U.S. Economic/Financial News
Bush Develops 'Credibility Gap' on Economy
Washington Post senior columnist David Broder penned an op ed Feb. 9, scoring Bush for his "credibility gap" on economic and budget policy, and drawing a parallel to President Lyndon Johnson, whose credibility gap on the progress of the Vietnam War ultimately drove him to abandon his 1968 reelection campaign.
Broder noted that on Jan. 27, Democratic leaders Sen. Tom Daschle (SD) and Rep. Nancy Pelosi (Calif) had addressed an audience at the National Press Club where they attacked the Bush "credibility gap" on his economic agenda. Broder wrote, "The budget that Bush delivered last week provides the strongest evidence to support the Democratic charges." He accused Bush of "burdening the future irresponsibly with debts he will not pay," citing the tax cuts, and the costs of the looming war with Iraq. He cited Sens. John Breaux (D-La) and Olympia Snowe (R-Me), two centrists, who criticized Treasury Secretary nominee John Snow for parroting the Administration's claim that the ballooning deficit is "within acceptable range," and accused him of trying to "cloud the reality of the rapidly approaching fiscal crisis."
Manufacturing Sector 'Morphing' into Service Sector
The U.S. manufacturing sector is undergoing a phase-shift as it turns itself into a service-sector employer, evidenced by the rapid decline in the percentage of manufacturing jobs that actually involve production of goods, the Wall Street Journal reported Feb. 10. Of 17 million "manufacturing jobs," only 54% are involved in actual production. The rest are "cubicle positions," including design, marketing, sales, packaging, and other support positionsas well as engineering. This has plunged from 68% ten years ago.
The Journal notes correctly that: "The act of making a good generally has a greater proportionate impact on the economy than providing a service. Arguably, then, the loss of those [productive] jobs could have a greater proportional impact as well." Does the reporter keep a copy of EIR in his cubicle?
Loss of Goods-Producing Jobs Signals Decline in Innovation, Invention
More evidence that some of the brighter writers at the Wall Street Journal are keeping close tabs on EIW and EIR: The loss of goods-producing jobs presages a decline in innovation and invention, says another Journal piece Feb. 10 (see previous item). "The Outlook" columnist Clare Ansberry observes that the loss of goods-producing jobs risks a spillover effect into the larger economy. "Making things is the result of invention and the genesis of additional invention. Manufacturing developments led to breakthroughs in software and cancer screening as well as Teflon and drip coffee makers. Such innovations often grow out of collaboration among workers, customers and engineers who tinker with production processes and so create solutions."
"The symbiosis between production and innovation is especially important in the medical-device industry," according to Thomas J. Duesterberg, CEO of the Manufacturers Alliance, based in Arlington, Va.
Machine-Tool Consumption Is in Breakdown Collapse
Machine-tool consumption by U.S. industry in 2002 totalled a mere $2.060 billion vs. $2.669 billion in 2001, a crash of 22.8%, the American Machine Tool Distributors Association and the Association for Manufacturing Technology reported on Feb. 10. Attempting to put a happy face on an otherwise devastating picture, the AMTDA and AMT both hailed the fact that for the month of December 2002, machine-tool consumption had risen by 18.1% over December 2001. But, at $167.8 million in December 2002, the figure is so small that the fact that it is much larger than the December 2001 figure is not much of an achievement.
By viewing the process from a higher level, the disaster is made clear.
U.S. Machine Tool Consumption ,on an Annual Basis
1997 |
5.56
|
($ billions) |
1998 |
4.91
|
|
1999 |
3.90
|
|
2000 |
3.99
|
|
2001 |
2.67
|
|
2002 |
2.06
|
|
Thus, U.S. machine-tool consumption in 2002 is only one-third the level of 1997. Because machine-tools incorporate in their design the most advanced scientific discoveries, they are essential to economic development.
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