The America's Manufacturing Boom That Isn't

 

"Kamala Harris is vying for votes in the Midwest by touting the Administration's efforts to boost U.S. manufacturing. In the recent debate, she boasted about "building a clean energy economy" and "investing in American-made products." So what's the Administration's actual record?

Start with the top line, which is that U.S. manufacturing output hasn't fully recovered from its pandemic plunge and is lower than in 2013. 

Most manufacturing growth under Mr. Biden occurred during his first year in office amid the post-Covid rebound. Businesses scaled up production owing to an increased demand for goods that was super-charged by the pandemic largesse.

It's true that spending on construction of new factories has more than doubled during the Biden years, no doubt partly owing to a gusher of subsidies. The Inflation Reduction Act includes rich tax credits for green manufacturing and renewable electricity projects built with U.S.-made materials.

Yet there are already signs that this government-driven investment is a mistake. Auto makers are scaling back electric-vehicle production, which may lead to under-utilized factories. Some green startups are struggling to stay in business, such as Lordstown and Fisker.

The Institute for Supply Management's purchasing managers index shows the manufacturing industry as a whole has been in almost continuous contraction since autumn 2022, right after Mr. Biden signed the IRA and Chips Act.

Meanwhile, investment in new industrial equipment has been notably weaker under Mr. Biden than Donald Trump. This suggests fewer manufacturers are refurbishing existing plants and investing in technology that will make them more globally competitive.

What about jobs? Ms. Harris said in her debate with Mr. Trump that the U.S. has "created over 800,000 new manufacturing jobs while I have been vice president." But almost all were bounce-back from the pandemic. 

Manufacturing job growth has since been flat for two years.

Manufacturing employment has grown in businesses boosted by subsidies, such as semiconductors (17,800) and batteries (8,800). But jobs have declined in others smacked hard by regulation and inflation, such as oil and gas machinery (-10,400), foundries (-7,200) and fabricated metals (-6,800).

Jobs and hours worked have declined since October 2022 when the Biden subsidy gusher began. Real average weekly wages for manufacturing workers are 2.7% lower than in January 2021.

In a fact sheet on Monday aimed at voters in Michigan, Ms. Harris and the White House boasted about $28 billion in private investment in "clean energy and manufacturing" in the state during the Biden years. Yet overall Michigan has lost 11,300 net manufacturing jobs in the last year and 7,200 since the IRA passed.

The problem for U.S. companies is that Mr. Biden's anti-business policies offset the impact of subsidies. Inflation caused by all that government spending and sanctions on Russia have raised business costs, and soaring electricity prices have been especially damaging. In March, Metal Technologies Inc. announced it is closing its Northern Foundry in Minnesota, citing the state's rising electricity prices. Blame in part Minnesota Gov. Tim Walz's renewable-energy mandate, which has forced the retirement of a major coal plant that provided cheap power.

The Environmental Protection Agency imposed rules requiring steel mills and iron foundries to limit carbon emissions. EPA's regulations "stand to paralyze an industry" and "impose billions of dollars in mandates" on U.S. manufacturers, warned Democratic Sens. Bob Casey, John Fetterman, Amy Klobuchar, Sherrod Brown and independent Joe Manchin. U.S. Steel warns it will close its Mon Valley plant because of refurbishment costs if the government blocks its acquisition by Nippon Steel.

The Biden EPA has also imposed stringent emissions limits on paper, cement, glass, steel, iron, and chemicals manufacturers in the name of reducing smog in downstream states despite little connection between the two. States and manufacturing groups challenged the rule, which the Supreme Court stayed in June.

But the business uncertainty caused by myriad rules has chilled investment. Electric transformer manufacturers last year warned that proposed efficiency standards for their industry made it difficult to scale up production. This in turn stalled other business investments, including housing projects and data centers.

---

The U.S. economy is dominated by services these days, so making a political fetish of manufacturing is misguided. But to the extent policy makers want to encourage more investment and hiring in manufacturing, the answer is to reduce costs to make U.S. firms more competitive. 

Low energy prices, low taxes and fewer regulatory costs are better than government-directed investment in industries that might not have a market.

Biden-Harris policy has been to raise costs for all businesses and then slather on subsidies for those they like. It isn't paying off for most U.S. companies or workers." [1]

Now Western Europe is closing eyes and diving into subsidies. America proved that this is a big mistake.

1. The Manufacturing Boom That Isn't. Wall Street Journal, Eastern edition; New York, N.Y.. 24 Sep 2024: A.18.

 

Sunkumų patirianti, euro zona susiduria su susitraukimu --- Sulėtėjimas kontrastuoja su vis dar dinamišku JAV augimu, artėjant ketvirčio pabaigai

 

 „Euro zonos ekonomika smarkiai sulėtėjo, artėjant trečiojo ketvirčio pabaigai, o tai prieštarauja vis dar dinamiškam augimui JAV, rodo pirmadienį paskelbti verslo tyrimai.

 

 Euro zonos apklausos rodo, kad gali kilti abejonių dėl švelnaus nusileidimo dėl infliacijos šuolio, kuris lydėjo sankcijas Rusijai.

 

 Europos Centrinio Banko politikos formuotojai tikėjosi sutramdyti infliaciją, nestumdami į krizę euro zonos ekonomikos, tačiau vis daugėja ženklų, kad pastaraisiais mėnesiais aktyvumas susilpnėjo, nes skolinimosi išlaidos išlieka didelės.

 

 Pagal pirmadienį paskelbtą „S&P Global“ sudėtinį pirkimo vadybininkų indeksą, privataus sektoriaus aktyvumas valiutų sąjungoje rugsėjį sumažėjo. Sudėtinis indeksas nukrito žemiau 50, slenksčio tarp plėtimosi ir susitraukimo, ir pasiekė 48,9.

 

 „Po sąstingio, kilusio po energijos kainų šoko, euro zonos ekonomika dabar vos atsigauna“, – sakė banko ING ekonomistas Bertas Colijnas.

 

 JAV sudėtinis indeksas nukrito tik šiek tiek, nes spartus paslaugų augimas išlaikė platesnę veiklą. Nepaisant to, gamybos sektorius užfiksavo didesnį nuosmukį, nei tikėtasi, o įmonių pasitikėjimą artimiausia ateitimi tebėra temdo politinis netikrumas prieš, lapkritį įvyksiančius, prezidento rinkimus, rodo apklausos.

 

 Energijos kainų šuolis po sankcijų Rusijai pristabdė euro zonos atsigavimą po Covid-19 pandemijos, tačiau valiutos zona nuosmukio išvengė. Tačiau per tris mėnesius iki birželio ekonomika sulėtėjo, nes įmonės sumažino investicijas, reaguodamos į dideles skolinimosi išlaidas, kurias sukėlė tas kainų šuolis.

 

 Visą laikotarpį po sankcijų įstrigimo euro zonos darbo rinka išliko stipri, o nedarbo lygis buvo rekordiškai žemas. Tačiau apklausos rodo, kad pasiektas lūžio taškas – įmonės atleidžia darbuotojus greičiausiai nuo 2020 m. pabaigos.

 

 Silpnesnė paklausa taip pat padėjo sumažinti kainų spaudimą. Paslaugų sektoriaus įmonės, kurios buvo pagrindinis infliacijos veiksnys euro zonoje, pranešė apie mažiausią sąnaudų padidėjimą per 3,5 metų, o gamintojų išlaidos sumažėjo. Dėl to kainos, kurias įmonės taikė savo klientams, kilo lėčiausiu tempu nuo tada, kai 2022 m. pradžioje su Rusijos ir Ukrainos konfliktu susijusios sankcijos sukėlė ilgą pragyvenimo krizę.

 

 Apklausos rodė keletą užuominų apie atgimimą ateinančiais mėnesiais, o naujų užsakymų mažėjo.

 

 „Atsižvelgiant į spartų naujų užsakymų mažėjimą ir mažą užsakymų skaičių, nereikia daug vaizduotės, kad būtų galima numatyti tolesnį ekonomikos silpnėjimą“, – sakė tyrimus užsakiusio Hamburgo komercinio banko vyriausiasis ekonomistas Cyrusas de la Rubia.

 

 Po to, kai rugpjūtį jį paskatino Paryžiaus olimpinės žaidynės, paslaugų veikla smarkiai sulėtėjo, indeksui pablogėjus iki 50,5 nuo 52,9, o tai rodo silpniausią augimo tempą per septynis mėnesius. Įtemptą rugpjūtį Prancūzijos paslaugų sektorius vėl smuko.

 

 Visoje euro zonoje apdirbamoji veikla ir toliau silpo, o krizės apimtame gamyklų sektoriuje nebuvo daug gerų ženklų. Apklausos parodė, kad Vokietijoje, ilgą laiką buvusioje Europos pramonės jėgainėje, gamyba toliau lėtėjo, o veiklos rodiklis pasiekė žemiausią tašką per metus.

 

 Šį mėnesį automobilių milžinė „Volkswagen“ pareiškė svarstysianti, precedento neturintį, gamyklų uždarymą savo šalyje, reaguodama į niūrias ekonomikos sąlygas ir aršesnę konkurenciją iš už Europos ribų. Silpnesnė gamybos apimtis ir mažėjantis užimtumas Vokietijoje padidina riziką, kad didžiausia euro zonos ekonomika pateks į techninį nuosmukį, kuris apibrėžiamas, kaip du ketvirčiai iš eilės smukimo, – įspėjo Clausas Vistesenas iš Panteono makroekonomikos savo pranešime klientams.

 

 Taip pat buvo pastebėta blėstančio augimo ženklų ir kitose didžiausiose pasaulio ekonomikose. Remiantis jos pačios veiklos tyrimais, Indija šiemet užfiksavo lėčiausią augimo tempą. Jungtinėje Karalystėje paslaugų ir gamybos sektoriuje veikla sulėtėjo." [1]

 

Kubilius jums pasakė: nustokite kranksėti apie blogą gyvenimą euro zonoje. Žiūrėkite, Kubilių šeimos ir Landsbergių šeimos gyvenimas niekada nebuvo toks geras. Likusi euro zona? Tiesiog eikite ir nusiskandinkite. Nustokite kranksėti, nusibodote.

 

1. World News: Struggling Eurozone Faces a Contraction --- Slowdown contrasts with still-dynamic growth in the U.S. as quarter nears end. Kirby, Joshua.  Wall Street Journal, Eastern edition; New York, N.Y.. 24 Sep 2024: A.10.

Struggling Eurozone Faces a Contraction --- Slowdown contrasts with still-dynamic growth in the U.S. as quarter nears end

 

"The eurozone economy slowed sharply as the third quarter draws to a close, contrasting with still-dynamic growth in the U.S., according to a series of business surveys released on Monday.

The eurozone surveys suggest there could be doubt about a soft landing from the surge in inflation that accompanied sanctions on Russia.

Policymakers at the European Central Bank had hoped to tame inflation without pushing the eurozone economy into contraction, but there are growing signs that activity has weakened over recent months as borrowing costs remain high.

Private-sector activity in the currency union shrank in September, according to S&P Global's Composite Purchasing Managers' Index, published Monday. The composite index fell below 50, the threshold between expansion and contraction, coming in at 48.9.

"After the stagnation that followed the energy price shock, the eurozone economy is now barely experiencing any recovery," said Bert Colijn, an economist at bank ING.

In the U.S., the composite index fell only slightly as robust growth in services kept wider activity ticking along. Nevertheless, the manufacturing sector booked a sharper decline than expected, and companies' confidence for the near-term future remains clouded by political uncertainty ahead of November's presidential elections, the surveys show.

The surge in energy prices that followed sanctions on Russia cut short the eurozone's recovery from the Covid-19 pandemic, but the currency area avoided a recession. However, the economy slowed in the three months through June as businesses cut back on investment in response to high borrowing costs induced by taming inflation.

Throughout the post-sanctions stall, the eurozone's job market has remained strong, with the unemployment rate at a record low. But the surveys suggested a turning point has been reached, with businesses shedding workers at the fastest rate since the end of 2020.

Weaker demand also helped cool price pressures. Businesses in the services sector, which has been a key driver of inflation in the eurozone, reported the smallest rise in input costs in 3 1/2 years, while those costs fell for manufacturers. As a result, the prices that businesses charged their customers rose at their slowest rate since the Russia-Ukraine conflict related sanctions on Russia sparked a lengthy cost-of-living crisis early in 2022.

The surveys carried few hints of a rebound in the coming months, with new orders in decline.

"Considering the rapid decline in new orders and the order backlog, it doesn't take much imagination to foresee a further weakening of the economy," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, which commissioned the surveys.

Services activity, after being fueled in August by the Olympic Games in Paris, slowed sharply, with the index deteriorating to 50.5 from 52.9, pointing to the weakest rate of growth in seven months. France's services sector, which had a busy August, fell back into contraction.

Manufacturing activity continued to weaken across the eurozone, with little sign of a rebound for the beleaguered factory sector. Germany, long Europe's industrial powerhouse, saw a further slowdown in manufacturing, the surveys showed, with the measure of activity reaching its lowest point in a year.

This month, auto giant Volkswagen said it would consider unprecedented closures of factories in its home country in response to a bleak economic backdrop and fiercer competition from outside Europe. Weaker output and falling employment in Germany increase the risk that the eurozone's largest economy is sliding into a technical recession -- defined as two successive quarters of contraction -- warned Claus Vistesen at Pantheon Macroeconomics in a note to clients.

There were signs of fading growth elsewhere among the world's major economies, too. India recorded its slowest pace of growth so far this year, according to its own activity surveys. In the U.K., activity lost momentum both in services and manufacturing." [1]

Kubilius told you: Stop crowing about bad life in eurozone. Look, the life in Kubilius family and Landsbergis family was never so good. Rest of eurozone? Just go drawn yourself. Stop crowing.

1. World News: Struggling Eurozone Faces a Contraction --- Slowdown contrasts with still-dynamic growth in the U.S. as quarter nears end. Kirby, Joshua.  Wall Street Journal, Eastern edition; New York, N.Y.. 24 Sep 2024: A.10.