ISM index hits new (recent) high. "New orders" highest in 53 years.

[Frodo]

This month's figures are not included on the graph. They are 66.2 for the red (total) index and an incredible 77.6 on the green (new orders) line.

Oops - on edit - They just updates the charts.


The total index is especially remarkable considering the markets expected a slight decline to around 61 (still a great figure). The higher number implies faster than expected growth.

A PMI in excess of 42.9 percent, over a period of time, generally indicates an expansion of the overall economy. The December PMI indicates that both the overall economy and the manufacturing sector are growing. The past relationship between the PMI and the overall economy indicates that the average PMI for January through December (53.5 percent) corresponds to a 3.9 percent increase in real gross domestic product (GDP). However, if the PMI for December (66.2 percent) is annualized, this corresponds to an 8.6 percent increase in GDP.

The "new orders" number is off the charts.

The index is 3.9 percentage points higher than the 73.7 percent registered in November and is the eighth consecutive month the index has exceeded 50 percent. This is the highest the index has been since July 1950, when the index registered 80.3 percent. A New Orders Index above 51 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 1987 dollars).

18 of 20 industries reported growth in production

The employment index was up for the second month with nine industries reporting higher employment

This coincides with a seperate economists poll released today expecting unemployement to fall to 5.5% by the election (an expectation of about 1.5 million new jobs in the next ten months).

[Skittles]

1. OOH OOH, BIG RECOVERY, BIG RECOVERY !!!!!!!!!!!!!!!!!!

BULLSHIT!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Frodo]

3. That's the spirit!

Want to guess how well that response is going to work for us in November??

The ISM is NOT a government agency.

[Skittles]

6. WHATEVER YOU DO, DON'T LOOK BEHIND THE CURTAIN

LEST YOU SEE THE *REAL* STORY.

[Frodo]

12. What do you expect the average voter to see "behind that curtain"??

Do you expect to be able to expose the double secret hidden numbers for what they really are?

[Skittles]

13. I EXPECT THEM TO SEE THE WHOLE STORY

how Bush's INSANE POLICIES are all designed for SHORT-TERM GAIN and how every one of us, our children and our grandchildren WILL BE PAYING LATER. I do not fall for such UTTER NONSENSE when I can look around and CLEARLY SEE WHAT IS GOING ON.

[Frodo]

18. AHHH! Now see, THERE you're RIGHT.

But your posts are contradictory.

YES, the incredible deficit spending is going to cost us BIG TIME in a few years. But they have a short-term effect in the opposite direction.

The example I've seen here is "if I run up $30,000 on my credit cards this year and I only have a $30,000 income... OF COURSE I'm going to feel like things are getting better"

The problem is that it won't be the defining issue of the election. That credit card CAN buy lower unemployment and faster growth. Probably faster growth than we saw in recent "boom" years and with low inflation. And we went out and bet the farm last summer that the economy was going to be THE issue come November.

NOW it's going to be "the deficit" because the economy will look fine.

[mhr]

24. Your Point Is Taken. However, Most Of Us Do Not Agree With You!

Unemployed for 42 months.

1,430 resumes sent.

Resume posted at 105 job boards.

Over-networked all my friends and acquaintances.

BSEE

MBA

Commercial Pilot

Veteran

Still no job.

Still no interest from anyone that has jobs to fill.

I would agree with others, these numbers are BUSHSHIT!

Our strongest argument is and will be the disappearing middle class.

Case closed as It is still the economy stupid per Carville.

[Frodo]

27. Look. If I haven't made it clear. If I ever need a pilot - you're my man.

OK?

But one man's experience does not a nation make. If unemployment falls to 1% and you're one of those 1%, you'll have the same story... and the "economy stupid" line will cut against us.

"The numbers are all lies" is both:
A) Inneffective, since they are all the public sees and you are unlikely to convince them that the number were true a year ago and false now. and:
B) Hard to believe since they come from several different sources, some of which could not possibly be under the thumb of the administration without it leaking out.

Wouldn't it be easier to figure our a new course than to spit in the wind and pretend it isn't there?

[Frodo]

2. A link to the actual report. (Sorry about that)

http://www.ism.ws/ISMReport/ROB012004.htm



"Diffusion indices have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent that it is generally declining. A PMI over 42.9 percent, over a period of time, indicates that the overall economy, or Gross Domestic Product (GDP), is generally expanding; below 42.9 percent, it is generally declining. The distance from 50 percent or 42.9 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis."

[ewagner]

4. This is confusing

If the numbers are REALLY that good, where are the jobs?

Why are more layoffs being ordered?

Am I wrong or is there a disconnect between the traditional numbers and reality?

[Skittles]

5. it is DESIGNED to be confusing

it's the DON'T ASK QUESTIONS ECONOMY. It is BULLSHIT.

[StClone]

8. Why did

High end stores such as Norstroms and Sax have outstanding years and while discount Walmart and slightly upscale Target miss predictions?

Why are corporate earnings through the roof while there was less than a 3% growth in employee earnings?

[Frodo]

10. OK... NOW you're scaring me.

"slightly UPSCALE Target"?????
Upscale of Walmart maybe... but... come on. :-)

Retail sales are not the same thing as production.

Employee earnings will continue to lag whil Unemployment is higher than recent (Clinton) history. No need to give big raises if people can't go anywhere else and there are qualified people waiting to take a job for what you are willing to pay them. That having been said, 3% wouldn't be too bad in a 1% inflation environment (really no different from 5% raises in a 3% inflation world like we had in the 90's). But I didn't think raises WERE that high yet.

[Frodo]

7. Have you noticed the unemployment numbers lately?

We're still singing last summer's song.

Unemployment has fallen from 6.4% to 5.9% and a report today has a market expectation of 5.5% by the election. "Where are all the jobs" is going to sound awfull hollow if they are right. And this was before the ISM index had a much stronger than expected employment index.

[StClone]

9. The question

Is are you better off than you were 4 years ago?

-Interest rates are starting to climb (housing industry will suffer).
-Bankruptcies are at record levels.
-More people are living behind on their paycheck to paycheck world.
-Local government is rainsing all sorts of taxes retail, real estate and park fees.
-Poverty and crime are increasing.
-pollution laws are scrapped

[Frodo]

11. All good points (though pollution is a different topic)

But the question has NEVER really been "are you better off than you were four years ago". Reagan didn't run on his first two years (which were numerically worse than anything Carter put out).

The real question is "are things getting better for you and people you know".

People have VERY short term memories on these things.

[Skittles]

14. Things are NOT GETTING BETTER

for me OR the people I know. I see few jobs being created, those that are being created are for far less money and far fewer benefits; I see my wages stagnating and the deficit skyrocketing. I simply do not FALL FOR BULLSHIT.

[Frodo]

17. Keep chanting that. That and $3.95 will get us a cup of coffee.

I don't think shrub was going to get your vote anyway, right?

In the best economy (a pretty recent one if you remember) we still had millions of people unemployed. Their PERSONAL experience WAS relevant to how they would vote, but it didn't contradict that unemployment was below 4% and growth was strong.

The deficit is a completely separate point. It's awful (how do you think they BOUGHT these numbers???) and won't be getting better any time soon.... But they won't affect short-term economic numbers for a few years, certainly not before the election (as is likely the plan).

[ewagner]

19. Okay...assume purchasing numbers ARE up....

precisely, WHAT is being purchased?

and from where will it be purchased?

My suspicion is that these are orders for more military products, or, that much of what commercial manufacturing there is will actually be manufactured overseas and imported. Is there anything to validate these either way?

[Frodo]

20. Sure.

You're asking the right questions "what do these numbers actually MEAN?". And, as with anything, we need to wait awhile before we have firm answers. The picture firms up each month and each quarter (watch the Q4 GDP number in a couple weeks for a "high level" number).

Military purchases WOULD impact these figures, though there is no evidence that military spending is up from last month or last quarter (in fact, the opposite appears to be true). They jacked military spending a year and half ago... it would have to be an increase from THERE to affect the numbers.

Overseas manufacturing would not change the numbers (these anyway) because these are all US manufacturers and are included by their share of US GDP.

Industries reporting growth were: Tobacco; Leather; Instruments & Photographic Equipment; Furniture; Apparel; Electronic Components & Equipment; Textiles; Miscellaneous*; Industrial & Commercial Equipment & Computers; Transportation & Equipment; Primary Metals; Fabricated Metals; Printing & Publishing; Paper; Food; Wood & Wood Products; Rubber & Plastic Products; and Chemicals.

[JNelson6563]

33. no, I think you'd be surprised

it doesn't have to be one person's experience. I have a friend who is so blindly a Freeper when it comes to politics...oy! Anyhoo, she is noticing things gong not-so-hot. Has a couple people in her family out of work who are highly employable. This is giving her cause to stop and think.....this is unprecedented and she sees it as a sign of trouble.

Wait till interest rates go up.

Aside from the jobs problem, people are swimming in debt. It is a crushing burden to many. One can only re-fi so many times. ;-)

Julie

[Skittles]

15. BY THE WAY

you are a FOOL if you believe that 5.9% NONSENSE.

[Frodo]

16. Right.

Care to show me where I'm wrong?

[cosmicdot]

21. the PMI was high during the Raygun years, too

ISM (Institute for Supply Management ... is formerly the National Associaton of Purchasing Managers, which I once was a member of ... it's Purchasing Manager's Index is one of the considered leading economic indicators ...

year jan...feb..mar..apr..may.june.july.aug..sept.oct..nov..dec
1982 38.2 38.3 36.8 37.8 35.5 38.3 38.4 38.3 38.8 39.4 39.2 42.8
1983 46.0 54.4 53.9 54.2 56.1 57.5 63.6 63.1 62.5 64.4 66.0 69.9
1984 60.5 61.3 58.9 61.0 58.6 58.1 56.1 53.0 50.0 50.8 50.3 50.6
1985 50.3 49.9 47.8 48.2 47.1 47.8 47.9 47.7 49.9 50.9 52.0 50.7
1986 51.2 51.0 51.0 49.7 53.4 50.5 48.0 52.6 52.4 51.2 51.2 50.5
1987 54.9 52.6 55.0 55.5 57.2 57.4 57.5 59.3 60.1 60.7 58.8 61.0
1988 57.5 56.2 54.6 55.8 55.5 59.3 58.2 56.0 54.6 55.5 55.6 56.0
1989 54.7 54.1 51.5 52.2 49.3 47.3 45.9 45.1 46.0 46.8 46.8 47.4
1990 47.2 49.1 49.9 50.0 49.5 49.2 46.6 46.1 44.5 43.2 41.3 40.8
1991 39.2 39.4 40.7 42.8 44.5 50.3 50.6 52.9 54.9 53.1 49.5 46.8

http://www.ism.ws/ISMReport/PMIndex.cfm

are you selling this economy for Bush-Cheney, or just presenting some data which we must be aware of to help the Democrats campaign? why put-down those who know the reality of main street??

I have a feeling reality is going to be stronger than the numbers show, because the benefits are in the hands of a few; whereas, during the voodoo economy of Raygun, many people were up-ward mobile (Yuppies) ... middle management jobs expanded ... employee rolls grew ... it's a different animal today.

Someone pointed out in another thread how many people just don't want to see charts ... they can't even 'get' a chart ... so, although I know what these figures and stats indicate ... it's as voodoo today as it was in the 80s ... it's a credit economy, and the consumers are maxed out again as they were at the end of the Raygun-Poppy period.

Every day folks will be able to relate to basic survival economics, and, likely, resent corporate boardroom "haves" ... this is why populism is on the increase ...

the Bush-Cheney plan is hoping to maintain enough people in the upper percentiles to build their coalition along with rightwing fundamentalists and such ...

we will prevail

[Frodo]

22. What am I doing? Good question.

I'm trying to get us ready for an election.

So let's take your point:

"the PMI was high during the Raygun years, too"

What't the highest it got? And when? 69.9 in December of the year before he ran for re-election?
What did that year (1984) look like? 7.3% GDP growth? Did his (also) 7.3% Unemployment number keep him from fooling everyone it was "morning in america" with THAT growth figure? Nope.

Comparing Bush to the guy who won 49 states that year is not improving my feeling about the election.

[ewagner]

23. I'm still sorting through this

Frodo listed a pretty impressive bunch of industries in which these orders were being placed. However, I, like you, am having a hard time squaring this with "main street economics".

In short, my instincts tell me that these numbers are too good to be true, or, if they are true, then something profound has happened within the economy that disconnects these kind of booming numbers from "main street economics". These numbers should, if I remember my economics correctly, lead to a huge hiring frenzy as well as increased wages to account for competition for valuable skills.

so far..........nada.........

what am I missing here?

[mhr]

25. Ewanger, Go With Your Gut And Ignore The Numbers Frodo Cites

Numbers can be massaged to impress people, maybe even Frodo.

When people can't get jobs, that is reality that no number can manipulate.

See my earlier post for my personal situation.

All of the other unemployed professionals are having similar luck.

We all can't be wrong regardless of Frodo's numbers.

[54anickel]

26. Good luck, even the economists are having problems understanding

why all of this good news isn't causing an upturn in the economy and the dollar.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=294669#295125

on edit:
You might want to checkout Raindogs article posted over here as well. It's long but really interesting.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=114&topic_id=4164#4182

[Frodo]

28. Hey nick?

I have no idea where that comes from. "Even the economists are having trouble understanding why all this good news isn't causing an upturn in the economy"??

The good news IS the economy. The good news included record GDP growth (AND today's figured fortell a higher-than-expected Q4 GDP number). GDP growth is THE single best measure of "the economy", so it's hard to say there isn't an "upturn". Another number people look at for how the economy is doing is the S&P or DOW, they're both up big time over the last three months. It's unemployment that we haven't been able to figure out (why it's so sluggish in rebounding - but of course we know the answer to that one... the policies were intended to aid profits... not workers)

You ARE correct that it isn't having an effect on the dollar, but it looks like that's intentional. The administration is intentionally shafting our allies (Europe and Japan) to boost THIS YEAR's numbers. Notice how today's ISM numbers show (relative) weakness ONLY in imports? Japan is trying to buy up dollars and prop up the Dollar NOT because they are our friends and want to protect Bush, but because if the Yen goes much higher THEIR economy is in danger. The German "fed chairman" recently made similar statements worried about the Euro.

It couls screw us in the end... but guess what? It doesn't look like the chickens will be home to roost until some time NEXT year. Anything to buy an election.

[ferg]

29. Anything to buy the election

The only real surprise is why this growth didn't happen before and why employment hasn't improved yet.

Shrub and consumers have been borrowing like mad for the past three years and Greenspan and the bond traders have happily dropped interest rates to keep the borrowing cheap.

Shrub's borrowing something like $400 billion a year and homeowners are borrowing even more.

With all that money pumping into the economy it better start improving: just in time for the election.

Of course, after the election it's likely that all hell will break loose.

[Frodo]

30. Yep

You got that right on the money.

Things had better "grow" awfully fast (and with no inflation) or the we're going to have serious problems in a couple years.

[54anickel]

31. The argument seems to be that Dems cannot use the old "It's the

economy" slogan. And yes, if you simply look at the numbers that are pumped out in the reports, things should be better. If you simply use the data points and nothing else in the argument you could loose.

But things are not better, the basic economic principals no longer apply. And YES, the Dems can win with a message that includes the economy.

The reports are for the most part immaterial. We are in a position economically, militarily, and respectability (lack thereof) where the US has never been before. Record twin deficits, no savings, record consumer credit, record trade imbalance, lowest exports in our history. Yep, I think a smart Dem, with a decent economic advisor can run against Shrubs record on the economy without a problem.

The bigger problem a Dem will have running on a message about the economy is how THEY plan to stop the hemmoraging. That would be the real reason to stay away from an economic debate with the Shrub.
There are no easy answers. Taxes will have to go up, interest rates will have to go up, some public programs will need to be cut, investment in some sort of leading edge technology to propel us once again (I'd like to think we'd invest in R&D of renewable energy and oil alternatives).

See, the reason to stay away from the economic debate is not the Shrub's actions look to be successful, most people understand it's not. It's the tougher question of what are you gonna do about it.

[ewagner]

32. Exactly

But things are not better, the basic economic principals no longer apply. And YES, the Dems can win with a message that includes the economy.

What are the new indicators? What do we have to do to return the middle class to /American economic prominence?

[54anickel]

34. Hey, If I had the answers to that, I'd be employed as some econ guru

right now.

Think about it, the interest rate / GDP gap right now, is huge. You would have to go back to the 70s to find a gap that large. Our huge twin deficit is something totally new to the study of economics, with it comes on the reliance on other countries to continue to pay for that debt. Why would they do that? Because of the US dollars special place as the world's reserve currency.

Does the dollar still deserve to be the world's reserve currency? That is the question on the rest of the world's mind. IMHO the answer they will eventually come up with is no. It made sense after WWII and during the cold war when you had 2 super powers 1 good guy, 1 bad guy. Of course you would back up the good guy. Who is the good guy now?

Shurb has managed to completely tarnish that image of the US with the heavy handed policies, pre-emptive war, imperialism attitude he has thrust upon our once great nation. He tried to replace the bad guy in this war on terror. But that's not a true enemy, you can't point to a source of origin, it's everywhere. How do you distinguish terror from revolutionists or a true enemy?

IMHO, the fiat dollar has had it's day. It was a great experiment, but totally based on the idea of confidence, nothing tangible. This is the scary thought for the US. Look at the many trade zones in the works. We have the Euro and the EU coming of age at 5 years now.

Once they get that EU constitution worked out, the Euro will be less risky than the dollar. The only thing missing is a EU military strength, they had heavily relied on NATO and US forces during the cold war. I believe that is why the US administration is against the creation of an EU military.

In the future, I think the world will be divided into trade zones, with no single currency as the world's reserve. Can you have a system without a single world reserve? I don't know. Will we go back to a gold standard or some type of hybrid of it? I don't know that either. I do know that most central banks are attempting to now rebuild their gold reserve, possibly as a hedge.

The US needs to prepare for the day when the world decides it is time to stop covering our debt. The policies of the current Fed are all based on the idea of fiat dollars and debt, covered by other nations. There is no back up plan and that worries me.

Last thought, this whole idea of us not having inflation. Yes, based upon the Feds basket of goods (which leaves out the stuff you need to survive such as heating fuel, food and housing) is a crock. The stock market, for one is inflated. The prices on average are something like 30% of P/E. Housing is a no brainer - up. Another measure of inflation or inflation to come is the spread between US 10-year Treasury bonds and inflation-indexed Treasuries. I read somewhere that it has about doubled to nearly 3% since early '02.

[many a good man]

35. Numbers games

I have to agree with you that these numbers look good. I also think that the numbers are gonna continue looking good through the first half of next year when people cash in their tax refunds. However, most people don't care about numbers or fuzzy math.

People who still have good jobs and money in the market will think everything is fine. But the vast majority of others see things differently. Its the perceptions of Wall Street versus Main Street. Most people are going to see these wonderful numbers as more evidence that people like them aren't even considered in these economic reports.

Don't feed us the line that more than half of all people have money invested in the market. For most of them its out of sight out of mind. They look around and see the fallout and see which direction the wind is blowing. They see decent jobs blowing out to sea and crappy jobs replacing them.

Incomes are falling, debt is rising. Good jobs are harder to find. The numbers don't add up.