Somewhat obscured by the horrible May unemployment news was an equally appalling drop in manufacturing, which was supposed to grow by a weak 0.2 percent in April, but in fact slipped by 0.6 percent. That makes three manufacturing slips in the past four months, while the numbers have performed below expectations in five of the past seven months.
This, in turn, prompted reduced forecasts for second-quarter GDP growth, which was already pegged for an unspectacular 2.2 percent. Some analysts think 1.7 percent is now more realistic.
Weak manufacturing growth can be seen as both a cause, and an effect, of poor job growth. The loss of jobs from this vital sector of the economy has been part of the inexorable Obama transition to a part-time workforce. The media doesn???t want to report on it, but the ???dirty little secret??? is that even Obama???s painfully weak job growth consists largely of part-time jobs. Part-time jobs hit an all-time high last month. The past two months have seen the largest growth of part-time employment in American history. As reported by economics website ZeroHedge, we actually lost 266,000 full-time jobs in May; every bit of that horrendous 69,000 net job increase came from part-time work.
This is partly due to the surge of students taking part-time summer jobs, but that surge arguably rescued President Obama???s spin doctors from having to explain a net job loss for May 2012. The slowdown in manufacturing and construction has choked off an important source of good jobs with solid benefits. The rest of the American economy has wrapped itself in a brittle cocoon, and will emerge with a more ???flexible??? part-time workforce that doesn???t have to be supplied with expensive benefits.
The plunge in durable goods is also a result of weak job growth. Remember, those endless downward ???revisions??? to the official job numbers mean that employment has been much weaker, for much longer, than the public was led to believe. Even as misleading headlines prattled about a slow but steady ???recovery,??? nervous employees and the long-term unemployed were in no mood to spend money on big purchases.
According to a Fox Business report, ???consumer confidence slipped to a four-month low and pending home sales unexpectedly slumped in April.??? Emphasis mine, because ???unexpectedly??? is the new buzz word for the Obama economy. It???s one ugly surprise after another, isn???t it?
There is much debate over the other causes of the manufacturing slowdown. Some point to the crisis in Europe, which is said to be dragging America to the brink of a double-dip recession. Of course, European analysts say we???re pushing them into a recession. One of the reasons commonly cited for the looming crackup of the Eurozone is that its ministers were reading the same horsefeather headlines as American consumers, and hoped a recovering U.S. economy would drag them out of their recessionary quicksand.
Europe only accounts for about 15 percent of American exports, but of course a weak manufacturing sector can???t exactly laugh away the loss of 15 percent of its customer base. Panic in the Eurozone is also depressing stock markets in the United States, and around the world, making investors nervous.
It???s foolish to blame the Euro crisis for the bulk of our manufacturing problems, however. It???s a factor, but the cold truth is that it shouldn???t be such a large factor. If our economic immune system was stronger, we wouldn???t be laid low by the European flu. Our private sector has been crippled by regulatory overreach, lunatic tax policies, and titanic government debt, back when Europe just had a bad case of the sniffles. America was left too weak to deal with a global economic crisis.
The Obama Administration couldn???t be more out of touch with all of this. Even as the awful May job report rolled off the printing presses, chief campaign adviser David Axelrod was hitting the talk show circuit to claim that manufacturing was up. The President who had unrivaled power for the first two years of his Administration, with his Party wielding total control over the entire U.S. government, continues to mutter about ???obstructionism.??? The Republicans have sent 30 pro-growth bills to die in the Senate, while Obama spends his days thundering about fiscally irrelevant millionaire surtaxes and $500 billion deficit-fueled ???stimulus??? pork, to throw atop the trillion-dollar stimulus he already wasted.
When the President had the political capital to do anything, he used it to ram his disastrous health care bill down America???s throat??? dramatically increasing the cost of labor, and placing a guillotine of regulatory uncertainty above the neck of American business. He made our private sector weak and timid, at precisely the moment when it should have been gathering strength to deal with the onrushing European storm. When you say “manufacturing,” Obama thinks of windmills and solar panels. His industrial policy is built on the premise that government should subsidize the creation of politically favored goods that nobody wants to buy.
The wise men of the Administration are now talking about another round of ???quantitative easing,??? in which the dollar is devalued to spur foreign purchases and investment. The last round didn???t work very well. What good is another devaluation really going to do, when the Euro is also devaluing??? or disintegrating?
Meanwhile, the government has taken one very large action relevant to the manufacturing sector: cuts in defense spending, which caused defense orders to fall by over 21 percent. That???s the largest single component of the April industrial slide, and it happened because defense is the only thing this government is actually willing to cut, in absolute terms.