Remember Obama’s ‘The Private Sector’s Doing Fine’ Remark? Manufacturing Just Crashed To Pre-‘Recovery’ Levels

The stink of a double-dip recession is heavy in the air and this time it’s going to take a whole lot more Kool-Aid to blame it on Bush.

But this is getting really wearisome to our messiah.  No matter what you hear, just remember: “The private sector’s doing fine.”

So if you hear something like, oh, say:

The trade group of purchasing managers said its index of manufacturing activity fell to 49.7. That’s down from 53.5 in May. And it’s the lowest reading since July 2009, a month after the Great Recession officially ended. Readings below 50 indicate contraction

and it occurs to you to think, “holy crap.  That sounds like the double-dip recession that conservatives predicted as a result of Obama’s stimulus being a sugar high that ultimately sucked money out of the private sector and then pissed it away on politically-connected government boondoggles.”

You just remember that your messiah said everything is “fine” and you just keep mindlessly supporting Obama.  Oh, and say a dozen “blame Bushes” before you go to bed tonight.

Jul 2, 5:05 PM EDT
US manufacturing shrinks for first time in 3 years
By CHRISTOPHER S. RUGABER
AP Economics Writer

WASHINGTON (AP) — U.S. manufacturing shrank in June for the first time in nearly three years, adding to signs that economic growth is weakening.

Production and exports declined, and the number of new orders plunged, according to a monthly report released Monday by the Institute for Supply Management.

The slowdown comes as U.S. employers have scaled back hiring, consumers have turned more cautious, Europe faces a recession and manufacturing has slowed in big countries like China.

“This is not good,” said Dan Greenhaus, chief economic strategist at BTIG, an institutional brokerage. Though the report “does not mean recession for the broader economy, it is still a terribly weak number.”

The trade group of purchasing managers said its index of manufacturing activity fell to 49.7. That’s down from 53.5 in May. And it’s the lowest reading since July 2009, a month after the Great Recession officially ended. Readings below 50 indicate contraction.

Economists said the manufacturing figures were consistent with growth at an annual rate of 1.5 percent or less. That would be down from the January-March quarter’s already tepid annual pace of 1.9 percent.

“Our forecast that the U.S. will grow by around 2 percent this year is now looking a bit optimistic,” said Paul Dales, an economist at Capital Economics.

Stocks fell sharply after the report was released at 10 a.m. But investors appeared to shake off the bad manufacturing news by the end of the day. The Dow Jones industrial average recovered most of its early losses to close down just 8.7 points at 12,871. And broader indexes ended the day up.

Most economists aren’t yet predicting another recession. Though the ISM report suggests manufacturing is contracting, it typically takes a sustained reading below 43 to signal the economy isn’t growing.

Still, U.S. manufacturing, which has helped drive growth since the recession ended, is faltering at a precarious time.

Americans have pulled back on spending, which drives roughly 70 percent of growth. Europe’s economy is likely in recession, which has hurt U.S. exports.

And China’s manufacturing sector grew in June at its slowest pace in seven months, according to a survey released Sunday by the state-affiliated China Federation of Logistics and Purchasing.

Manufacturing will likely stay weak for the next few months. The ISM’s gauge of new orders, a measure of future activity, plunged from 60.1 to 47.8. That’s the first time it has fallen below 50 since April 2009, when the economy was still in recession.

Fewer new orders reflect growing concerns of businesses. In addition to slower global growth and less spending by U.S. consumers, many companies worry that U.S. lawmakers won’t extend a package of tax cuts at the end of the year.

Bricklin Dwyer, an economist at BNP Paribas, said the uncertainty “has left businesses unwilling to invest.”

A gauge of production in the ISM’s survey fell to its lowest level in more than three years.

U.S. factories are also reporting less overseas demand. A measure of exports dropped to 47.5, its lowest level since April 2009.

A gauge of employment edged down but remained at a healthy level of 56.6. That suggests factories may still be adding jobs. Manufacturers have reported job gains for eight straight months.

Overall hiring has slowed sharply this spring. Employers added an average of only 73,000 jobs per month in April and May. That’s much lower than the average of 226,000 added in the first three months of this year. The unemployment rate rose in May to 8.2 percent from 8.1 percent, the first increase in a year.

Worries about slowing job growth are outweighing the benefits of lower gas prices. A measure of consumer confidence fell in June for the fourth straight month.

Slower job growth and falling confidence are weighing on consumers’ willingness to spend. Americans cut back on purchases of autos and other long-lasting factory goods in May, the government said Friday.

The sharp drop in U.S. factory activity overshadowed more positive news on housing.

Construction spending rose 0.9 percent in May from April, the Commerce Department said in a separate report Monday. It was the second straight monthly increase, even though the level of spending still isn’t healthy.

The increase was driven by a surge in residential construction. Home sales are up from the same month last year. Mortgage rates are at the lowest levels in history. And prices have begun to stabilize in most markets.

The economy could also get a boost this summer from lower gas prices, which have tumbled more than 60 cents per gallon since peaking in April. The result is that consumers have more money to spend on other goods, from autos and furniture to electronics and vacations, that fuel economic growth.

The article twice mentioned “lower gas prices.”  But why are gas prices lower?  Because the economy sucks which drives down demand.

“Demand is down, which ought to help drive up demand.” 

Just you remember that at least we don’t have that awful George W. Bush.  The unemployment rate was a terrible 5.3 percent:

Thank God those grim days are behind us.

Obama will probably talk about his 27 consecutive months of job growth.  Which is much better than George Bush’s pathetic 52 consecutive months of job growth.

I don’t doubt that Obama is going to blame Europe.  What’s funny, of course, is that Europe is blaming America.  But the bottom line is both Obama and the Europeans want to pile on more debt on top of their already utterly unsustainable debt.

One thing is for sure; Obama will NOT be talking about his shrinking labor participation rate, which has shrunk every year of his presidency and is now the worst its been in over thirty-one years.  Obama won’t talk about the fact that if the same labor participation rate that he inherited from Bush – 65.76 percent – were applied to Obama today, unemployment would actually be about 11.6 percent now.  He won’t talk about the fact that 88 million Americans of working age are out of the work force under his presidency.

He won’t mention any of that because the private sector’s doing fine.

That is an article of faith and if you don’t believe it, you’re a heretic.

And a racist, too.

Tags: double-dip recession, index, job growth, manufacturing activity, manufacturing shrank, participation rate, The private sector's doing fine, unemployment