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X22 Report is a daily show that will cover issues surrounding the economic collapse

Sunday, April 21, 2013

By Michael Mccune: Economy Struggling, Factory Output Declines (( to Have MIke send you the Rant to your Email contact Him Here (( memccunewyo@yahoo.com ))

Economy Struggling, Factory Output Declines

Between the ricin mail and the Boston bombers, the news outlets have been deluged with a lot of breaking news. But they missed a release that is going to impact the economy, a decline in factory production in March.


At first glance the manufacturing report from the Philadelphia Federal Reserve showed a mere decline of .1 percent in March after February's robust report. But there were some inner details that portend trouble for manufacturing which makes up almost one-eighth of the American economy and almost 65% of the actual Gross Domestic Production not counted in the service sectors.


Factory capacity utilization, the report said, climbed to 78.5 percent, a gain of .2 percent in the month-over-month comparison. If would figure American manufacturing is recovering and that the decline is a minor hiccup, right?


No, that's what the Fed wants you to believe. Factory capacity continues to decline in America, that is why the capacity number is going up. Factories are closing, making America's ability to recover even tougher. It is the same trick the government is using to disguise the true size of the unemployment ranks. By removing non-working people from the count each month, they can keep the size of unemployment down. Here, they lost capacity so capacity output went up even while real output declined.


Worse for manufacturing was the auto industry showed a solid increase, hitting a five-year high, in output meaning the decline was across a broader spectrum than previously anticipated. Metal, computer, electrical equipment and furniture manufacturing were hit hard in March.


There are two major items I track to keep tabs on the economy, jobs and housing. Jobs are not forthcoming as much as the declining unemployment rate would have people believe but the housing market seems to be rebounding as it exceeded an annual pace of 1 million new units in March. Why then the steep decline in furniture demand?


The problem in housing is the government has begun lumping all units together. Where two decades past single family units led the way, today it is apartment style units that are pushing the drive. Renters are less likely to furnish the home as lavishly as a home owner--it is one of the points the Rant has contended the economists are missing by adhering to the Case-Schiller Housing Index. The housing market that disappeared is not the same one they are measuring today, the paradigm has shifted. This manufacturing report is supporting proof even if the economists continue to discount the shift.


Putting another damper on the housing surge was homebuilder sentiment fell for a third straight month. The builders are becoming increasingly depressed over the rising costs of getting an affordable unit on the market because of rising labor costs and problems with land because of heightened EPA involvement. In essence, most would-be homeowners are being priced out of the market.


One last bit of bad news on the economic front. The International Monetary Fund has lowered its 2013 growth rate forecast once again. The IMF dropped its projections in November and December and January. It skipped February but lowered the January forecast in March.


The Washington-based IMF now sees a global economy struggling as America's recovery isn't gaining traction when government spending is factored out and the Euro Union mess remains unresolved. The IMF cut its projection to 3.3 percent. But, as the United States is still the world's leading economy and is showing signs of slowing even more, expect that figure to be revised down in the coming months.


The economists at the IMF dropped hints it is seeing a growth rate of but 1.2 percent for this year now and 2.2 percent for 2014.

Neither figure is enough to keep pace with population growth.


Without the ricin letters and without the Boston bombers the regular news outlets might have delved into this story but that's doubtful. Still, the state of the U.S. economy should be a concern to everyone, just not the people who bring you the news.


"I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man."--Thomas Jefferson

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