In this issue:

U.S. Must Fund Offensive for Manufacturing Technology Infrastructure

Machine-Tool Consumption Plunges in 2003

BLS Economist: Labor Department Inflation Stats 'Understated'

California Pension Plan Raises Co-Pays for 1.2 Million Members

Survey Finds U.S. Faces 'Weakest Job Outlook' in 12 Years


From Volume 2, Issue Number 25 of Electronic Intelligence Weekly, Published June 24, 2003

U.S. Economic/Financial News

U.S. Must Fund Offensive for Manufacturing Technology Infrastructure

The United States must launch a "national offensive" to build a manufacturing technology "infrastructure that would unleash America's ability to build its future," urged Lawrence Rhoades, chairman of the Association for Manufacturing Technology, in testimony to the House Science Committee June 5. Rhoades, warning that a nation's manufacturing operations define the standard of living for the entire nation, noted that U.S. machine-tool consumption has plunged 63% from 1997-2002. Although ranked as the world's "strongest economy," the U.S. is fifth in its investment in manufacturing equipment, he said.

But just purchasing more capital equipment is not enough, he cautioned. The nation "must find new methods, new approaches, new technologies," for manufacturing. "[T]he U.S. is in need of a coordinated national program," he insisted, large enough to develop a "manufacturing technology 'infrastructure,'" as a "rational and appropriate" response to the massive loss of both manufacturing jobs, exports, and Federal tax revenue.

On the other hand, cutting taxes to encourage investment, he cautioned, "does not directly respond to what's happening." Rhoades urged Congress to "mount a national offensive" to build a national manufacturing technology "infrastructure"—with Federal funding. He cited the following:

*"The private sector cannot, and will not build the needed manufacturing technology infrastructure alone—any more than they could or would build a road system or a school system."

*Focus the investment on innovators in industry and research centers, including centers generating "new science."

*Center the investment on the usually smaller companies that act as the "technology providers" to the U.S. industrial base. These firms accelerate the transformation of "new science" into "new tools" for America's factory floors.

*Specifically, expand support for defense manufacturing technology programs; the National Institute for Science and Technology's Manufacturing Extension Partnership program that provides critical assistance to small manufacturers; NIST's Advanced Technology Program; and the creation and expansion of open-membership U.S. industry collaborative R&D consortia. The Bush Administration plans to eliminate Federal funding for the MEP and ATP programs, while Congress has appropriated funds for fiscal 2004 that cut ATP and only maintain MEP.

Such a manufacturing technology "infrastructure," he concluded, "would unleash America's ability to build its future."

Machine-Tool Consumption Plunges in 2003

U.S. machine-tool consumption in January-April is down 16.7% from last year's depression level, to a total of $584.66 million—proof of the urgent need for LaRouche's "Super-TVA" policy. Machine-tool use by U.S. industry in April totalled $169.57 million, down 2.1% from the level in March, and down 1.3% from the amount consumed in April 2002, reported the Association for Manufacturing Technology (AMT) and the American Machine Tool Distributors' Association (AMTDA).

Machine-tool consumption—the means by which man develops the biosphere—had already plunged by the end of 2002, to about 37% of the level in 1997.

BLS Economist: Labor Department Inflation Stats 'Understated'

The Department of Labor is understating inflation, Pat Jackman, the Bureau of Labor Statistics economist in charge of the consumer price index, admitted to the Wall Street Journal. "More money is coming out of your pocket," Jackman said, than the official inflation figures indicate. The BLS, which is part of the Labor Department, uses all kinds of tricks, and the true rate of inflation is probably 5% a year, wrote John Crudele in the New York Post June 17. Forget all the talk about "deflation." What Fed chairman Alan Greenspan is worried about is asset deflation; when he talks about inflation and deflation, he's talking about assets.

The "tricks" identified by Crudele include "geometric weighting"—a calculation that when steak prices rise, people will switch to cheaper hamburger, and thus, that part of the increase can be ignored. (Which would seem to imply that if people don't eat at all, food must be free!) He also mentions the so-called "quality adjustments," which EIR has exposed since the early 1980s—i.e., if the "quality" of a consumer good, say, an automobile, "improves," the increase in price is not counted. Finally, there is something called "intervention analysis" allowing price increases to be reduced, if something like gasoline rises faster than the Labor Department's computers expect. No foolin'.

California Pension Plan Raises Co-Pays for 1.2 Million Members

CalPERS—California's 1.2-million-person pension plan, substantially raised co-payments on drugs and fees for some medical services, the San Diego Union Tribune reported June 19. CalPERS is one of the nation's largest pension plans. It provides health-care benefits to 1.2 million state workers and retirees. Fees for emergency room visits were tripled from $25 to $75. On June 17, the outfit increased premiums by 16.7-18.4% for the year 2004. CalPERS cites surging medical costs as its reason.

Survey Finds U.S. Faces 'Weakest Job Outlook' in 12 Years

A survey of businesses finds that, for July-September, the U.S. faces the "weakest job outlook" since 1991. Some 65% of employers do not expect to hire any additional workers, while 9% plan to eliminate jobs during the third quarter, according to a survey of 16,000 businesses conducted in April by Manpower Inc. About 20% of the firms surveyed plan to add jobs. The forecast "represents the weakest job outlook in 12 years," cautioned Jeffrey Joerres, Manpower chairman and CEO. For the education and non-durable goods manufacturing sectors, in particular, "employment levels are projected to be the lowest we have seen in the third quarter for more than 20 years," he added.

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