Last Friday (2/15) the Board of Governors of the Federal Reserve system issued a revision to the January 2013 industrial production numbers which showed a contraction of 0.1 percent after having risen 0.4 percent in December and 1.7 percent in November. For the fourth quarter as a whole, manufacturing production as a whole, is now estimated to have advanced 1.9 percent. The capacity utilization rate for total industry decreased in January to 79.1 percent, a rate that is 1.1 percentage points below its long run (1972-2012) average.
Dr. Ken Mayland, reviewing the numbers for the Precision Machined Products Association writes as follows:

  • “Total manufacturing industry capacity utilization was 79.1% for January (down 0.2 points sequentially). This is another piece of hard evidence on the impacts of fiscal drag and economic uncertainties.
  • Output for January rose in 9 of 19 manufacturing industries, but fell in 10 of those 19.
  • Oil and gas well drilling (part of mining) continued its string of production reductions, down 0.4% in January, marking the seventh consecutive decline.

So, what’s the story?

  • Manufacturing is still laboring under an inventory slowdown, and suffering from the debilitating impacts of economic and business uncertainties generated by the political scene….but the other side of the picture is that manufacturing is being run lean, and production “oomph” is being stockpiled, and will probably be uncorked well before the ending of the year.”
  • Raw steel production was down 0.4 percent from the previous week at an average capability utilization rate of 75.7%. in the corresponding week last year, mills operated at an annual capacity utilization rate of 80.7%.
  • So far this year, mills have operated at an average capacity utilization rate of 75.3% down from the same period last year when they operated at a capacity utilization rate of 79.1%.
From the Metals Service Center Institute (www.msci.org) MSCI North American Manufacturing advocacy news for 2/18/13

MSCI reacts to the President’s State of the Union Address:
“In his address the president outlined a platform to expand US manufacturing. While MSCI supports the majority of the policies, it also recognizes several proposals outlined by the president could have profoundly negative consequences for metals producers, distributors and processors.”
“Specifically, President Obama proposed to create more manufacturing innovation centers, to invest in R&D and new training programs, and to ensure a robust domestic energy supply. However, the positive proposals were balanced with calls to further increase taxes on small business owners and a plan to bypass Congress and allow the EPA to regulate greenhouse gases.”
In this address, the president said it is lawmakers’ duty to restore the very American “idea that if you work hard and meet your responsibilities, you can get ahead.” Of course, he is correct, but he speaks words he does not mean. We cannot restore the dream by enabling people to stay home and be irresponsible, to not work hard, to take and take from those who do work and contribute, feeling they are entitled to the fruits of others’ labor, their innovation and success. These totally un-American philosophies are the foundation of his agenda, not self reliance, hard work and personal responsibility.
On the sequester:
“While US Senate Democrats say they have reached a deal that would replace the upcoming sequester spending cuts with a 50-50 split between tax increases and spending cuts, a small group of senators focused more exclusively on revenues. Two bills introduced by the lawmakers would raise taxes by more than $1 trillion over the next decade. The proposed hikes would harm the manufacturing and metals service industries.

Among their proposals:

  • Increase income taxes on taxpayers earning more than $2million by ensuring they pay at least a 30% effective federal rate
  • End manufacturer’s ability to defer income from goods produced overseas
  • Limit itemized deductions for some individual taxpayers to 28%
  • End last-in, first out (LIFO)
  • Lawmakers are also considering getting rid of S-Corp pass through all together.

Ending LIFO and the S-Corp pass through provision would significantly harm the manufacturing and metals service industries.” MSCI will work to oppose these proposals.”

How about this:

Since crap rolls down hill, why not have the head of each government department issue a directive down the line for each department under his or her control to cut 2% (or 5% or 10%) out of their spending budget. I am quite sure each department is aware of where they can save 2%, whether it be on paper towels, $5000 toilets, whatever, there is waste everywhere in government. Hold people accountable for this, top to bottom. These scare tactics of laying off hundreds of thousands of people, cutting social security and medicaid and decimating our defenses are laughable. The defense department can surely find a means to cut 2% of its immense amount of wasted dollars while maintaining and improving our military capabilities. So can every other department.
We are dealing with a collection of morons, allowing them to make laws which are not in line with our Constitution and the economic history of our great Republic. The bigger problem is “we the people” who continue to vote for and approve of the direction in which these “lawmakers” are taking our country. To wit:

  • 4 years of unemployment hovering around 8%, with no forecast of improvement in the forseeable future.
  • The most anemic economic recovery and subsequent anemic business cycle in nearly 100 years. Growth is forecast to be around 2% in 2013. Hip hip hooray!
  • A four year spending spree which has added over $4 trillion we do not have to the federal debt. And the president wants to spend…er, invest more.

All this spending was to stimulate the economy. Did it do so in your world? Not mine.
And yet, they don’t seem to care, they want to spend more, to tax more, to regulate more. To them, there are no consequences to this and quite frankly, there are no consequences – to them. They have insulated themselves from all the bullcrap they have created. They do not have to deal with the laws they make. Their own pensions, their own insurance etc etc. when will people wake up to this charade? Yet, the majority voted for four more years. It is inconceivable, like an episode of The Twilight Zone or Alfred Hitchcock Presents….what are people thinking?
Have a great weekend, enjoy the Daytona 500 if you will be watching. There are lots of steel parts in those cars….love it. We’ll see if Danica can put it together.

God Bless America