NEMA Currents : Economy

Bad News on Jobs

Gill, Tim — Fri, 06 Nov 2009 16:16:00 GMT

Even as numerous indicators suggest that the economy is emerging from recession, one of the most important of all continues to worsen. The Bureau of Labor Statistics reported today that the unemployment rate rose to 10.2% in October (subscription required), its highest since April 1983. Statistics like this don’t augur well for optimistic predictions of a snappy V-shaped recovery.

Hoping for help from Uncle Sam? Steve Pearlstein, in this WaPo piece, gently suggests that it will be difficult for the government to fill the “jobs gap,” among other things.

Touting "No Layoff" Companies

golds — Thu, 05 Nov 2009 14:45:00 GMT

Economic times are tough for all U.S. manufacturers, and many have had to lay off employees. But some advanced manufacturing facilities have opted not to fire anyone, event if it means switching their roles until production picks back up.

You can count NEMA members among the companies that are keeping their workforces intact. In a radio segment today, NPR highlighted two of them, Hypertherm of New Hampshire and Lincoln Electric of Cleveland, whose CEOs (*** Couch and John Stropki, respectively) sit on NEMA's Board of Governors.

As Couch says, "Once you have a highly skilled workforce, the last thing you want to do is lay them off. This isn't altruism. It's good business."

Green Shoot Sighting

Gill, Tim — Fri, 07 Aug 2009 18:16:00 GMT

The July employment report was released by BLS this morning and came as a pleasant surprise. The unemployment rate actually declined - by a tenth of a percentage point to 9.4% - for the first time since April 2008. Let's not break out the champagne, though. Payrolls were still nearly 250,000 lower in July than in June. It was not that long ago that a loss of 250,000 jobs in a single month would have been considered a calamity. Moreover, if the jobless recoveries of recent history are any guide, payrolls will recede further before ultimately turning the corner.

Still, even a jobless recovery is better than a job destroying recession. And the signs we're seeing look more and more like the beginnings of a shift from recession to recovery.

Happy 100th!

Gill, Tim — Thu, 25 Jun 2009 20:28:00 GMT

Wednesday marked the release of the 100th edition of NEMA's Electroindustry Business Confidence Index report. The EBCI tracks the evolution of business conditions facing the electroindustry in North America and three other world regions, as seen through the eyes of senior executives of NEMA member companies. Perhaps the most interesting component is the report's measure of expected conditions a half-year down the road.

Naturally, this future conditions index has seen highs and lows over the years, beginning as it did in March 2001, at the outset of the last recession. The index plunged in the fall of that year in the aftermath of the 9/11 attacks, but soared during the heady days of the electroindustry expansion of 2004-2008. The EBCI survey panel did a good job predicting that runup, so in these difficult times it may be comforting to note that the index has been signaling forthcoming growth for four months now and that latest reading (for June) measured its highest since August 2005.

Here's to hoping the industry's executives get it right once again....

The Tough Times Continue

Lego, Brian — Fri, 19 Jun 2009 18:02:00 GMT

We can now clearly say that this is the manufacturing sector's deepest downturn since the dark days of the Great Depression (see the charts below for evidence). While the blood-letting will probably continue for some time, a few regional Fed surveys (here, for example) and NEMA's very own Electroindustry Business Confidence Index (EBCI) suggest manufacturers are beginning to strike a more optimistic tone on their expectations for future economic conditions. The forward-looking components of these indexes are especially helpful at times like these because they have demonstrated an ability to predict improvements (or further deterioration) in manufacturing output and employment. Nonetheless, six months ahead is a bit down the road and should conditions remain on their present course, the economic hole that we'll have to crawl out will be an even deeper one than it already is.

Saving Ourselves from Recovery?

Lego, Brian — Thu, 04 Jun 2009 15:45:00 GMT

Newly-released data reveal that U.S. consumers are accumulating savings at a rapid clip. In the space of about a year, the personal savings rate has climbed from just above zero to nearly 6 percent-reaching its highest point since the early 1990s. During no other recession in the post-WWII era has the savings rate soared so high so fast; it will likely continue its upward march in the months to come as consumers attempt to rebuild the wealth they lost in the carnage of the housing and stock market collapses. While this is perfectly rational behavior for individual households, it may be detrimental to the economy as a whole according to Keynes' legendary "paradox of thrift". That is indeed a possibility and a concern, but one must also look ahead and consider what the shift to higher savings means for the economy once the recovery actually begins to materialize.

According to Professor Ed Leamer of UCLA, a set of dominoes typically falls into place when the economy enters and exits a recession. For example, declines in residential investment and consumer spending usually lead or coincide with recessions, but both generally rebound in advance of a recovery. Since we have plenty of reasons to believe that housing will not be a significant growth driver in the near term, thanks to high inventories, rising foreclosures and sliding prices, should consumer spending be held back by higher rates of household saving, two fundamental elements of Leamer's stylized recovery will be missing.

The Giant Sucking Sound

Gill, Tim — Fri, 08 May 2009 18:55:00 GMT

With sentiment growing that the banking system may survive after all, one may be tempted to look ahead to a day when ostensibly private entities will once again be politely asked to bear their losses without recourse to the public dole.

Not so fast.

According to today’s Washington Post, Fannie Mae posted a gigantic first quarter loss, blowing a $19 billion hole in their balance sheet that was immediately filled with an infusion from the Treasury.

Oh well. At least the administration’s plan “to wring $17 billion in savings” from next year’s $3.6 trillion federal budget will pay for most of today’s bailout.

Copper - the new Gold Standard?

Winstanley, Gerard — Wed, 29 Apr 2009 17:53:00 GMT

Copper prices are at a 6 month high, so is this an indicator of economic recovery? Analysts are not so sure. China has been buying up copper at well beyond its current needs leading to speculation that the copper is going into long term stockpiles rather than to manufacturing. This has led others to speculate that China is disenchanted with the dollar; so it is replacing the old “gold standard” with a new ”copper standard”. Instead of buying US treasuries and dollar holdings, China is stocking up, at rock bottom prices, on a commodity that is essential for infrastructure and manufacturing industries.

Whatever the reason, is China’s purchasing of copper good or bad for US manufacturers? Well, it could go either way. China will certainly have an advantage once the recovery is underway since it bought its copper at the lowest price. However the industry worldwide could benefit from the smoothing out of demand. If copper production levels are being maintained this will help stabilize prices. Once the demand returns this could help us avoid a bidding war pushing copper prices back up to last summer’s record levels.

Kepler Telescope blast-off – Technology is the engine of growth

Winstanley, Gerard — Mon, 09 Mar 2009 14:54:00 GMT

Over the weekend the Kepler telescope was launched into space to hunt for earth-like planets. So who was this space craft named for? The name Kepler is familiar to me because it is the name of my printer at work – being a slightly nerdy, technology-based trade association NEMA names it meeting rooms and printers after scientists, engineers and inventors. Johannes Kepler was a 17^th century astronomer who developed the mathematics of planetary motion.

During a recession it is a timely reminder that economic progress over the centuries has been fueled by technological development. Most scientists and engineers are not celebrated or remembered in our history texts, but their contributions have been responsible for the vast improvement in the quality of our lives. They have not been responsible for the current economic crisis; the pipeline of scientific development has not run dry. New, innovative ways of producing energy, curing diseases, increasing crop yields and doing more with less will continue to the developed and provide the growth for the future.

It’s worth honoring these scientists and engineers; whether it’s a spacecraft or a printer that is named after them.

Billions of Dollars for Energy-Efficient and Smart Grid Technologies

Hansen, Dain — Wed, 18 Feb 2009 15:39:00 GMT

On February 17, 2009, President Obama signed the economic stimulus bill, which aims to rejuvenate the struggling U.S. economny. Within this bill were many NEMA-supported provisions. For the past several months, NEMA met with President Obama's staff and Hill staff to secure funding for NEMA's priority programs. The bill contains billions of dollars that will benefit NEMA members. A quick rundown of the NEMA-advocated provision are;

$4.5 billion for smart grid related activities

$10 million of which was expressly directed for the NEMA/NIST "smart grid interoperability framework"
$200 million for energy storage technology

$6.5 billion to build new transmission systems
$14.4 billion for renewable energy and energy efficiency
$4.5 billion for energy efficiency upgrades to Federal buildings
$8 billion for renewable-energy loan guarantees
$4.2 billion for energy efficiency block grants for State projects
$2 billion for "advanced" batteries and components
$20 billion for health IT activities
3-year extension of the Renewable Wind Energy Tax Credit thru 2012
5-year accelerated depreciation for smart meters installed by January 2011
30 percent Advanced Energy Manufacturing tax credit for investments in plants or machinery
$30 billion for transportation infrastructure projects
50% bonus depreciation for capital equipment investments

For a more comprehensive summary of the bill, please use the provided link to view NEMA's analysis and summary of the stimulus package: http://www.nema.org/NEMA-Summary-HR1