures for which will be released by the end of the week. If that number continues to rise, expect consumer confidence to decline and these numbers to get worse. It’s far too early to celebrate the end of the recession.
Too much service and not enough making.
If we don’t start producing more of what we are consuming, there is no recovery.
Here’s some anecdotal commentary on the local situation:
We are largely manufacturing in this area, dependant upon automotive suppliers, manufactured housing, travel trailers/RVs, and boats. The neighboring county, Elkhart, is where Obama was today. In the last 3-4 weeks, several companies have recalled some of their workforce and are restarting the assembly lines. However, this is not what it appears. These companies shut down last fall, and have remained closed for nearly a year as the inventory was sold off. Inventory is now gone, so the companies have restarted the lines to rebuild inventory. Green shoots? No. The plan is to run the production lines about 4 months, shut down before Thanksgiving and spend several months (again) selling off the inventory. The companies are likely to remain closed until next summer, so this is a temporary blip....
hh
nobama has put on a happy face and is lying through his teeth about how wonderful things are. We’re turning the proverbial corner.
Nonsense!
Do you personally see anything that indicates joy? I certainly don’t.
The article mentions that unemployment figures will be released this week. I wonder of all the faux nobama bluster is because he knows bad news is coming. More than 10% ya reckon?
Don’t you understand? Recovery is right around the corner. Don’t you read Newsweek or the AP? Don’t you listen to MSNBC, Chris Matthews and Olbermann? Don’t you listen to our president’s press conferences? Unemployment of 9.5 percent and rising? Just who do you know is unemployed? All my friends are employed by the federal government and NONE of them have lost their jobs.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.