Happy days … today marks the first day of winter. We have not had any measurable snow in Cleveland yet this season, however, a strong storm is bearing down on us from the plains. It is likely we will get snow today and through the weekend. The good news is now the days will begin to lengthen as they march toward spring and summer. I dislike walking my dog on these dark mornings, even with my little flashlight …
Back to business:
Indeed, Speaker John Boehner earlier this week offered his plan “B” to the president’s plan. This would increase rates on those earning $1,000,000 per year, exempting some 98% of taxpayers from a rise in rates. His counterparts in the house did not support this and the vote was cancelled.
According to Gallup, U.S. small business owner’s plans for capital spending over the next 12 months are now at their lowest level in more than 2 years.
The membership of MSCI has been urged to call or email their lawmakers to tell them to oppose individual income tax increases. I did.
The Wall Street Journal notes: these increases, combined with a potential lowering of corporate rates next year, would mean small firms would pay much higher rates than larger companies. The U.S. corporate income tax is the highest in the world.
The president signed a Russian Trade Bill, an important victory for manufacturers. The legislation, signed last Friday, opens up the world’s ninth largest market to American manufacturing product exports.
Industrial production in the U.S. increased 1.1 percent in November, the largest gain since December 2010.
U.S. factory orders increased 0.8% in October after rising 4.5% the month before. Orders for core capital goods were up by the largest amount since February. Orders for durable goods were up 0.5 percent.
Meanwhile, the unemployment rate fell to 7.7 percent in November, its lowest point since December 2008. Let me say that again… 7.7 percent unemployment rate, the lowest point in four years…. Way to create jobs. As you would guess, this shows underlying weakness in the job market. The economy has added an average 150,000 jobs per month this year. Not enough to keep up with population growth.
According to Statistics Canada, the Canadian economy added just 59,300 jobs in November and the unemployment rate fell to 7.2%. Manufacturing cut 19,600 positions.
American Metal Market reports U.S. raw steel output rose 1.4 percent last week from the week before. Operating at an annual capability utilization rate (ACUR) of 73.9%.
For the year to date raw steel production at U.S. mills is at an ACUR of 75.7%, up 2.8 percent from the like period last year.
On Thursday the National Bureau of Economic Research released the following data:
Real Gross Domestic Product ( GDP ) increased at an annual rate of 3.1 percent in the third quarter of 2012 according to the third revision of the Bureau of Economic Analysis ( BEA ). This follows a second quarter reading of 1.3%.
Also on Thursday the Conference Board Index of Leading Economic Indicators was released and showed a decline of 0.2 percent in November to 95.8 (2004 = 100) following an increase in October and September. This brings the six month growth rate to zero. The LEI points to increasing risks of slowing economic activity in the near term, but the coincident economic index, measuring current conditions, continued to increase in November.
This morning in the Wall Street Journal an article cites “rising caution and falling confidence among U.S. businesses and consumers for the economy’s limping toward the end of the year. No improvement is seen until late into next year. Businesses are slowing their investment amid a pileup of unsold goods and uncertainty over the billions of dollars in spending cuts and tax increases known as the fiscal cliff. Consumers are worried about the prospect of more taxes. Economists surveyed predict the nations GDP will grow just 1.3% on an annualized basis in the final three months of 2012 and 1.7% in the first quarter of 2013.”
“The recovery could gather steam next year if Washington averts the cliff. The housing market, long a drag, has helped the economy grow for six straight quarters.”
“But mixed signals from Washington and the possibility of stricter fiscal policy have consumers and businesses wary about spending or hiring, in turn leaving the economy more vulnerable to shocks.”
So, there you have it, a fairly muddled view coming in the forms of sinking economic data and a lack of focus and cooperation in Washington. I believe things will be flat to down next year. The severity of such a slowing will be mainly dictated by the success or lack of the same in correcting our fiscal issues, including tax code reform. In other words, our future is in the hands of the lawmakers….hardly an encouraging scenario.
But, this is the Holiday Season and we want to wish all a safe, healthy and happy holiday weekend and a very Merry Christmas next week. We are, after all is said and done, living in the best country on the planet.
God Bless America
