As the crisis in Japan began to ease, American industrial output surged in July, driven by motor vehicle productions, gaining at nearly double the rate expected. Along with that, the decline in building new housing actually eased last month:
So much for higher fuel efficiency standards killing manufacturing, huh? President Obama has (as have many of his critics on the Left - yes, I'm looking at you, Dr. Krugman) often said that it is not enough to have an economic recovery that leads us back to the same cycle of boom and bust where the financial sector - which, whatever its merits, actually produces nothing tangible - takes primacy over manufacturing, you know, making things. We need to make things again, and build our economy on something more than financial products that can evaporate in the blink of an eye on Wall Street. That's what we are doing, and that's where this data points.
Industrial output increased 0.9 percent, the Federal Reserve said on Tuesday, after a 0.4 percent gain in June -- nearly double economists' expectations for a 0.5 percent rise.
Manufacturing rose 0.6 percent as motor vehicles production surged 5.2 percent after falling 0.9 percent in June. Excluding autos, manufacturing rose 0.3 percent, pointing to resilience in the sector that has been the economy's main pillar of support, even when regional factory activity has been cooling. [...]
Also supporting the improving tone for the economy, housing starts slipped a less-than-expected 1.5 percent in July to a seasonally adjusted annual rate of 604,000 units as builders broke ground on new multifamily units to meet demand for rental apartments, Commerce Department data showed.
But what is the role of public policy in these indicators, you ask? Think about what would have happened if President Obama had not singlehandedly rescued the American auto industry. It didn't just save GM, it also saved a great amount of small businesses and suppliers and dealers and auto body shops in the United States. Those shops and suppliers don't just repaid American cars, nor produce supplies only for American cars. The auto industry is as dependent on them as they are on it. Had the American auto industry collapsed, driving these suppliers and service centers out of business, the re-energizing of the Japanese auto industry would not matter in our economy, as they would be left without the infrastructure that manufacture and supply their parts, too. Oh, anyone remember Cash for Clunkers? An immensely successful program, that was another brilliant investment to jumpstart the auto industry.
Think about what would have happened if the President had not injected stimulus into the economy in multiple forms: the Recovery Act, unemployment extensions, the Make Work Pay tax credit later transforming to a payroll tax cut for the working poor and the middle class, and encouraging the development of new green technology. Despite all the whining about it, there is little doubt that the Recovery Act added and saved over 3 million jobs, jump-started American manufacturing by investing in infrastructure projects as well as renewable technologies, and kept the consuming engine of our economy from grinding to a complete halt by providing extended unemployment benefits.
Think about what we could be looking at if health reform did not invest billions in new medical technology and electronic records, given that health care is now the fastest jobs growth field, suddenly as the Affordable Care Act is being implemented.
People are often remiss to connect specific policies with specific economic activities, and our media does us little favor by never bothering to cover any of this in detail, choosing instead to confuse their viewers with the daily volatility of the stock market and scaring them further in a time of extraordinary difficulty. Instead of looking at the before-and-afters of the worst economic crisis induced by human beings since the Great Depression, we engage in magical thinking and blame the President for not solving all our economic woes with a magic wand. Instead of looking at the spectacular policy failures that lead to the absolute falling off of the economy and the current policies that are concentrated on long term growth rather than a short term bubble, we get to see a daily kabuki theater on TV of people who caused the crisis insisting that we return to those policies in order to be saved from it.
By the way, about that "OMG we're going into a double dip" cry from the It'sNotEnough-ists on the Left,
"I don't think we are headed for a second recession," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.And....
The strong rise in output “suggests that the U.S. economy is not in a recession now, and it’s a fairly encouraging sign that it won’t slip into one, either,” said Paul Dales, senior United States economist with Capital Economics.Also...
“The increase in manufacturing production suggests the economy is finally emerging from distortions posed by the Japanese production shutdowns, which wreaked havoc on the global manufacturing supply chain,” said Joseph LaVorgna, chief United States economist with Deutsche Bank SecuritiesCertainly, we are not out of the woods yet. Housing is still the weak sector that is dragging the economy. New home sales are down as consumers and builders both adjust to a new economic reality. Unemployment is actually the biggest factor keeping consumers from spending as much as they could in a better economy - even though retail sales have been encouragingly growing throughout this year. Once again, the President is focused on finding ways to create jobs for Americans, and we are still left wondering when our vaunted 24x7 "news" is going to cover the truth about the Republican Jobs Blockade.
I went out on a limb about a month ago and said that examining a mix of indicators, I did not see the economy headed for recession, but rather a slowly but surely recovering economy. The indicators today continue to point that way as crisis in at least one part of the world is easing. This is no excuse to be complacent or happy with the current economic conditions, but as hard as it is to get through, we have to remember that progress is being made. We are rebuilding a country after a devastating economic storm, and we need to build it on stronger building blocks.