The Fed and S&P Global report gave the lie to Joe Biden's “manufacturing boom” that the administration celebrated during October's “Manufacturing Month.”
The Commerce Department's announcement celebrating the “boom” quotes Biden as saying:
The future of our manufacturing, the future of our economy, and the solutions to the climate crisis all happen in America and create good jobs.
This belief was reiterated by Secretary of Commerce Gina Raimondo.
No one cares more about revitalizing America's manufacturing industry than President Biden… He believes America is where we should be making things. And that's what his American investment agenda is all about.
The Commerce Department report praised taking money from those who earned it and giving money to those who did not. That's the job of the EDA (Economic Development Administration), the part of the Department of Commerce that spends taxpayer money according to its wish list.
Since January 2021, EDA has invested $2 billion in 732 projects that support manufacturing and advanced manufacturing (whatever that is), with over 300 of those projects supporting community and regional upskilling (? ) and specializes in supporting capacity building for economic development.
doesn't work
Unfortunately it doesn't work. S&P Global's December U.S. manufacturing PMI (Purchasing Managers' Report, or index) was “significantly below market expectations” and “the momentum of contraction in U.S. factory activity continued for the sixth consecutive month.” It added: “Looking ahead, factories expressed concerns about lack of demand and rising input prices (inflation).”
Last week, the Federal Reserve released a report on production and capacity utilization. It also contradicted Biden's optimistic assessment of manufacturing.
Industrial production fell by 0.1% in November after declining by 0.4% in October. …Production decreased in all categories of nondurable consumer goods in November. …In November, the capacity utilization rate fell to 76.8%, which was 2.9% below the long-term rate. -Average of runs (1972-2023).
The Philadelphia Fed's regional manufacturing report has more bad news for manufacturing.
The Philadelphia Federal Reserve Manufacturing Business Index…reported a significant decline…The sharp decline suggests that conditions in the region's manufacturing industry are deteriorating. This figure is in sharp contrast to the expected (higher) numbers and highlights a deeper recession than initially expected.
“While analysts were expecting positive changes indicating an improvement in the situation, the actual data shows a different and more worrying picture,” it added.
consumers are suffering
Coming into the holiday spending season, only one in six shoppers expect to spend more than last season, and more than a third of them plan to spend less.
According to Bank of America, nearly one-third of all households “spend more than 95% of their disposable income on necessities like housing, groceries, and utilities.” Lending Tree reports that a quarter of all Americans were unable to pay their entire utility bill at least once in the last year. “The need to cover utility bills has led 34.3% of Americans to cut back or completely eliminate spending on essential items at least once in the past year,” LendingTree said.
Because of their plight, consumer retail stores are closing across the country. Party City will be closed. Big Lots will then begin a “going out of business” sale at all 936 remaining stores starting the day after Christmas.
More than 7,000 retail stores have closed so far this year, a 69% increase from last year.
This is the last time Biden has touted manufacturing, giving highly misleading praise, an accomplishment of which he is extremely proud.
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