In the manufacturing sector we find the most supreme test of economic credentials. Despite what is clearly taking place, the mainstream, orthodox outlook and assessment continues to dominate. There isn’t any doubt anymore about the manufacturing sector, as recession not only is broad enough there on its own it continues to deepen and darken. Yet, because Janet Yellen declared the US economy close to “overheating” by initiating a rate increase, there remains all sorts of confusion about how this contradiction could occur.
It stands to no reason that an overheating economy would be so incredibly weak in the one segment that should be most visibly revivifying. If American economic fortunes were so bright, there is no reason to suggest that Americans would not be buying as much as “stuff” as they possibly could. Frugality is not a current consumer trait, and the fact that the savings rate may be closer to 5.5% rather than 10.5% as it once was suggests that hasn’t been instituted out of anything more than necessity.
So the December ISM is reported today at a worse rate than any other since the Great Recession, with a clear downward trend extending all the way back into 2014. But for the media and economists, it has to be “something else” because there is no way, apparently, Janet Yellen would claim “overheating” where there clearly is none.
Manufacturing in the U.S. contracted in December at the fastest pace in more than six years as factories, hobbled by sluggish global growth, cut staff at the end of 2015…
Struggling overseas demand and declines in commodity prices that are hurting investment in energy and agriculture continue to limit orders for American manufacturers. At the same time, robust domestic growth buoyed by labor-market momentum and burgeoning wage gains are supporting consumers’ spending power and preventing U.S. factory activity from slowing even more.
It’s easy to point to everywhere else and suggest that as the cause of so much inconsistency and worry. There is the clear decline in economies overseas as well as the dollar, no longer strong, that supposedly makes the export economy and only the export economy so much worse. As the second quoted paragraph above implies, the economy would be in recession if it weren’t so robust. It’s just these kinds of absurdities that are “required” to maintain the view of overheating against what is clearly a manufacturing problem of recessionary (economy-wide) proportions.