Led by declines in production and employment related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to -0.23 in March from +0.76 in February. Three of the four broad categories of indicators that make up the index decreased from February.

The index’s 3 month moving average, CFNAI-MA3 decreased to -0.01 in March from +0.12 in February. March’s CFNAI-MA3 suggests that growth in national economic activity was very near its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

US Department of Commerce advance report on durable goods
  • New orders for manufactured durable goods decreased 5.7 percent in March. This decrease, down 2 of the last 3 months, followed a 4.3 percent increase in February.
  • Shipments of manufactured durable goods, up 6 of the last 7 months, increased 0.4 percent. The highest level since the series was first published in 1992.
  • Unfilled orders for manufactured durable goods, down 2 of the last 3 months decreased 0.6 percent.
  • Inventories of manufactured durable goods, up 17 of the last 18 months, increased 0.1%
American Metal Market report

US raw steel production dipped 1.2 percent last week as mills operated at an average capability utilization rate (ACUR) of 77.6 %
In the corresponding week last year ACUR stood at 80.9%
So far this year ACUR stands at 76.1% down from the same period last year when mills produced steel at an ACUR of 79.7%

From this week’s MSCI North American Manufacturing Advocacy News

According to the White House, the federal government is on track to collect $2.7 trillion in revenues this year, a figure that is higher than any amount the federal government has taken in previously. The White House would like to increase these levels even further. Last week we reviewed some of the tax increases included in the president’s 2014 budget. The Metals Service Center Institute is opposed to these tax increases and continues to vigorously fight against them. The problems with the proposed tax increases were outlined by Dorothy Coleman, who oversees tax policy at the National Association of Manufacturers. Coleman said,

The President’s idea of strengthening (international tax rules) means imposing some $157 billion in new taxes on American worldwide companies, actually making our uncompetitive, antiquated system worse than it is… Nor will manufacturing be strengthened by imposing some $44 billion in new taxes on energy companies…The budget also includes a slew of tax increases targeted to individual taxpayers that also will hit many of the almost 2/3 of manufacturers that operate as “S” corporations or other flow through entities.”

Coleman also criticized the president for seeking to raise the estate tax rate to 45% after signing a bill in January that would have set the top rate at 40 percent permanently.

More importantly, as said many times before by MSCI “piece meal changes or repeal of longstanding rules outside of tax reform will inject more uncertainty into business planning, making US companies even less competitive and threaten economic growth and US jobs.”

Uncertainty, Uncertainty, Uncertainty

This seems to be the rule of the day for the US manufacturing industries. We have an anti-business administration doing what it can to over tax and over regulate the US economy and its job and wealth producers. We certainly feel it in our business. Uncertainty permeates the air. Sure, we are busy, but not as busy as we could or should be. No one we speak with (in the metalworking or steelmaking business) have any confidence in this economy, in the current direction of this country. I believe this will be a battle of give and take, slugging it out for the next four years (unless we maintain the House and take the Senate in next year’s midterm elections) just to stay ahead of the government, forget about the daily battle to beat your competition and be the best you can be for your customers and vendors, to generate a profit for the owners and/or shareholders of a business enterprise. Additionally, those of us Americans who work hard and contribute to the good of our society are precariously close to being the minority in this country. What will happen in the United States when there are more who do not care to work than those who accept the responsibility of caring for themselves and their families, to better themselves by their own efforts? We lose. Then how long will it be before you or I, as a taxpayer, say, “Why am I beating my head against the wall here? I might as well just get in line to get mine, that which the government “owes” me. Then we will all be wearing little green uniforms……In my youth, this would have been an absurd postulation for the future of this great country. As an adult, I am sick at the thought. As an American, I am sick at the thought.

……BACK TO THE Advocacy News

“Rather than simplify the tax code, the president’s budget would make it more complicated, and rather than move toward lower rates and a broader base of income, it would selectively lower and/or raise rates based on priorities that have little to do with simplicity or overall economic growth.”
According to the S-Corp Association “ A broad policy of tax expenditures while cutting only corporate rates would raise the tax burden on pass through businesses by approximately $27 billion per year-and that doesn’t include the additional hit to pass-throughs from their increased marginal tax rates beginning January 1, 2013.”

Further review on the key differences between the House, Senate and President’s budgets

Deficit Reduction. The House budget would cut the deficit by $4.6 trillion over 10 years by cutting spending. The Senate version includes $1.85 trillion in deficit reduction and the president outlines $1.85 trillion in deficit reduction. Those plans would reduce the deficit through a combination of spending cuts and tax increases.

Taxes. The House Republicans’ budget doesn’t raise taxes and would cut the top individual income and corporate tax rate to 25% each. The Senate Democrats’ budget would raise taxes by $975 billion by closing loopholes and raising taxes on high income earners. President Obama’s budget raises taxes by $580 billion by closing loopholes, limiting deductions and requiring taxpayers who earn more than $1 million to pay 30% of their income in taxes. That is $300,000.00. Why? Because you are successful? Shame on you Mr. President.

Spending. The House budget extends spending caps put into place in 2011, repeals portions of ObamaCare and calls for Medicare reform. The Senate budget reverses the sequester spending cuts, keeps the 2010 health care law intact, along with the current Medicare system while cutting $275 billion in health care and $240 billion in military spending and includes $100 billion in new spending on infrastructure ( I am all for infrastructure spending-if done properly. For instance, we don’t need to spend millions of dollars for signs telling us where the money is coming from (and those are not even factual, the money comes from taxpaying American citizens and businesses). The president’s plan reverses the sequester spending cuts, keeps the 2010 health care law intact, along with the current Medicare system while cutting $400 billion from Medicare and other health care spending and $150 billion from military spending. The president’s plan also includes $50 billion in new spending on infrastructure.

The Bureau of Economic Analysis (BEA) issued its first advance estimate of GDP growth for the 1st quarter of 2013(that is, from the 4th quarter of 2012 to the first quarter): the output of goods and services produced by labor and property located in the United States increased at an annual rate of 2.5 percent. This is an initial estimate, the second estimate will be released on May 30, 2013.

Have a great weekend.
God Bless America