As the chart above shows, the ISM manufacturing index is pretty representative of strength in the broader economy. Today's December ISM report is consistent with fourth quarter GDP growth of 3-4%, and that is somewhat better than the market had been expecting. The Atlanta Fed's GDPNow forecast for the fourth quarter had been 2.5%, and today it rose to 2.9%.
Export orders, shown in the chart above, were usually strong in December, a good sign that overseas economic activity is picking up. It's also encouraging that export orders have strengthened even as the dollar has strengthened (normally a stronger dollar would be expected to make life more difficult for U.S. exporters). This further suggests that animal spirits are rising both here and abroad.
The chart above provides confirmation of this, in that it shows that manufacturing conditions in both the U.S. and the Eurozone have improved quite a bit in recent months. A synchronized strengthening of economic conditions around the world is a very welcome development.
Great start! I hope it carries through.
ReplyDelete"For months, despite criticism from President-elect Donald Trump, Ford Motor Co. executives insisted that they would not alter their intention to spend $1.6 billion to build a new factory in Mexico.
ReplyDeleteBut with Trump poised to be take office and showing no hesitation to use his new clout to publicly pressure companies over their practices, Ford abruptly reversed course."
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Is this really bad news for Americans?
http://www.usatoday.com/story/money/cars/2017/01/03/ford-motor-co-donald-trump-mexico-us/96106334/
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"To be sure, Ford acknowledged that it would still move production of the next-generation Focus sedan to Mexico, as previously announced. But it will be built at an existing plant in Hermosillo, Mexico, not at a new facility...Ford's expansion will convert 700 temporary jobs at the Michigan plant into permanent positions, adding to an existing hourly staff of about 3,600. Fields said the automaker will add about 200 jobs at its plant in Hermosillo, Mexico, to make the Focus but did not say how much it would invest."
So all that is happening is a new plant will be cancelled ... but the car that would have been made there will still be made in Mexico anyway, just at an existing plant. And the "new" jobs at the Michigan plant will be nothing more than temps shifted to regular employees. Which is nice for those particular employees, but it's still not the blockbuster it's being made out to be.
An interruption in free flow of capital is hardly something to cheer about and it is unsustainable. water seeks its own level. if this continues-and I suspect it will, it will end badly.
ReplyDeleteThis is a short well versed piece on why I did not vote for DT (obviously didn't vote for hillary either). He is a thin skinned bully:
ReplyDeletehttp://cafehayek.com/2017/01/41932.html#.WGwBwfDr-NE.facebook
Trump is a narcissistic, sociopath with absolutely no convictions other than increasing his family wealth and power. The unprecedented conflicts of interest he brings to office will rival Russian oligarchs.
ReplyDeleteGood luck predicting what his administration will bring other than him enriching his personal business interests, which are murky at best. It will be very tough to tell where government ends and business begins (or vice versa). His own party is already aghast at his unrelenting support for Putin. It seems inevitable that before too long something horrendous, perhaps even treasonous, arises and the GOP turns wholly against him.
We are seeing the greatest con-man of our times. Hang on to your hats.
WASHINGTON—President-elect Donald Trump, a harsh critic of U.S. intelligence agencies, is working with top advisers on a plan that would restructure and pare back the nation’s top spy agency, people familiar with the planning said, prompted by a belief that the Office of the Director of National Intelligence has become bloated and politicized.
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Usually, meglomaniacs like spy agencies and larger militaries. Trump seems to be cutting back the military and wants to cut back the CIA.
Too soon to call, but so far a lot of good signals from Trump.
I am keeping an open mind and wishing Trump every success.
This is going to be an interesting 4 years to say the least.
ReplyDeleteStudents of economics know that trading with partners according to comparative advantage is most efficient for the greatest number of people, and usually strengthens inter-dependance between countries.
But could Trump have a point that some of the deals may not necessarily be in our best interest? That is, when reading into the details could they actually be best for the bureaucrats making the deals, and not necessarily for the greatest number of people in the U.S?
Scott. What do you think about the recent protectionist stances by Trump. Is he just pandering to the masses via twitter because he knows it's good politics?
Scott. What do you think of this?
Re Trump and trade: I had a post last November 21st (http://scottgrannis.blogspot.com/2016/11/tracking-trump-with-themes-and-charts.html) in which I quoted David Malpass saying (essentially) that what Trump wants is not fair trade but freer trade. I'm sure that existing trade agreements, while ostensibly existing to promote free trade, in fact contain a lot of provisions that obstruct free trade, as David points out. So I'm hopeful that David Malpass' take on Trump is correct. I know David, who is now rumored to be in line for an important international post in the Treasury department, is absolutely committed to free trade. I hope that Trump's bark is worse than his bite on trade, and that the bad things we are hearing are just pandering—as well as veiled threats to our trading partners that we won't tolerate bad agreements.
ReplyDeleteHe is showing nothing but bark right now. I think most people here were keeping their fingers crossed it was just bark. There will be no wall, Hillary will not go to jail, the illegals will not be deported, our taxes will not go down, Trumps tax returns will not be released, his assets wont be moved into a blind trust & Trump is filling the swamp with even dirtier slimy water. Trump made all these promises to pander to the ignorant. He is not even in office yet and has backtracked on many promises. I wonder at what point the masses realize they have been Donnie-conned. You can see the Republicans in Congress and the Senate already turning against him. The chaos this con-man will bring can't be a good thing.
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