THE United States became the world’s largest economy because we invented products and then made them with new processes. With design and fabrication side by side, insights from the factory floor flowed back to the drawing board. Today, our most important task is to restart this virtuous cycle of invention and manufacturing.
Rebuilding our manufacturing capacity requires the demolition of the idea that the United States can thrive on its service sector alone. We need to create at least 20 million jobs in the next decade to offset the effects of the recession and to address our $500 billion trade deficit in manufactured goods. These problems are related, given that the service sector accounts for only 20 percent of world trade.
To make our economy grow, sell more goods to the world and replenish the work force, we need to restore manufacturing — not the assembly-line jobs of the past, but the high-tech advanced manufacturing of the future.
August 29, 2011 A Reprieve from Misguided Recklessness
John P. Hussman, Ph.D.
It is now urgent for investors to recognize that the set of economic evidence we observe reflects a unique signature of recessions comprising deterioration in financial and economic measures that is always and only observed during or immediately prior to U.S. recessions. These include a widening of credit spreads on corporate debt versus 6 months prior, the S&P 500 below its level of 6 months prior, the Treasury yield curve flatter than 2.5% (10-year minus 3-month), year-over-year GDP growth below 2%, ISM Purchasing Managers Index below 54, year-over-year growth in total nonfarm payrolls below 1%, as well as important corroborating indicators such as plunging consumer confidence. There are certainly a great number of opinions about the prospect of recession, but the evidence we observe at present has 100% sensitivity (these conditions have always been observed during or just prior to each U.S. recession) and 100% specificity (the only time we observe the full set of these conditions is during or just prior to U.S. recessions). This doesn’t mean that the U.S. economy cannot possibly avoid a recession, but to expect that outcome relies on the hope that “this time is different.”
As of last week, we estimate that the prospective 10-year total return for the S&P 500 is back down to about 5.1% annually. To put this expected return in perspective, the chart below reviews the prospective return estimates from our standard methodology, going back to just before the Great Depression. The chart also presents the actual subsequent 10-year total returns achieved by the S&P 500. Note that a 5.1% prospective return is certainly not the worst level we’ve observed in history, but it is far from the 7.5-13% range of prospective returns that has characterized the bulk of historical data (and of course nowhere near the 20% prospective returns that have marked “secular” market lows).
Gabriele Stabile/Cesuralab for The New York Times.
Employees at the A123 Systems factory in Livonia, Mich.
Hockfield recently assembled a commission at M.I.T. to investigate the state of American manufacturing and to offer a plan for its future. “It has been estimated that we need to create 17 to 20 million jobs in the coming decade to recover from the current downturn and meet upcoming job needs,” she said at a conference this past March. “It’s very hard to imagine where those jobs are going to come from unless we seriously get busy reinventing manufacturing.” This logic has been endorsed by Jeffrey Immelt, General Electric’s C.E.O.; Andy Grove, the former chairman of Intel; and Andrew Liveris, Dow Chemical’s C.E.O. A widely circulated 2009 Harvard Business Review article — “Restoring American Competitiveness,” by two Harvard professors, Gary Pisano and Willy Shih — has become one of the touchstones of the manufacturing debate. In the article, Pisano and Shih maintain that U.S. corporations, by offshoring so much manufacturing work over the past few decades, have eroded our ability to raise living standards and curtailed the development of new high-technology industries.
Charles Blahous | 08/23/2011
August 25, 2011 10:16 A.M.
On January 20, 2009, the total outstanding public debt was $10,626,877,048,913.08 ($10.62 trillion).
As of Tuesday, the debt is $14,649,289,670,347.85 ($14.64 trillion).
In 946 days, Obama has increased the national debt by $4,022,412,621,434.77 or $4.02 trillion.
That amounts to $4,252,021,798.56 per day ($4.25 billion).
If spending continues at the normal pace through Inauguration Day 2013, it would add an additional $1,326,630,801,150.72 ($1.32 trillion) to the debt total.
Obama will have, in one term, raised the national debt by $6.22 trillion, 22 percent more than George W. Bush did in two terms.
Aug 18th 2011, 15:18 by The Economist online
August 21, 2011 at 3:25 pm
By Chad Syverson, Steven Levitt and John List Aug 18, 2011 6:54 PM CT
We found clear evidence of learning by doing at the plant: average defects per car fell more than 80 percent during the production year. (The next time you buy a car, consider in which part of the production year it was made.) This pattern is consistent with earlier research documenting big productivity gains from learning.
What’s more interesting is how learning happened. For example, this quality improvement didn’t come from addressing just the most defect-prone processes, even though the most troublesome 20 percent of processes accounted for 90 percent of all defects. Instead, such rates fell about equally across the board.
One of the clearest patterns in the data was that that most “know-how capital” brought by learning wasn’t not bottled up in the plant’s individual workers, but rather incorporated into its physical or organizational capital. Two key pieces of evidence point to this. When the plant’s second shift started several weeks after the first one had begun, the second-shift defect rates were no higher than those being experienced on the first shift, even though most second-shift workers hadn’t yet been on the line that year.
Similarly, while worker absences slightly raised defect rates, their impact was, practically speaking, very small. Something bigger than each worker’s experience was at play. Broader changes, such as altering the layout of tools at the workstations and regrouping the sequence of operations, made the difference. Individual workers” suggestions quickly turned into new institutional practices. Total factor productivity rose as the plant adopted fresh ways of doing things.