(What’s Left of) Our Economy: U.S. Manufacturing’s Now Defying Hurricanes and Delta

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aircraft, aircraft parts, appliances, Boeing, CCP Virus, chemicals, computer and electronics products, coronavirus, COVID 19, Delta variant, electrical equipment, fabricated metal products, facemasks, Federal Reserve, furniture, Hurricane Ida, inflation-adjusted growth, machinery, manufacturing, masks, medical devices, medicines, oil refining, paper, personal protective equipment, petrochemicals, pharmaceuticals, plastics, PPE, real output, semiconductor shortage, supply chain, travel, ventilators, Wuhan virus, {What's Left of) Our Economy

Domestic manufacturing’s done it again. Just as with the Labor Department’s August jobs report, the Federal Reserve’s new release on manufacturing output for the month shows that industry kept dodging whatever potholes the CCP Virus and its highly infectious Delta variant keep digging for the rest of the U.S. economy.

America-based manufacturers’ inflation-adjusted production grew by a meager 0.11 percent sequentially in August. But output was held down by facility closures forced by Hurricane Ida in the petrochemicals, plastics resins, and petroleum refining sectors. Overall revisions were mixed, but some upgrades and downgrades in individual major industries were pretty remarkable, as will be seen below.

The biggest winners in the new price-adjusted manufacturing production report were the small, catch-all “other manufacturing” category (2.42 percent); furniture and related products (up 2.07 percent); computer and electronics products (whose 1.21 percent output rise may have been a response to the worldwide shortage of semiconductors); paper (up 1.07 percent); and fabricated metal products (up 0.74 percent).

The biggest losers were electrical equipment, appliances, and components (down 1.16 percent); textiles products (down 0.81 percent on month); machinery (down 0.80 percent); and the big chemicals sector (down 0.49 percent).

Normally, the machinery results would be discouraging, since its products are used so widely both in the rest of manufacturing and also in big non-manufacturing industries like agriculture and construction. But its August dip followed a July jump of 3.31 percent – its best production improvement since January’s 4.63 percent – which was dramatically upgraded from the previously reported 1.91 percent.

The electrical equipment category followed a similar pattern. Its July real production results were revised all the way up from 2.31 percent to 3.95 percent – its best such performance since January, 2010, when the economy was still in its early bounce-back from the Great Recession that followed the global financial crisis.

Also enjoying a solid August were two narrower manufacturing categories that remain in the news due to the ongoing effects of the CCP Virus. Air travel has of course suffered throughout the pandemic-era, and aerospace manufacturing giant Boeing has been hit with numerous related manufacturing and safety problems (including some pre-dating the pandemic, like the grounding of the popular 737 Max jetliner).

Yet aircraft and parts production in constant dollars advanced by 0.34 percent in August, and in another major revision, July’s previously reported 2.78 percent increase is now pegged at 4.10 percent – its best such result since January’s 6.79 percent burst. And June’s downgraded 3.57 percent rise was bumped back up to 3.84 percent. As a result, aircraft and parts production is now 12.63 percent higher in after-inflation terms than in February, 2020 – the last full data month before the virus began significantly affecting the U.S. economy.

The pharmaceuticals and medicines sector (which includes vaccines) saw a real month-to-month production increase of 0.89 percent in August, and revisions were modest and mixed. These results left inflation-adjusted output 12.33 percent higher than its immediate pre-pandemic levels.

But August real production sank sequentially by 1.73 percent in the vital medical equipment and supplies sector – which includes virus-fighting items like face masks, protective gowns, and ventilators.

On the brighter side, July’s initially reported 1.71 percent constant dollar production rise was revised up to 2.42 percent. June’s dramatically downgraded 1.54 percent decrease was upgraded to a 0.13 percent drop, and May’s upwardly revised 1.86 percent real growth was downgraded only slightly – to 1.78 percent. Even so, on a price-adjusted basis, this crucial industry is just 2.66 percent larger than before the CCP Virus arrived in force.

Domestic industry still faces important headwinds of course – and not just from the possibility that Delta keeps worsening America’s public health and economy, and that approaching winter weather triggers a new wave of infections, hospitalizations, deaths, and restrictions. Those global supply chain snags are still with us, too.

But throughout the pandemic era, U.S.-based manufacturers have overcome obstacles just like this, and their consistent vigor indicates that it’s the pessimists about their future prospectswho now face the biggest burden of proof.

Glad I Didn’t Say That! A Claim that Masks Are and Aren’t Good for Kids.

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CCP Virus, children, coronavirus, COVID 19, education, facemasks, Glad I Didn't Say That!, masks, mental health, psychology, schools, Wuhan virus

“[T]here is plenty of reason to believe that [mask wearing] won’t 

cause any harm” to children.

– Research psychologist Judith Danovitch, August 18, 2021

 

“This is not to say that masks are preferable to no masks, all things

being equal.”

– Research psychologist Judith Danovitch, August 18, 2021

(Source: “Actually, Wearing a Mask Can Help Your Child Learn,” by Judith Danovitch, The New York Times, August 18, 2021, Opinion | Actually, Wearing a Mask Can Help Your Child Learn – The New York Times (nytimes.com))

 

 

(What’s Left of) Our Economy: Automotive’s Still in the U.S. Manufacturing Growth Driver’s Seat

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aircraft, aluminum, appliances, automotive, CCP Virus, China, coal, coronavirus wuhan virus, COVID 19, Delta variant, electrical equipment, facemasks, Federal Reserve, industrial production, inflation-adjusted growth, inflation-adjusted output, infrastructure, lockdowns, machinery, manufacturing, masks, medical devices, metals, petroleum refining, pharmaceuticals, PPE, real growth, recovery, reopening, steel, stimulus, tariffs, Trump, vaccines, {What's Left of) Our Economy

Talk about annoying! There I was last Thursday morning, all set to dig into the new detailed Federal Reserve U.S. manufacturing production numbers (for June) in order to write up my usual same-day report, and guess what? None of the new tables was on-line! Fast forward to this morning: They’re finally up. (And here‘s the summary release.) So here we go with our deep dive into the results, which measure changes in inflation-adjusted manufacturing output.

The big takeaway is that, as with last month’s report for May, the semiconductor shortage-plagued automotive sector was the predominant influence. But there was a big difference. In May, domestic vehicles and parts makers managed to turn out enough product to boost the overall manufacturing production increase greatly. In June, a big automotive nosedive helped turn an increase for U.S.-based industry into a decrease.

The specifics: In May, the sequential automotive output burst (which has been revised up from 6.69 percent in real terms to 7.34 percent) helped push total manufacturing production for the month to 0.92 percent after inflation (a figure that’s also been upgraded – from last month’s initially reported already strong 0.89 percent). Without automotive, manufacturing’s constant dollar growth would have been just 0.47 percent.

In June, vehicle and parts production sank by an inflation-adjusted 6.62 percent , and dragged industry’s total performance into the negative (though by just 0.05 percent). Without the automotive crash, real manufacturing output would have risen by 0.40 percent.

Counting slightly negative revisions, through June, constant dollar U.S. manufacturing production in toto was 0.60 percent less than in February, 2020 – the economy’s last full pre-pandemic month.

Domestic industry’s big production winners in June were primary metals (a category that includes heavily tariffed steel and aluminum), which soared by 4.02 percent after inflation; the broad aerospace and miscellaneous transportation sector, which of course contains troubled Boeing aircraft, (more on which later), and which turned in 3.75 percent growth, its best such performance since January’s 5.62 percent pop; petroleum and coal products (up 1.36 percent); and miscellaneous durable goods, which includes but is far from limited to CCP Virus-related medical supplies (up 1.21 percent).

The biggest losers other than automotive? Inflation-adjusted production of electrical equipment, appliances, and components, which dropped sequentially by 1.73 percent in real terms; the tiny, remaining apparel and leather goods industry (1.44 percent); and the non-metallic minerals sector (1.07 percent).

Especially disappointing was the 0.55 percent monthly dip in machinery production, since this sector’s products are used so widely throughout the rest of manufacturing and in major parts of the economy outside manufacturing like construction and agriculture.

But in one of the biggest surprises of the June Fed data (though entirely consistent with the aforementioned broad aerospace sector), real output of aircraft and parts shot up by 5.24 percent – its best such performance since January’s 6.79 percent. It’s true that the May production decrease was revised from 1.47 percent to 2.61 percent. But with Boeing’s related and manufacturing and safety-related woes continuing to multiply, who would have expected that outcome?

And partly as a result of this two-month net gain, after-inflation aircraft and parts output as of June is 7.83 percent higher in real terms than in pre-pandemicky February, 2020 – a much faster growth rate than for manufacturing as a whole.

The big pharmaceuticals and medicines sector (which includes vaccines) registered a similar pattern of results, although with much smaller swings. May’s originally reported 0.22 percent constant dollar output improvement was revised down to 0.15 percent. But June saw a 0.89 percent rise, which brought price-adjusted production in this group of industries to 9.33 percent greater than just before the pandemic.

Some good news was also generated by the vital medical equipment and supplies sector – which includes virus-fighting items like face masks, face masks, protective gowns, and ventilators. Its monthly May growth was upgraded all the way up from the initially reported 0.19 percent to 1.18 percent. And that little spurt was followed by 0.99 percent growth in June.

Yet despite this acceleration, this sector is still a mere 2.27 percent bigger in real terms than in February, 2020, meaning that Americans had better hope that new pandemic isn’t right around the corner, that the Delta variant of the CCP Virus doesn’t result in a near-equivalent, or that foreign suppliers of such gear will be a lot more generous than in 2020.

As for manufacturing as a whole, the outlook seems as cloudy as ever to me. Vast amounts of stimulus are still being pumped into the U.S. economy, which continues to reopen and overwhelmingly stay open. That should translate into strong growth and robust demand for manufactured goods. The Trump tariffs are still pricing huge numbers of Chinese goods out of the U.S. market. And the shortage of automotive semiconductors may actually be easing.

But the spread of the Delta variant has spurred fears of a new wave of local and even wider American lockdowns. This CCP Virus mutation is already spurring sweeping economic curbs in many key U.S. export markets. Progress in Washington on an infrastructure bill seems stalled. And for what they’re worth (often hard to know), estimates of U.S. growth rates keep coming down, and were falling even before Delta emerged as a major potential problem. (See, e.g., here.)

I’m still most impressed, though, by the still lofty levels of optimism (see, e.g., here)  expressed by U.S. manufacturers themselves when they respond to surveys such as those sent out by the regional Federal Reserve banks (which give us the most recent looks). Since they’re playing with their own, rather than “other people’s money,” keep counting me as a domestic manufacturing bull.

(What’s Left of) Our Economy: A “Gentleman’s C” for the New Manufacturing Jobs Numbers

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aircraft, aircraft engines, aircraft parts, automotive, Boeing, CCP Virus, electronics, Employment, fabricated metals products, facemasks, food products, furniture, housing, Jobs, Labor Department, manufacturing, masks, metals, pharmaceuticals, ports, PPE, printing, productivity, protective gear, recession, recovery, reopening, semiconductor shortage, tariffs, vaccines, {What's Left of) Our Economy

June’s gains weren’t nearly enough to overcome the latest trend in U.S. manufacturing employment: From a job growth leader earlier during the CCP Virus pandemic, domestic industry has turned into a laggard. It’s not lagging by a big margin, but given significant net headwinds it should still be enjoying, recent results are clearly disappointing.

This morning, the Labor Department reported that U.S.-based manufacturers created 15,000 net new jobs in June – a modest number given the 662,000 increase in total private sector employment on month. At least revisions were positive. May’s initially reported 23,000 monthly improvement is now judged to be 39,000, but April’s already downwardly revised 32,000 sequential job loss is now pegged at 35,000.

In many of the nation’s supposedly prestige colleges, the grade earned by this kind of result would be called a “Gentleman’s C.”

As a result, domestic manufacturing has now regained 904,000 (66.32 percent) of the 1.363 million jobs lost during the pandemic. The numbers for the private sector overall are 72.98 percent of the 21.353 million lost jobs that have been recovered, and for the total non-farm economy (the definition of the American employment universe used by the U.S. government, which includes government jobs) 69.75 percent of the 22.362 million jobs lost.

A manufacturing optimist (and I’ve been one of them) can note that industry took less of an employment hit during the pandemic-loss months of March and April, 2020. Manufacturing employment sank by 10.65 percent, versus 16.46 percent for the private sector and 14.66 percent for the whole non-farm economy.

But nowadays, domestic manufacturers are still benefiting from major tariffs plus massive government stimulus on both the fiscal and monetary fronts, and from the huge ramp up in vaccine production. Reopening-related bottlenecks clearly are causing problems, but according to the major national surveys that measure how manufacturers themselves believe they’re faring, production and new orders for their products keep growing strongly. (For the newest ones, see here and here.) Even given equally widespread reports that new workers are hard to find, I expected hiring to remain much more robust than it has.

One explanation may be higher productivity, which enables businesses to turn out more goods with fewer workers. But given the longstanding difficulties of gauging this measure of efficiency, and undoubted pandemic-era distortions, I’m reluctant to put too much stock in this argument.

The shortages issues have been once again illustrated by the dominance of the automotive sector in the June manufacturing jobs picture. Payrolls of vehicles and parts companies fell by 12,300 – the biggest individual sector decreases by far – and surely stem from the continuing global shortage of the computer chips that have become ever more important parts of cars and trucks of all kinds.

One small bright spot in the June figures – the 300 jobs increase in the machinery sector. It’s an important indicator of the overall state of industrial hiring, since its products are used throughout industry (as well as in non-manufacturing sectors like agriculture and construction). At the same time, these new positions represented machinery’s weakest sequential performance since January’s 3,200 employment decrease.

Other big June manufacturing net hiring winners were furniture and related products (up 8,500, no doubt reflecting still strong home sales and remodeling activity), fabricated metals products (up 5,700, which is noteworthy given still widespread whining about the ongoing U.S. tariffs on metals), and miscellaneous durable goods manufacturing (up 3,300 – encouraging since this category includes many pandemic-related medical supplies).

The biggest losers other than automotive were food products (down 4,100 and continuing an employment slump that began in January), electronic instruments (down 2,100 and possibly related to the semiconductor shortage), and printing and related activities (down 1,400).

Pandemic-related industries turned in a mixed hiring performance, according to the latest jobs report. Job creation accelerated significantly in the surgical appliances and supply sector, which contains protective gear like face masks, gloves and surgical goans. Its payrolls grew by 1,700 on month in May (its data are one month behind, as is the case with the other sectors examined below), up from April’s 1,200 and its best monthly total since last July’s 3,000. This surgical category’s workforce is now 11.50 percent bigger than in February, 2020 – the last pre-pandemic month.

But the May figures revealed a job creation setback in the overall pharmaceuticals and medicines industry. April’s hiring was revised down slightly, from 2,700 to 2,500, but the number was still solid. In May, however, its payrolls shrank by 400, its worst such performance since pandemicky April, 2020. And its workforce is only 3.82 percent greater than in February, 2020.

Better news came out of the pharmaceuticals subsector containing vaccines, but not that much better. This industry added one thousand workers on net in May, but April’s initially reported 1,300 jobs increase was revised down to 1,100. Still, this vaccines-heavy sector now employs 9.20 percent more workers than just before the pandemic.

And in aircraft, Boeing’s continuing manufacturing and safety issues surely helped produce this industry’s worst jobs month – consisting of a 5,500 payroll decrease – since June, 2020’s 5,800. This sector has now lost 9.39 percent of its jobs since the final pre-pandemic month.

Interestingly, the aircraft engines and parts, and non-engine parts categories weren’t nearly as hard-hit job-wise in May. (The former even maintained employment levels.) But payrolls in each are down since February, 2020, by roughly twice as much proportionately as in aircraft.

Major uncertainties still hang over the domestic manufacturing jobs scene, and in one important respect – big new backups in Chinese ports – they’ve become murkier. Nor do Boeing’s problems seem ready to end any time soon. I’m still bullish on U.S.-based manufacturing’s employment outlook, at least in the short and medium terms mainly because American policy remains so overwhelmingly stimulative and its effects are still coursing through the economy. But I’m getting a little impatient for the numbers to start backing me up once again.

Im-Politic: The Pandemic is Over! (Unless It’s Not?)

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Biden, CCP Virus, Chincoteague, coronavirus, COVID 19, facemasks, Im-Politic, lockdowns, Maryland, mask mandate, Prince George's County, Riverdale Park, shopping, shutdowns, stay-at-home, Wuhan virus

Some recent experiences of mine, though of course by definition anecdotal and therefore inconclusive, have still been mixed enough to indicate that President Biden is right about his plan for the July 4^th holiday. His idea of using Independence Day “to mark the country’s effective return to normalcy after 16 months of coronavirus pandemic disruption” may be just what many Americans still need to shed the “masks for all” and “stay at home” mentalities despite major signals from political and public health authorities’ at all levels of government that such hypercaution is no longer necessary.

In fact, these experiences have not only been mixed. A couple have been downright puzzling.

For instance, as I’ve written previously, my town in a Maryland suburb of Washington, D.C. is pretty darned woke. It’s granted the right to vote in local elections to all illegal aliens 16 years of age and older who can show they’ve just briefly resided in Riverdale Park. And when it comes to the virus, many residents seem to have been caught up in pandemic virtue-signaling and scolding. In addition, our county – Prince George’s – has been lifting virus-related restrictions much more slowly than the rest of the state. (In fairness, it’s infection and hospitalization rates have consistently been on the high side.)

But on one of my (quasi-) daily strolls through the town, during the same conversation, a thirty-something neighbor both proclaimed himself “one of the wokest people you’ll ever meet” and declared that “this [virus] thing is over!” And for the first time since I began noticing him sitting on his porch and met him a few months ago, we shook hands.

In addition, at the local farmer’s market where last summer I was scolded for lowering my mask to sniff some fruit for ripeness (see the above-linked September 26, 2020 RealityChek post) two weeks ago, no one scolded me for paying a visit maskless even though face coverings were still being worn a this outdoor venue (including by folks who almost certainly, like me, are fully vaccinated). And no one scolded me this time for sniffing some fruit.

Best of all, about a week ago, I was able to shop maskless at my mainstay grocery store. What a thrill to be able to spend my normal hour-and-a-half going through the aisles without a piece of cloth smothering my bearded visage and getting sucked halfway into my mouth with each inhalation!

At the same time, on my previous trip to this store, masks seemed to still be required – even though the county’s indoor mask mandate had been lifted, even though the company’s website specified that its stores in this county would no longer require masks, and even though the floor markers in the aisles aimed at aiding social distancing had been removed for about a month. (They remained for the checkout lines.)

Normality signals were even more oddly mixed on a recent trip to a favorite beach destination: Chincoteague, Virgina. Since the town relies heavily on vacationers, and presumably had been hard-hit by travel curbs and lockdowns, I expected that it hoped for virus-related curbs to be lifted sooner rather than later. Moreover, without having researched its politics, I surmised that it’s on the whole a risk-tolerance and decidedly conservative place – both because it’s still small and seemingly tradition-minded (though apparently by no means averse to the noteworthy development that’s taken place during the three decades that I’ve been visiting), and because more than a few residents still earn their living at hard-scrabble actitivies like fishing, or are descended from those who did. Indeed, on the three-hour drive there from Prince George’s, through other pretty similar towns and farmland, a handful of Trump-Pence signs could still be seen – but no Biden-Harris placards.

Yet I was still pretty taken aback by how crowded the area was for an early June mid-week stretch of days, and even more surprised to learn that Chincoteague had been hopping since March. As I was told by several wait staff and merchants, “People really want to get back to their lives.” Which made perfect sense to me upon remembering that Chincoteague tends to attract a much more middle-class and (for lack of a better term) middle-brow crowd than nearby beach towns that tend to be either college student or yuppie meccas.

Even so, one of three of the four restaurants we patronized (and always patronize) in town and along the way required masks in the waiting area and any time customers left their tables. All the staff wore face coverings, too. In our other three favorites, neither customers nor staff were wearing masks at any time. One of the town’s book stores mentioned on its website (but not on the premises) that masks are mandatory, but when I entered mask-less and offered to show the co-owner behind the counter my vaccination card, she laughed and said not to bother. This relaxed attitude, however, wasn’t evident on its upper level, which I’ve always liked because of the easy chairs that enable you to thumb through your prospective purchases while taking a load off. The easy chairs were marked off-limits till the pandemic passed – whenever that’s supposed to be.

Further, the much smaller, much more ramshackle book shop about halfway to (or from) Chincoteague greeted customers with a big “Masks Required” sign on the front door. I had my vaccination card with me then, too, but didn’t want to make a scene – partly because it’s a much more close-quarters place than its Chincoteague counterpart. So I endured the mask inhalation thing while squeezing through and contorting myself around the incredibly cramped (but incredibly well stocked) paperback science fiction section in search of gems for a buck.

So I’ll be rooting for the President to be in top form if he does indeed declare July 4^th to be Independence from the Virus Day. And due to his own hypercaution for so long, he could well be a highly credible carrier of the message that it’s finally time for all Americans who don’t need to take special precautions to understand that it’s really over.

(What’s Left of) Our Economy: It’s an Autos Story Again for U.S. Manufacturing Production

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aerospace, aircraft, aluminum, apparel, automotive, Boeing, CCP Virus, chemicals, China, computers, coronavirus, COVID 19, Donald Trump, electronics, facemasks, Federal Reserve, health security, inflation-adjusted output, machinery, manufacturing, medical supplies, paper, pharmaceuticals, PPE, printing, real growth, semiconductor shortage, semiconductors, shutdowns, steel, stimulus, tariffs, vaccines, Wuhan virus, {What's Left of) Our Economy

Earlier in the CCP Virus era, the U.S. manufacturing production story was largely an automotive production story – because the industry shut down so suddenly and completely during the pandemic’s first wave and the deep economic downturn it triggered, and then began reopening at a record pace. And today’s Federal Reserve figures show that domestic industry’s growth is being driven by dramatically fluctuating vehicles and parts output once again – but this time it seems due significantly to the global semiconductor shortage that’s deprived the sector of critical parts.

Also noteworthy about today’s Fed manufacturing release (which covers May): It incorporates the results of the benchmark revision of these data for the 2017-19 period. As explained in yesterday’s post on the subject, the new numbers create a new baseline for pre-pandemic manufacturing growth, and therefore a new picture of how big the virus-induced downturn was, and how strong the recovery has been – at least until the next benchmark revision. And of course, the new figures therefore supersede those in the April Fed release I reported on last month.

Automotive’s influence on the May numbers is clear from the following: Total inflation-adjusted sequential growth for U.S.-based manufacturing hit a strong 0.89 percent last month. Without automotive (whose 6.69 percent monthly output pop followed a 5.57 percent April drop), the increase would have been just over half that – a still solid 0.50 percent. Don’t be surprised if the microchip shortage keeps these results on a roller coaster.

Its May increase brought total real domestic manufacturing output back within 0.31 percent of its last pre-pandemic level, in February, 2020. In March and April, such production plummeted by 19.41 percent. Since then, it’s surged by 23.90 percent. For the record, as I wrote yesterday, the pandemic-spurred Spring, 2020 nosedive was slightly shallower (0.92 percent) than judged before the revisions (1.42 percent) but the comeback through this past April was a bit weaker (22.81 percent versus 23.27 percent).

Machinery making enjoyed a good month in May, and as known by RealityChek regulars, that’s good news for all domestic manufacturing and the rest of the economy, since its products are so widely used. Constant dollar output improved by 0.78 percent last month, and consequently, the sector is now 2.35 percent bigger in these terms than just before the virus started depressing the economy. One downside should be noted, though: The new revision indicates that the machinery recovery has actually be significantly slower than previously estimated.

Manufacturing’s list of other big inflation-adjusted production winners in May featured some real surprises. The apparel and leather goods industries remain shadows of their historic selves, but their real output last month jumped 2.59 percent – their best such result since January’s 2.06 percent. Moreover, this sector has grown in real terms by 6.74 percent since just before the pandemic – much faster than manufacturing as a whole.

After-inflation production in the small printing and related activities industry grew by 2.59 percent – also its best result since January (3.99 percent).

But some big sectors saw healthy gains in May, too – notably chemicals (whose products are also used throughout the economy) and computer and electrnics products. The former saw real production advance by 2.19 percent sequentially last month – its best such result since March’s weather-aided 4.08 percent. And the latter grew in May by 1.60 percent.

The biggest losers? Paper led this pack by far, with May constant dollar production sinking by 1.59 percent on month – its worst such showing since January’s 1.78 percent decrease.

Likely due to Boeing’s continuing production and safety problems (more on which later), the aerospace and miscellaneous transportation sector’s after inflation production sank by 0.95 percent sequentially in May – and that followed a 2.55 percent nosedive (no pun intended) in April. And wood products real output fell by 0.82 percent.

But the losers’ list contains a big surprise, too. Complaints keep coming that that the domestic steel and aluminum industries (and especially the steel-makers) have responded to tariffs simply by enjoying the higher resulting prices and sitting on these winnings. So it’s noteworthy that even after a 0.82 percent monthly real output decline in May, primary metals production after inflation is slightly (0.15 percent) higher than in immediate pre-pandemic-y February, 2020 – another such performance that’s bested that for all manufacturing.

The aforementioned problems suffered by Boeing keep coming through in the real output data for the aircraft and parts sub-sector of the aerospace and miscellaneous transportation industry. In May, inflation-adjusted output was down 1.47 percent on month – much bigger than the larger industry fall-off. And that came on the heels of April’s 2.21 percent decrease. Real aircraft and parts production is still 4.36 percent above its immediate pre-pandemic level, but given the ongoing post-CCP Virus worldwide rebound in air travel, these figures are definitely disappointing – and moving in the wrong direction.

By contrast, the big pharmaceuticals and medicines sector is still benefitting from reopening headwinds. May’s 0.22 percent monthly real output increase was admittedly modest, especially since this sector includes vaccine production. But it’s grown by 8.44 percent since the virus began spreading rapidly in the United States. on g – also delivered a disappointing performance in April, especially since it includes vaccines.

But both the May real production numbers and the benchmark revision left the vital medical equipment and supplies sector a conspicuous production laggard. This industry – which includes virus-fighting items like face masks, face masks, protective gowns, and ventilators – grew in real tems by just 0.19 percent sequentially in May, and April’s after inflation output was down 1.66 percent. As a result, this sector is turning out only 0.35 percent more product than just before the pandemic’s arrival – which doesn’t seem to augur well for national preparedness for the next pandemic.

If I was a betting person (I’m not), I’d still wager on better days ahead for U.S. domestic manufacturing – because so many powerful supportive trends and developments remain in place, ranging from massive government spending and other forms of stimulus to the virus’ continuing retreat to waning consumer caution to huge amounts of pandemic-era consumer savings to ongoing Trump tariffs that keep pricing huge numbers of Chinese goods out of the U.S. market.

But no one should forget about a list of threats to the pace of manufacturing growth, if not growth itself – like the prospect of higher taxes and more regulations, and the possibility that consumer demand will keep growing but switch away from goods to the hard-hit but quickly reopening service sectors (which of course do buy manufactures). Inflation isn’t good for strong (real) growth, either, though I’m an optimist on this front.

Ultimately, though, I’m most struck by evidence of domestic manufacturers’ continuing optimism about the prospects of their businesses. If they’re still confident about their futures, that remains good enough for me.

Im-Politic: Our Dysfunctional Watchdog of Democracy

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Anthony S. Fauci, Barry Meier, Biden, Buzzfeed.com, CCP Virus, coronavirus, COVID 19, democracy, Donald Trump, facemasks, Im-Politic, journalism, lockdowns, Mainstream Media, masks, Russia, Steele dossier, The New York Times, The Washington Post, Thomas Jefferson, Trump-Russia, Wuhan virus, Yellow journalism

A New York Times article posted this past weekend strongly reinforces a suspicion that I’ve held for some time about the title of most worrisome – because largely neglected – existing threat to American democracy. It’s not demagogues who get elected to high (or even the highest) public office. It’s not white supremacists or Antifa. It’s not voter fraud or voter suppression. It’s not Russian leader Vladimir Putin. It’s not even the kind of disinformation and misinformation and even election interference that he and other foreign dictators (like China’s Xi Jinping) have engaged in.

Instead it’s our own Mainstream Media – including the gargantuan social media platforms that have come to play such a huge role in determining what news Americans see, watch, and hear.

Why are these news organizations so dangerous? For two main reasons. First, their democracy-subverting activities are much more subtle and therefore harder to identify than those of the above culprits. Second, their ever-growing partisanship and arrogance is destroying what has long been relied on as the nation’s fail-safe mechanism – a watchdog press.

To be fair, this idea has always been problematic, even though throughout U.S. history, prominent Americans have made statements like “Our liberty depends on the freedom of the press, and that cannot be limited without being lost” (Thomas Jefferson) and “Democracy Dies in Darkness” (the Washington Post).

Yes, despite the bedrock Constitutional system of separation of powers, it’s been essential for some influential force outside government to “guard the guardians.” But embedded in the very consequent need for private ownership (to ensure that the press can independently monitor the government) is the danger that these owners will solely or mainly use their power to further their own particular interests, not society’s.

All of which is to say that we’ve long had a national conundrum to deal with. But it doesn’t seem unreasonable to conclude that, once journalism clearly exited its sensationalistic “Yellow” phase and (probably in the years following Wold War II), started acting like a profession that needed to embody and uphold standards of accuracy and objectivity, the major media met its watchdog responsibilities fairly well – over both government and the private sector.

What the author of the Times piece, former journalist Barry Meier, makes clear, is that there’s not only more reason than ever to fear that the commitment to objectivity is rapidly weakening (and these fears have been amply justified lately, as I’ve reported here). There’s also more reason than ever to fear that the kind of commitment to accountability watchdogs must accept – inevitably entailing an acknowledgement of legitimate outside criticism and the imperative of correcting mistakes – seriously is fading as well.

These worries have been triggered by two specific observations made by Meier about the Mainstream Media’s handling of the charges that former President Trump colluded with Russia to ensure victory in the 2016 election. As Meier recounts, these accusations were supercharged by reports that a former British super-spy had uncovered evidence that Trump’s personal misbehavior had exposed him to Russian blackmail, and resulted in his turning into a latterday Manchurian Candidate who would be forced to do Moscow’s bidding.

The infamous “Steele dossier” that supposedly made this case was published by a website called Buzzfeed.com in January, 2017 – shortly before Trump’s inauguration – and although no serious efforts at confirmation or even finding any supporting evidence were made, “countless articles, television shows, books, tweets and blog posts about it appeared.” (The dossier also formed part of the basis of the FBI’s request to a special U.S. court to spy on the Trump campaign in 2016, and Bureau Director James Comey’s March, 2017 disclosure that this investigation was continuing poured additional fuel on the Trump Russia fire.)

By 2019, Meier goes on, the Steele dossier had been exposed as a bogus hatchet job. But by that time, of course, the collusion firestorm had dominated the Trump presidency, along with equally offbase news coverage of his administration, and surely compromised its ability to govern effectively.

Why this prolonged media focus? In large measure, as Meier explains, because “It was easy for many journalists to believe that Mr. Trump would do anything to win, even — given his stance with…Putin — collude with Russia.” Indeed, as the author observes, they picked up this ball and ran with it even though “Steele said that his information needed to be confirmed….”

This flagrant anti-Trump bias was bad enough. Much worse, though was the media’s response once the dossier had been debunked. In Meier’s words:

“[A] few reporters who had written about the dossier had backed away from it. ‘Some people have wanted to maintain that the dossier is checking out when, as far as I can tell, it hasn’t,’ said Michael Isikoff of Yahoo News. He was in the minority. When Erik Wemple of The Washington Post wrote a series of columns about the media infatuation with the dossier, most journalists he contacted either defended their work or ignored his inquiries.”

Even though Meier, Isikoff, and Wemple all work for Mainstream Media organizations themselves, these revelations are more disturbing because they cast doubt on these news organization’s willingness, either individually or collectively, to admit that a major preoccupation of theirs that shaped American politics for years was an utter crock. And in a similar vein, they’re grounds for great skepticism that these same media will produce accurate post-mortems on the actual actions by governments or by individual politicians that conformed with this Get Trump obsession.     

The reason for this reluctance is obvious: Their credibility – their most precious asset, even in this hyperpartisan era – would be devastated. But if these powerful companies won’t self-correct or correct the records of others – and in some systematic, comprehensive way that can make a difference, not in dribs and drabs – especially on a matter of this importance, then their watchdog reputation gets thrown out the window.

And as far as I’m concerned, good riddance. But if the big national media can’t be relied on to play this role responsibly, who or what can? And can a democracy worthy of the name long survive without actors that can credibly set the record straight before the archives are fully open to historians years and even decades from now?

Moreover, we’re getting an example of how such flawed Mainstream Media performance could be a literally fatal flaw – and on mass level.  Specifically,  evidence has appeared throughout the CCP Virus pandemic that sweeping lockdown- and mask-wearing-centric mitigation strategy pursued in most of the country at the behest of the public health establishment was completely and tragically mistaken. (See, e.g., here.)  America’s major national news organizations have obviously bought in to the stay-at-home and mask-up claims, as shown, for example, by their near canonization of leading lockdowns proponent Dr. Anthony S. Fauci, the federal government’s head immunologist and now President Biden’s top medical adviser. 

I’d like to believe that if conclusive evidence emerges invalidating this virus-fighting approach, and supporting measures with potentially greater effectiveness during future pandemics, the news would be trumpeted all over the Mainstream Media even if the federal government tried to hush it up.  But as of now, expressing the hope that the real story might become known looks like nothing so much as practicing quackery.  

Im-Politic: Texas-Sized Goofs from the Experts on the Lockdowns

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Anthony S. Fauci, Biden, CCP Virus, coronavirus, COVID 19, facemasks, Im-Politic, lockdowns, mask mandate, masks, Mississippi, reopening, social distancing, Texas, Washington Post, Wuhan virus

This is getting embarrassingly easy. The so-called experts along with control freak politicians keep making apocalyptic predictions about decisions at any level of government in the United States to relax CCP Virus-related curbs on personal behavior and business activity. And they keep getting it laughably wrong. The latest example: Texas’ decisions last month to reopen its economy fully and lift its state-wide mask mandate, both effective March 10, and similar announcements by Mississippi effective March 3.

The blowback was swift and harsh. Dr. Anthony S. Fauci, longtime director of the federal government’s National Institute for Allergy and Infectious Diseases and President Biden’s chief medical adviser, on March 3 attacked the moves as “quite risky.” And citing a recent plateauing of new infections in both states, added “That’s a dangerous sign because when that has happened in the past, when you pull back on measures of public health, invariably you’ve seen a surge back up.”

Mr. Biden was much blunter, contending on the same day that both states were making “a big mistake” that stemmed from “Neanderthal thinking.”

Well now it’s a little more than a month later and it sure looks like the know-nothings are in Washington, D.C. As of yesterday, according to the Washington Post‘s virus tracker, the seven-day average of daily new reported cases in Texas is down by 40.60 percent since March 10, and in Mississippi it’s plunged by 61.37 percent since March 3.

Even more revealing, while reported infections in these troglodyte states were sinking, guess what happened to reported cases nationally? Between March 3 and yesterday, the seven-day new infections average rose by two percent. And needless to say, this nation-wide figure includes many states that have retained mask mandates and other extensive behavior and economic curbs.

By the way, I’m fully aware that case numbers are a deeply flawed measure of pandemic spread and progress against it, due to flaws in states’ reporting systems, varying definitions of “case,” the undoubtedly large numbers of asymptomatic infections throughout the country, and now, surging numbers of vaccinations. I’m also aware that we’re now dealing with different strains of the virus with differing degrees of virulence.

But reported new infections are one of measures emphasized by Fauci in particular. And it seems safe to assume that he and the President know about the different strains. So live analytically by the chosen statistic, and die by it.

I’m also aware that neither Texas nor Mississippi was turning its back totally on the mitigation measures stressed by the Feds. For example, the former exempted areas “with high hospitalizations,” and those counties are entirely free to retain or impose significant restrictions. And businesses all over the state can still require mask-wearing and other hygiene measures.

Mississippi also still mandates mask-wearing where its not possible to follow its remaining social distancing rules (which are still noteworthy, especially in schools and for their extracurricular activities – including sporting events – at all levels, from kindergarten through university). Further, counties and municipalities are fully free to adopt stricter rules if they wish except for businesses providing essential services.

But Fauci and the President surely read the actual Texas and Mississippi executive orders – didn’t they?

It’s entirely possible that in the coming days and weeks, states that start or keep easing anti-virus mandates of all kinds will see rising case numbers. In fact, that appears to be the situation in Michigan now – even though its rules are still pretty restrictive. But actually, that’s the point. If comparable masks and lockdowns etc policies and comparable policy changes are producing dramatically different results, then clearly something, or some things, other than these restrictions and their status are mainly responsible. And recognizing this logic is crucial given that the economic curbs haven’t exactly been cost-free either in terms of the economy or public health.

For the time being, though, there’s one dimension of the CCP Virus story that seems firmly established. For the experts and the political leaders who profess to be simply “following the science” on pandemic forecasts, being whoppingly off-base means never having to say you’re sorry.

(What’s Left of) Our Economy: Winter Smacks February U.S. Manufacturing Output but Forecast Remains Bright

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aerospace, aircraft, American Rescue Plan, automotive, Biden, Boeing, CCP Virus, China, coronavirus, COVID 19, Covid relief, Donald Trump, facemasks, Federal Reserve, industrial production, inflation-adjusted output, machinery, manufacturing, masks, medical equipment, petroleum refining, pharmaceuticals, plastics, PPE, real growth, resins, semiconductor shortage, semiconductors, stimulus package, tariffs, Texas, Trade, vaccines, winter, Wuhan virus, {What's Left of) Our Economy

Count me as one awfully surprised blogger when I saw this morning’s Federal Reserve U.S. manufacturing production figures (for February), which reported a 3.12 percent sequential drop in industry’s inflation-adjusted output. That was by far the worst such monthly performance since pandemicky April’s 15.83 percent crashdive, and even though the Fed largely blamed harsh winter weather in much of the country, it still contended that manufacturing would have shrunk by about half a percent even in balmier conditions.

A big reason for my surprise was the apparent contrast between these results and the findings of the monthly manufacturing surveys conducted by various of the Fed’s regional branches. They’re soft data, presenting manufacturers’ perceptions rather than actual changes in output (or jobs, or capital spending, or any other indicator), and I’ve written before that soft data are anything but perfect. But not only were the production reads in these surveys strong. They were strong even in Texas, where the storms were so severe. (And the Dallas Fed’s survey was conducted as they were raging.) Moreover, the same held for the February results from the neighboring Kansas City Fed bank.

Further, other hard data – specifically, on jobs – pointed to a good February for manufacturing, too, as industry expanded its payrolls by 21,000.

But the new Fed production numbers shouldn’t be dismissed entirely, so let’s look at the…lowlights, starting with the revisions, which were moderately negative. January’s previously reported 1.04 percent monthly advance is now pegged at 1.29 percent. December’s already once-downgraded inflation-adjusted output growth was lowered again, from 0.94 percent to 0.84 percent. November’s result, which had been upgraded twice (most recently to 1.10 percent) is now judged to have been 1.05 percent. October’s string of upward revisions was stopped, too, as the new report reveals a downgrade from 1.51 percent to 1.39 percent.

Overall, these readings mean that domestic manufacturing’s after-inflation production has grown by 20.26 percent since its April nadir, and stands 3.83 percent below its last pre-pandemic reading, from February.

As not the case with recent Fed industrial production reports, the output changes were highly concentrated in a few industries. Bearing out the central bank’s observation that “some petroleum refineries, petrochemical facilities, and plastic resin plants suffered damage from the deep freeze and were offline for the rest of the month,” most of these sectors saw outsized price-adjusted month-to-month drops in February. For petroleum and coal products, the fall-off was 4.43 percent, and for the huge chemicals sector, 7.11 percent Interestingly, the chemicals decline was even bigger than that it suffered last April, at the depths of the pandemic and related economic activity curbs (6.08 percent).

And as for those resin plants? Their February real output plummeted by fully 28.12 percent – much more than at any time last spring, during the pandemic’s height, and the worst such performance since the 30.64 percent cratering during Great Recessionary September, 2008. In fact, constant dollar output in the industry sank to its lowest level since equally Great Recessionary March, 2009.

Another February real production decrease that looks temporary (but perhaps longer-lasting): the 8.26 percent plunge in constant dollar automotive production. The main culprit is no doubt a global shortage of semiconductors that could well weigh on the entire domestic manufacturing sector going forward.

As known by RealityChek regulars, the machinery sector is a major barometer of manufacturing’s overall health, because its products are used throughout industry. So given February’s poor results for the entire sector, it’s no surprise that real machinery output was off by 2.33 percent on month. But January’s results were upgraded tremendously – from 0.52 percent after-inflation growth to 2.59 percent. So price-adjusted machinery output is still within 1.17 percent of its final pre-pandemic levels.

Because Boeing’s protracted safety-related problems continue to clear up, aircraft and parts production notched another month of growth in real terms in February – an increase of 1.04 percent. Revisions, however, were negative, especially December’s – its previously upgraded production increase (to a strong 3.03 percent) is now judged to be a 0.61 percent decline. Largely as a result, inflation-adjusted output is now just fractionally above its February pre-pandemic level.

The picture was brighter in pharmaceuticals and medicines. This industry, which includes vaccines, saw its after-inflation production climbed by anorther 1.29 percent in February. Moreover, January’s initially reported robust 2.42 percent increase was revised to an even better 2.57 percent. As a result, pharmaceutical and medicines real output is now 5.62 percent higher than just before the pandemic, and should generate even better results in the coming months, as vaccine production will be surging even more strongly.

Unfortunately, the also vital medical equipment and supplies sector – which includes virus-fighting items like face masks, face masks, protective gowns, and ventilators – is still behind the curve. Constant dollar production actually dipped by 0.56 percent on month in February, although in another major revision, January’s performance is now judged to be a 1.08 percent gain rather than a 0.54 percent loss. All the same, real production in this sector (which encompasses many other products as well) is still 1.37 percent less than just before the CCP Virus and the lockdowns arrived in force.

All told, I’m still full of confidence about domestic manufacturing production, due to the Boeing, vaccines, and now the Biden stimulus effects. And don’t forget the administration’s continued reluctance to lift its predecessor’s towering and sweeping tariffs on China, and on metals imports from many countries. Lastly: The weather’s bound to keep getting better!

Im-Politic: Who’s the Real Adult-in-the-Room on Mask-Wearing

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CCP Virus, celebrities, coronavirus, COVID 19, election 2020, entertainment, Face the Nation, facemasks, Im-Politic, Joe Biden, Margaret Brennan, masks, Scott Gottlieb, sports, Trump, Wuhan virus

Joe Biden is not only big on masks. He clearly views them as a super-weapon against the CCP Virus.

At last week’s final presidential debate, the Democratic candidate said “The expectation is we’ll have another 200,000 Americans dead between now and the end of the year. If we just wore these masks, the president’s own advisors have told him, we can save a 100,000 lives.”

So it seems he believes that masks can cut forecast upcoming fatalities by 50 percent – no doubt why he also declared that “What I would do is make sure we have everyone encouraged to wear a mask all the time.”

The former Vice President is also clearly a believer in what I like to call “The Science” – apparently believing that there’s a strong consensus among the relevant medical authorities (i.e., not your family GP, or brain surgeons, or others in the healthcare field not specializing in epidemiology or respiratory diseases) on all anti-virus efforts and strategies, including on the power of mask-wearing.

So I found myself decidedly amazed this morning upon listening to Scott Gottlieb‘s take on the matter. Although he served as Commissioner of the Food and Drug Administration under President Trump, Gottlieb (an M.D., but an internist,by the way) has been a leading critic of the Trump anti-CCP Virus policies. And that’s fair enough. By the same token, however, it’s noteworthy that he came out with a distinctly non-Biden-y take on masks’ effectiveness.

When asked during his latest weekly Face the Nation appearance by host Margaret Brennan (who cited a claim by the Centers for Disease Control and Prevention that “masks are the best plan for the moment”) to “Walk us through what the safest masks are,” here was Gottlieb’s response:

“Remember the masks serve two purposes. One is to protect other people from you, so if you’re asymptomatic or pre-symptomatic, if you have a mask on, you’re less likely to expel respiratory droplets that can affect other people. The other purpose is to provide you some measure of protection if in fact you’re around people who are infected. So if you want a mask to afford you some protection from other people, quality matters. A cloth mask may be 10 percent to 30 percent protective. A surgical mask, a Level Two or Level Three surgical mask, procedure mask, may be about 60 percent effective. An N-95 mask or equivalent, like a KN-95 mask, which is the Chinese equivalent, or what we call an FFP 2 mask, which is the European equivalent to an N-95 – that could be 90, 95 percent protective. So if you want a mask to afford you a level of protection, wear a higher quality mask. If you can only get a cloth mask, thickness matters, and cloth masks with polyester in them, that combination of polyester and cotton, do better.”

He did add that “A national mask mandate could be put into place,” but also stated that, “It doesn’t need to be backed up with fines or stringent enforcement. We have other requirements that we expect of a civil society that we enforce with political jaw-boning, leadership. We give people warnings at first. So I think masks are one thing that we could be doing.”

Neither Gottlieb nor Biden would limit the virus response to more mask-wearing – not by any means. But even when viewed in isolation, Gottlieb’s cautious and indeed extremely nuanced assessment contrasts strikingly with Biden’s practical fetishization of masks, and in particular with the idea of a national mandate – unless you think it would be a game-changer with or even without “fines or stringent enforcement.”

Gottlieb’s views also contrast with Mr. Trump’s long-time mockery of mask-wearing in general. But contrary to mask enthusiasts, and generally consistent with Gottlieb’s caution, there are any number of reputable studies casting doubt on the masks-as-panacea meme – either showing negligible effects outside clinical and other obvious settings, or coming to inconclusive results. (See here for a useful summary.)

And since the Biden stance is so widely echoed by so many leading American influencers (including not only Mainstream Media journalists but figures from the sports and entertainment worlds), and since the former Vice President is equally widely portrayed as the adult in the room, it seems legit to emphasize that his position arguably is no more scientifically grounded than the President’s.

As for me, because I’m a law-abiding person, and these are the Maryland regulations, I wear masks when in indoor public and crowded outdoor spaces, but nowhere else. They’re all cloth of varying thicknesses, though.