- Last week US raw steel production was down 1.6 percent from the previous week as mills operated at an average capability utilization rate of 76.3%. To this point, mills are operating at an average capability utilization rate of 75.7 percent, down from the same period last year when the ACU was 79.1%.
- Scrap prices have settled higher for March and American Metal Market reports that Nucor Corp will raise its raw material surcharge (RMS) on Special Quality Bar (SBQ) products by $43.00 per ton ($2.15/cwt) effective with shipments April 1, 2013.
- Retail sales for February jumped 1.1% from January and 4.5% year to year.
- Hardware stores saw a 1.1% sales gain which could be reflecting the pickup of activity in the housing sector.
This week’s Advocacy News from MSCI (Metals Service Center Institute) reports the following news of note
President Obama seeks “Grand Bargain” deficit reduction plan by July. I happen to believe it is political posturing so the “people” can see he has made an effort to reach across the aisle in negotiations. Fact is he is adamant on increasing revenues through new, higher tax rates. He wants to continue spending, unfettered by his opponents.
MSCI believes the “Bargain” could include LIFO repeal. If you are carrying inventory, you know what that means. The president has repeatedly proposed ending LIFO in his annual budget outlines.
Members of Congress continue to press for approval of the Keystone Pipeline. All completed environmental studies including the State Departments recently released review determined there are NO environmental reasons NOT to move forward with the project. The pipeline would provide nearly 1 million barrels a day of secure crude oil and would support thousands of good jobs.
The Senate last week introduced the American Works Act, a bill that would address the skills gap that has kept hundreds of thousands of US manufacturing jobs from being filled. The senators noted that “67% of manufacturers have a moderate to severe shortage of available and qualified workers.”
The PMPA (Precision Machined Products Association) is highly involved in helping to solve these problems and further, to educate the public on the career possibilities which exist in the precision machined parts industries.
The National Federation of Independent Business recently fielded a survey asking small business owners what they would like to see come out of Congress’s push for federal tax reform: 85% of small business owners want Congress to ”fundamentally revise” the tax code this year, with the goal of reform being to reduce complexity. More than ¾ of those interviewed would be willing to eliminate certain tax preferences in exchange for lower overall tax rates. More than half of small business owners oppose a carbon tax.
The US Labor Dept announced last Friday that the unemployment rate dropped from 7.9% in January to 7.7% in February. Counting those who are working part time for economic reasons or who have stopped working, the unemployment rate was still high at 14.3% in February. Job growth figures previously announced for January and February have been revised downward. Over the last 6 months employers have added an average of 186,500 jobs per month, a rate that is barely enough to keep up with population growth. Manufacturing was a bright spot with the sector adding 14,000 jobs in February and has added 107,000 positions over the last year.
According to Statistics Canada that country’s unemployment rate fell to 7 percent after adding six times the job gains that analysts had predicted. Canada has gained back all the jobs lost in the recession and the jobless rate is the lowest in four years, unfortunately, Canada’s manufacturing sector has shed jobs for the second month in a row.
According to the National Association of Manufacturers’ (NAM) most recent assessment of global economic trends, the economies for most of the US’s top trading partners remained strong in February. NAM wrote “Seven of the top 10 markets for US manufactured goods have PMI readings above 50….. This has been the case for three consecutive months.
- $250 million to Egypt, a down payment on a $450 million transfer to that country
- $27 million to Morocco to teach them how to make pottery
- $200 million per year to help US agricultural trade associations and co-ops. It funded a reality show in India that advertised US cotton.
- $141,450 grant to fund a Chinese study on swine manure
- $1.2 million grant to the UN for clean fuel promotion
- Federally subsidized Amtrak lost 84.5 million on its food and beverage services in 2011 and $833.8 million over the past 10 years. It has never broken even on these services.
- The US Navy bought 450,000 gallons of biofuels for $12million (nearly $27/gal) to showcase the fuel and bring it closer to commercialization.
- $121 million in 2008 & 2009 alone spent by the Justice dept to host or participate in 1,832 conferences
- $325,000.00 was spent on a robotic squirrel to study how a rattlesnake would react to it.
- $2 million in Small Business Administration loan guarantees to 10 cupcake shop owners.
- Food stamp recipients spent $2 billion on sugary drinks alone.
- $520,000.00 to fix the Stevenson Road Covered Bridge in Green County, Ohio, which was last used in 2003.
OK, let’s see how we can inconvenience the American people; longer lines at airports, release of criminals, massive layoffs, how about shutting down the White House to public tours? This is the best the President of the United States can do? He refused the power to target and eliminate specific known waste (as above), instead, his efforts to intimidate the Congress to capitulate and to use scare tactics to alarm the American people (apparently with the idea that the people would blame Republicans) have backfired and his approval rating has taken a crap, if you’ll pardon my French. Good for him and the rest of his cohorts.
Writing an opinion in the Wall Street Journal on Thursday 3/14, Daniel Henninger opines:
So it looks like we’ve all been sentenced to spending at least 2 more years in budget hell with Barack Obama….All hope is not lost. Amid the sequester smackdown with the White House, Republicans did something off-script: they called the Obama bluff. They let the sequester spending cuts occur, and the apocalypse didn’t ascend. The only thing that cracked was the president’s approval rating (as noted above)…..Republicans are going to need all the help they can get to convince the American people that more cuts in spending will preserve and protect their economy.
Help is at hand-economist Alberto Alesina
….a professor at Harvard University. Ever since Ronald Reagan legitimized the efficacy of tax cuts, Democrats have sought to discredit his idea and restore the New Deal theory of a Keynesian multiplier which dates to 1931. It holds that more public spending will revive a struggling economy.
Mr. Alesina has identified the alternative. His and others’ work the past decade with how struggling economies revive suggests that the Obama spend more solution is the opposite of what the US should be doing.
There is general agreement on at least two things about the current US economy; it is emerging from the deepest recession since the Great Depression and, its debt level is unsustainable. The path back to growth, argues Mr. Alesina, is a combination of significant, permanent cuts in public spending and relatively small tax increases, if any.
This view isn’t born of “right wing” ideology. Analyzing an International Monetary Fund history of all the fiscal plans that 17 OECD governments enacted between 1978 and 2009, including the US, Canada and Japan, these countries tried everything to grow-raise spending, cut spending, raise taxes, or cut them, in endless combinations. What helped? “Adjustments based upon spending cuts,” the economists concluded, “are much less costly in terms of output losses than tax-based ones. Spending based adjustments”-that is, cuts-“have been associated with mild and short lived recessions, in many cases with no recession at all. Tax-based adjustments”-tax increases-“have been associated with prolonged and deep recessions.”
“Austerity” plans, the Alesina studies suggest, fail to revive growth when they too heavily rely on raising taxes on income and capital-as across Europe and now in the US. There is no magic ride back to prosperity. Fiscal plans based on large, permanent spending cuts are associated with renewed growth more than any alternative policy mix that has been tried. Indeed, spending cuts without big tax increases look to be the only thing that really works.”
After 4 (FOUR) years of not submitting a budget, Democrat Patty Murray submitted the following: a $975 billion spending cut and a $975 billion tax increase.
Republican Paul Ryan submitted the following: $4.6 trillion of spending cuts and no new taxes beyond the fiscal-cliff increases. Even increasing spending 3.4% per year.
Neither budget is anything the world has never seen. The available record suggests which of the two is the road to perdition.”
Just in from the Board of Governors of the Federal Reserve:
Industrial production increased 0.7 percent in February after having no change in January.
Have a great weekend,
God Bless America