US factory activity, construction spending unexpectedly fall

…from Press TV, Tehran

[ Editor’s Note: This news comes as no surprise, as our yo-yo president has the business community up a tree on how to plan for the future, where the only long term planning that Trumps seems focused on is getting re-elected.

I have been writing on the risk of a worldwide recession, not so much due to the slow slide of spending and exports, but with all the international aggression by the US now in some kind of silly game of “if we hurt them more than we do ourselves we still come out the winner.”

We already had a major close call in the Persian Gulf, with the big US drone shot down and Trump reversing the US retaliatory strike on Iran’s missile defense structure. The word was to avoid 150 Iranian casualties estimated.

Can China out last US sanctions, with Trump under reelection pressure and impeachment?

But yours truly suspects that US Intel told Trump that Iran’s response to a US attack would be a full-scale attack on all US bases in the region, and that it could not promise that we would not take major losses.

Trump would then be caught in a position of explaining why all that damage was incurred over the loss of one drone, which is widely believed to have been darting in and out of Iranian airspace to get it to shoot at the intruder.

I expect a back-story here that it was some kind of electronic warfare live test to blind the Iranian missile that did not turn out too well.

That is mere conjecture on my part, as I have no source for it other than during the Cold War, the US was doing that frequently to collect information on Soviet radar responses to US incursions, to find holes, or at what range they would light up and anti-radar missiles could be fired at them, etc.

And then we had the ARAMCO attack, where everyone learned that the US was not going to attack Iran over the Saudis losing half their oil production for about a month, which we can see now was not an economic disaster. After a delay of a month or so, the Saudis even went forward with the ARAMCO stock offering.

Trump feared a misstep in a war that he would be blamed for, which would hurt his reelection prospects. And then I suspect his NeoCon economic advisers are telling him the trade wars are hurting our competitors more than us and they will cave in first.

Trump’s interference in Hong Kong as part of his multi-phased attack on China might trigger China’s hunkering down, thinking a recession could help get rid of Trump for a second term, and worth the trade-war cost, as opposed to risking four more years with himJim W. Dean

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– First published … December 02, 2019

US manufacturing output deteriorated for the fourth consecutive month, damaged by trade conflicts and a weakening global economy.

The Institute for Supply Management, an association of purchasing managers, said Monday that its manufacturing index dipped to 48.1 last month from 48.3 in October. Anything below 50 signals contraction.

US factories have been on a losing streak since August. New orders, production and hiring all dropped for the fourth straight month. Export orders fell in November after rising in October.

Continued contraction in manufacturing could put the Federal Reserve in a difficult policy position. The US central bank in October cut interest rates for the third time this year and signaled a pause in the easing cycle that started in July when it reduced borrowing costs for the first time since 2008.

US President Donald Trump has imposed import taxes on foreign steel, aluminum and thousands of goods from China. Businesses have been reluctant to invest until they have a clearer idea whether, when and how the trade conflicts will end.

Trump on Monday restored tariffs on steel and aluminum imports from Brazil and Argentina. Economists say without a complete trade deal, manufacturing is unlikely to rebound much and the sector could remain under pressure.

Manufacturing is also facing challenges from a domestic inventory bloat, slowing profit growth and weak overseas demand.

In a separate report on Monday, the US Commerce Department said construction spending dropped 0.8% as investment in private projects tumbled to its lowest level in three years. Data for September was revised to show construction outlays declining 0.3% instead of rising 0.5% as previously reported.

In October, spending on private construction projects dropped 1.0% to $956.3 billion, the lowest level since October 2016, after declining 1.1% in September. It was held down by a 0.9% decrease in spending on private residential projects. Outlays on residential construction dropped 1.1% in September.

Spending on private nonresidential structures, which includes manufacturing and power plants, plunged 1.2% in October to the lowest level since January 2018.


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6 COMMENTS

    • Did he do anything positive in the economy during his term as president? Now, if objective. Or the country itself can perfectly live on its own? – and let the president engage in verbiage with opponents.

    • The majority of Americans understand nothing about the Federal Reserve and the practice of “fractional reserve banking”. They also fail to understand, through lack of information and lies that the current economy is built on massive debt/spending the Fed has encouraged through the creation of fiat money (inflation). This entire economy is now fueled by the Fed, which is why it is labeled a balloon economy. It will continue to expand until the massive debt catches up with it and then it pops.
      It happened during the Dotcom boom and bust. It happened in 2008 when the housing boom popped. It happened in 1929 when Wall St. crashed.
      Ignoring the lessons of history create future disasters.

  1. Other signs: orders for semi tractors have dropped by 57%. The default rate on subprime auto loans is at an all time high even above that just before the 2008 crash. Housing markets across the country are crashing. The student loan default rate is at an all time high. Student loan debt has grown by 120%. The balances now equal 7.6% of GDP. The balance actually jumped by $32.9 billion in the third quarter.The total amount of student loan debt is $1.64 trillion.
    The problem is the Federal Reserve and the government’s addiction to borrowing, this includes the student loan fiasco. As long as the Fed continues to create more money out of thin air by buying government debt and an out of control government that continues to ignore and disregard the warnings, a recession is coming.

    Most people get it wrong when it comes to things like recessions and depressions. They have nothing to do with deregulation or corporate greed. In every case the Federal Reserve has created these massive bubbles by the creation of fiat currency in ever increasing amounts. This is inflation. When you go to the store to buy a pound of ground chuck and the price along with everything else has increased by X amount, that is the symptom of inflation.

    • Americans are maxed out on their credit cards. There is nothing more. household debt which includes house payments, credit cards, auto loans and other major purchases have buried many American families in massive debt and they will have to cut back drastically to avoid going under. Many will just default and walk away. New and used cars are piling up and the auto companies are laying off.
      Now let’s see just how black Friday sales fared against all this.
      This next recession could very well become a depression that could possibly become ugly before it’s over.
      Those who aren’t prepared for what’s coming will suffer the worst of it.