A beginning of positive news from the Forging Industry Association (FIA) Economic Update 5/27/20

How Goes the May Rebound?

Since the start of the pandemic and the decision to impose an economic lockdown as the only means left by which to control the outbreak, it has been assumed that May would be the make or break month. There were references to the May rebound as early as February and as the shutdown recession took its toll that mantra became more and more desperate and intense. For many companies, the facts were plain – they would not survive without recovery by May. The challenge has been that the virus never agreed to this timetable. There has always been an assumption that people would be eager to recover their former lives, but the question was whether they would be allowed to. That remains the critical question as business starts that slow process of recovery. What happens if the pandemic spreads quickly again once there is renewed contact? Will efforts to enforce isolation be renewed if there is an outbreak? These questions remain to be answered but, in the meantime, it has been possible to see the first stirrings of that May rebound.

Analysis:

Real data to support the notion that business is returning will not be available for a few more weeks, so most of the evidence for this rebound has been anecdotal although there have been some tantalizing clues. Later this week we will publish the latest Credit Manager’s Index from the National Association for Credit Management, but I can’t resist a little preview. The report was completed just a couple of days ago and the data was quite encouraging. After two straight months of extremely low readings, there was a dramatic recovery in a variety of the categories.

This is an index modeled after the Purchasing Manager’s Index and uses the same diffusion index so that anything over 50 suggests growth and numbers under 50 suggest contraction. In April some of these categories fell as low as the 20s and 30s. This month those readings bounced back up to the 40s. This is still short of the growth levels desired, but it is certainly a trend in the right direction. What makes this observation important is the nature of credit management. The average credit manager is not all that interested in how a debtor is doing right at the moment, their interest is when that debtor is due to pay. They may have 30, 50, 90, 120 day, etc. terms and the creditor wants to know what they will be able to do when that debt is to be paid. They think into the future and the results of the latest index suggest they are getting a little more optimistic about that future. They are seeing more evidence of businesses ready to resume more normal operations.

There are other signs of life popping up. The service industry is starting to adjust to the new rules, and people are venturing out to get their hair done and to get massage therapy. The retailers that have been shuttered for weeks are seeing traffic again and better yet, the people that are shopping are spending money. People are eating out again and there have been people out and about. Nobody yet knows how many or how much money is being spent. Airlines are reporting more people flying and hotels are getting guests again. Most of the manufacturers are back at it and so on. The challenge now is that data will be slow to catch up, so we don’t yet know how many people are getting their jobs back and how many businesses will be able to resume their old activity.

There is expected to be a loss to the majority of the business community of around 20% to 25% – essentially the loss of a quarter of the year’s business activity. For some, operations there will be an opportunity to catch up through the rest of the year, but there are many sectors that will not have that option. The airlines, hotels, restaurants and service providers can’t get those days and weeks back and will have to hope they can survive the year on 75% of what they would normally see.

The Federal Reserve Bank of Richmond Fifth District Survey of Manufacturing Activity

The Federal Reserve Bank of Richmond released its Fifth District Survey of Manufacturing Activity and reports manufacturing remained soft in May. However, the composite index rose from a record low of -53 in April to -27 in May. This is an improvement as all three components-shipments, new orders and employment-were above their April readings but are still in contraction territory.

Unemployment Fell for First Time Since February

The number of workers receiving unemployment benefits fell for the first time since February and new weekly claims continued to ease, offering evidence that layoffs related to the pandemic are slowing.

As an American citizen, how do you want our country to move forward for you and your family:

SECURE BORDERS? OPEN BORDERS?
MORE GOVERNMENT? LESS GOVERNMENT?
A STRONG MILITARY? A WEAK MILITARY?
LESS TAXATION? MORE TAXATION?
LESS GOVERNMENT REGULATION? MORE GOVERNMENT REGULATION?
FAIR TRADE AGREEMENTS? QUID PRO QUO TRADE AGREEMENTS?
PROPER CARE FOR OUR VETERANS? DON’T CARE FOR OUR VETERANS?
MERIT BASED IMMIGRATION? THE SHIT WE HAVE NOW?
RESPONSIBLE HELP FOR THE POOR? THROW MONEY AT THE PROBLEM?
TEACH AMERICAN HISTORY TO OUR CHILDREN? ERASE AMERICAN HISTORY?
RESPECT OUR FLAG? DON’T GIVE A SHIT?
SAY THE PLEDGE OF ALLEGIANCE IN SCHOOL? WHAT IS THAT?

Infrastructure X (Keystone & Dakota pipelines) Regulation Reform XX 1 in 2 out
Individual Tax Reform XX Entitlement Reform
Business Tax Reform XX Education Reform X
Healthcare Reform Veterans Administration Reform X
Rebuild our Military X Trade Reform X
Secure our Borders (The Wall) XX Lead the world from the front XX
Help for the poor XX Drain the swamp X as we speak
Peace through unmatchable strength Support Israel X
Destroy ISIS XX Extreme Vetting XX
Conservative Supreme Court nominees XX American Jobs XX

I will track these campaign promises and will check them off as each is accomplished adding those I have missed as they become apparent. This is quite an agenda and will be difficult to achieve all in one term, but I believe the American people are behind him and know these things need to be done. Now, if he can get our legislators to support him instead of fighting him….

“MAKE AMERICA GREAT AGAIN”

and

“KEEP AMERICAN GREAT”

Have a great weekend…. God bless America!

Buy American made products whenever you can, it’s good for you, good for your friends and neighbors and good for our country.

If you are hiring…try to hire a veteran…. they are loyal, disciplined, hardworking…and they deserve our support.

By the way, if you wish to comment on my rants or offer any other insights you may have, you are encouraged to email me.

TEDDY ROOSEVELT ON IMMIGRANTS IN AMERICA…1907

In the first place, we should insist that if the immigrant who comes here in good faith becomes an American and assimilates himself to us, he shall be treated on an exact equality with everyone else for it is an outrage to discriminate against any such man because of creed, or birthplace, or origin. But this is predicated upon the person’s becoming in every facet an American and nothing but an American. There can be no divided allegiance here. Any man who says he is an American, but something else also, isn’t an American at all. We have room for but one flag, the American flag…We have room for but one language here and that is the English language…and we have room for but one sole loyalty and that is a loyalty to the American people.”