Steep Auto Sector Recovery to Continue To view this article, Click Here Brian S. Wesbury – Chief Economist
Robert Stein, CFA – Senior Economist
The scrappage rate, according to R.L. Polk & Company, a provider of auto information, has been 5.5% in the past decade. This means Americans scrap 12.9 million vehicles a year. Meanwhile, the US driving-age population (age 16+) is projected to rise 1.08% this year, which translates into additional demand of 2.5 million autos (1.08% of 234 million). Combined, these figures suggest the underlying trend in demand is 15.4 million autos per year.”
“Of course, the GAO’s mandate is to outline the problem, not devise a solution. That’s a job for U.S. policymakers. Their first task will be to move a mountain of assumptions about who we are as a nation, and what we do in the world. The decline of domestic rare earths mining that’s created a dangerous foreign dependency is emblematic of a larger issue. In the past generation, the U.S. has become a nation of “symbolic analysts,” interested in making our livings by manipulating spreadsheets, designing websites, devising marketing plans (writing op-ed articles) – more likely to invent a synthetic derivative Rare Earths Collateralized Debt Obligation than to get our hands dirty with the real thing.
We’ve grown more and more used to doing less and less mining and manufacturing here in the U.S., leaving that messy business to other folks in other climes from whom we can simply buy the stuff anyway.”
I attended the OSHA Townhall meeting on combustible dust. In the US last year there were no fatalities from combustible dust explosions so we obviously need a regulatory program to control the hazard. OSHA is planning to develop a rule to control this hazard. Testing dust for explosive character is expensive with a preliminary cost of over $500 per sample to screen with over $2,00 per sample to characterize. As always, the regulation will not identify the hazard or the compliance requirements but will place an openended liability on companies to ensure that there is no potential for an incident.
A common parameter for characterizing dust is the deflagration index Kst. FM Global publishes a standard on this topic: http://www.fmglobal.com/assets/pdf/fmapprovals/5700.pdf . They characterize the hazard of dust into 4 categories, ST 0 with Kst=0, ST 1 with Kst 1 to 200, ST 2 with Kst 201 to 300, and ST 3 with Kst > 300. Foundry dust is generally less than 30 which is well under the limit of 45 thought to be a safe working limit.
In the meeting, the industry feedback was that the standard could not apply to all dust but must be targeted at the hazard. A standard regulating any dust with a Kst . 0 was unworkable. It would appear that SFSA and AFS may need to develop a program to collect a large number of samples and data and create a data base of information that could be referred to by foundries to obviate their need to individually test their own dust.
Combustible dust training and compliance is a likely new regulatory requirement for foundries in the next 5 years.
47% of the US pays no income tax. Krugman says this is misleading since they pay Medicare and Social Security. This chart is for all federal taxes.The top 40% pay 86% of all federal taxes.
One key price bellwether can be seen as activity heats up at the world’s largest known single resource of hydrocarbons, Canada’s several thousand billion barrels of hard-to-extract and thus expensive Athabasca oil sands in Alberta. Devon Energy ( DVN – news – people ) recently announced buying half of BP‘s ( BP – news – people )billion-dollar level oil sands acreage. Similar billion-dollar-class acquisitions or production plans have also just recently come from France’s Total ( TOT – news – people ), ConocoPhilips ( COP – news – people ) and PetroChina ( PTR – news – people ). While Athabasca’s output has doubled in the last half-decade, and current capital plans will double it again in another five years, all that growth will be absorbed in just a year or two of increased Asian demand.
By James Kostohryz Apr 06, 2010 7:45 am
Commodity price risks. The most immediate inflation risk relates to the price of international commodities such as oil, steel, copper, and the like. The Fed, and the US in general, has virtually no control over these global markets. US demand for most commodities, even under an optimistic growth scenario, will be inferior to the overall rate of growth of global supply of these commodities. This means that the US will generally be net drag on global commodity prices on the demand side. The marginal demand growth for commodities is coming from emerging nations, and Asian countries in particular. Very strong economic growth there, combined with very loose monetary policies in those countries, will tend to pressure commodities’ prices. Given that demand is relatively inelastic and production capacity is fairly tight relative to current levels of demand in most commodities, strong global growth could provoke major spikes in commodities’ prices as demand growth starts to overrun supply growth, and inventories start to shrink appreciably starting in the second quarter of 2010.
Although the US economy has become progressively less commodity intensive over the years, synchronous spikes in commodity prices such as those that occurred in the 2003-2007 period could increase the annual CPI rate by three to five percentage points over any given 12-month stretch. The core CPI could also be affected by 1% to 2% with a lag in such a scenario.