There was not much in the way of economic news this week, however, Dr. Ken Mayland, writing for the Precision Machined Products Association gave his take on some relevant numbers:
“Durable goods orders from November rose 0.7%. This came atop a 1.1% October advance (revised higher). Increases in September October and now November, however, have failed to fill the 13.1% fall off the cliff suffered in August.”
“Shipments in November grew 1.5% following a +0.1% October performance (also revised up). Unfilled orders inched up 0.1% in November while inventories edged up 0.2%.”
A picture of the last year of durable goods orders and shipments (in nominal, not inflation adjusted terms) … “orders have fallen significantly below shipments, which is not a good sign for future production. Lay this souring of the manufacturing climate at the feet of the Washington politicians, who have allowed uncertainties re taxes and spending in 2013 (and beyond) to fester. As a result, we are very close to a recession. (The broad based NBER indicators in November are almost flat versus July).”
“Commercial aircraft orders dove 13.9% in November. Total non-defense capital good shipments expanded 1.3% for November, a reasonably good showing.”
“Motor vehicle/parts orders swelled 3.5% in November and shipments lurched 3.1% higher. Estimate on auto losses from Hurricane Sandy are 250,000 destroyed cars. December should be a great month for sales, maybe only tempered by the January 1 fiscal cliff concerns.”
The Fiscal Cliff concerns … hmmmm. The American people are about to be screwed .. er … pushed over this cliff and, instead of staying in Washington and hammering out a deal, our lawmakers leave for the Christmas Holiday, the president flies off to Hawaii then makes a huge sacrifice and flies back on Thursday night, leaving his wife and children in Hawaii at a cost of around $200,000.00, and we are left here to consider what the new year will bring in the way of higher personal and business taxes, more unrestrained government spending, and an economy teetering on the edge of recession … after we never really “recovered” from the debacle of 2008. It’s not a very good View from the Top.
That being said, business cycles are born, they evolve, rising in a heated rush, then moderating and finally capitulating to correction over time. The business cycle cannot be stopped in a free market economy so good times follow bad and bad times follow good … our task as business people is to prepare for the bad times during the good times.
As 2012 comes to a close, I wish to thank our customers and valued suppliers for supporting our efforts, the business we have done together in the past year, the business we will do together going forward into the new year and beyond. All of us at Summit Steel wish everyone a healthy, happy and prosperous New Year. Welcome 2013.
God bless America.