No, Seriously: Is Manufacturing Slowing Down?

By Matthew McMullan
Oct 01 2019 |
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ISM index is the lowest it’s been in a while.

New polling from industry publication Thomas finds that most Americans put a premium on American-made products … and most of us don’t think the manufacturing sector is particularly stable right now.

That matches up well with the latest ISM data today.

Remember the ISM data? It’s the result of the Institute for Supply Management’s survey of purchasing managers at manufacturing firms – a number above 50 indicates optimism, and below 50 suggests manufacturing activity is slowing down. Last month it was at 49.1. The number is now at 47.9. 

That’s a bad number! From CNN’s writeup:

The overall index number was bad, but more worrisome is the report's drop in factory orders of exports, said Torsten Slok, chief economist at Deutsche Bank. "There is no end in sight to this slowdown, the recession risk is real," he wrote in a note to clients.

As recession worries resurface, investors wonder whether the Federal Reserve could turn more dovish as the year comes to an end.

The central banks cut interest rates twice this year, in July and again last month, to boost the economy. But at its September meeting the average forecast from policy committee members didn't account for further cuts this year. The softening manufacturing data could change this.

Is renowned economist President Trump on board with this approach? Buddy, you know he is:

But interest rates are already pretty low. And the Republicans already cut taxes. So what other options are there to push manufacturing orders back toward 50, and get the economy going in the right direction? A massive infrastructure bill. It'll make American businesses more competitive and creates jobs.

Frankly, that’d be impossible to pass right now. There’s an election just over a year away, an impeachment inquiry beginning in Congress right now, and the White House has implied it'll sink any legislation while impeachment is on the table. Washington is in, as per usual, a state of gridlock.

But, look, when it finally comes time to slow down what may be a recession, we'll know what the fix is: Pass an infrastructure bill!