South By North Strategies, Ltd.

A Framework for Manufacturing

Over the holidays, the Obama Administration released a white paper outlining “A Framework for Revitalizing American Manufacturing.” The document looks at a strong manufacturing sector as vital to the nation’s long-term prosperity and considers ways in which public policy can nurture the sector’s viability and competitiveness.  More specifically, the report details a seven-part agenda:

• Provide workers with the opportunity to obtain the skills necessary to be highly productive.
• Invest in the creation of new technologies and business practices.
• Develop stable and efficient capital markets for business investment.
• Help communities and workers transition to a better future.
• Invest in an advanced transportation infrastructure.
• Ensure market access and a level playing field.
• Improve the business climate, especially for manufacturing.

Manufacturing in the South Atlantic: Dec.

From the Federal Reserve Bank of Richmond’s December survey of manufacturing activity in the South Atlantic (District of Columbia, Maryland, North Carolina, South Carolina, Virginia and West Virginia):

Manufacturing activity in the central Atlantic region pulled back in December from positive territory after expanding during the previous seven months, according to the Richmond Fed’s latest survey. All broad indicators of activity — shipments, new orders and employment — landed in negative territory. Most other indicators also suggested additional softness. Capacity utilization turned negative following seven months of improvement, while backlogs held steady. Vendor delivery times were virtually unchanged, while manufacturers reported slightly quicker growth in inventories.
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Despite the decline in activity, manufacturers in December were more optimistic about their future prospects. Firms anticipated that their shipments, new orders, backlogs, and capacity utilization would grow more rapidly in the months ahead.

Around the Dial – Jan. 13

Economic policy reports, blog postings, and media stories of interest:

• Economix shows just how much the government already spends on health care.
• The Atlanta Fed asks “what’s up with young folks” and the labor market.
• New Deal 2.0 has a user’s guide to the Financial Crisis Inquiry Commission.
• Martin Wolf asks what can we learn from Japan’s economic troubles.

Fueling + Fighting the Housing Bubble

At Economist’s View, Mark Thoma asks if low interest rates or regulatory failures caused the housing bubble. His answer: both.

What fueled the housing bubble? There were three main sources of the liquidity that inflated the bubble. First, the Fed’s (and other central banks’) low interest policy added cash to the financial system, second, the high savings in Asia, particularly China, along with cash accumulations within oil producing nations, and third, some of the cash was generated endogenously within the system (e.g. by increasing leverage or by diverting other investments into housing and mortgage markets).
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Once the fuel was present, something had to allow the bubble to inflate and then do widespread damage, and that’s where the regulatory failure comes in. But I don’t think the regulatory failure matters much without a large amount of liquidity within the system, and I don’t think the large amount of cash in the system is problematic without the regulatory failures.

Few Job Openings in November

The newest version of the  Job Openings and Labor Turnover Survey conducted by the U.S. Bureau of Labor Statistics found that job openings remained scarce in November, the most recent month for which data are available. As the Economic Policy Institute noted in its analysis of the data:

This morning the Bureau of Labor Statistics released the November 2009 report from the Job Openings and Labor Turnover Survey (JOLTS), showing that such openings declined by 156,000 to 2.4 million in November. At the same time, the number of unemployed workers decreased by 272,000 to 15.3 million, resulting in 12.9 million more unemployed workers than job openings in November, or 6.4 job seekers per available job, an increase from 6.1 in October.